Today's Headlines

Bloomberg:

- Investors should buy bullish options on companies with a higher concentration of their shares sold short because better-than-expected earnings may boost the stocks, Macro Risk Advisors LLC said. General Motors Corp., U.S. Steel Corp., Nordstrom Inc. and other companies with higher percentages of shorted shares are at risk of a “short squeeze” like the one that sent Sherwin- Williams Co. up the most in six months after results beat estimates, Macro Risk president Dean Curnutt wrote in a report. The New York-based strategist also cited Abercrombie & Fitch Co., AvalonBay Communities Inc., CenturyTel Inc., Cephalon Inc., Meredith Corp., Mylan Inc., Whole Foods Market Inc. and Wynn Resorts Ltd. as stocks at risk of being “squeezed” because they report earnings by May and have short interest of at least 15 percent.

- Sales of existing U.S. homes in March stayed near a four-month average, and prices rose from February, a sign the housing recession has stopped getting worse. Prices for home resales posted their biggest monthly gain since June 2005, and NAR chief economist Lawrence Yun said that some regions are seeing multiple bids on properties. Today’s housing figures indicate that the record-low mortgage rates fueled by the Federal Reserve are stanching the industry’s hemorrhage. “We’re seeing signs of some pickup in some of the sales activity -- we’re getting a lot of reports that banks are successfully selling off foreclosures,” Stephen Gallagher, chief U.S. economist at Societe Generale in New York, said in a Bloomberg Television interview. The rate for a 30-year fixed home loan declined to 4.80 percent from 4.82 percent a week earlier, Freddie Mac, the McLean, Virginia-based mortgage buyer, said today. Earlier this month the measure hit 4.78 percent, the lowest in Freddie Mac data going back to 1971. The number of houses on the market dropped 1.6 percent to 3.74 million. The NAR’s affordability index, which tracks mortgage rates, home prices and incomes, surged in February to the highest level in 20 years of data.

- General Electric Co.(GE) Chief Executive Officer Jeffrey Immelt defended the University of of Notre Dame’s invitation to President Barack Obama to speak at a graduation ceremony, after more than 300,000 people signed a petition against him making the address.

- Moody’s Investors Service downgraded its Latvian and Lithuanian credit ratings as the global financial crisis pushes the Baltic region into the European Union’s deepest recession. Latvia, with the worst contraction in the 27-nation EU in the fourth quarter, was cut to the lowest investment grade of Baa3 from Baa1. Lithuania’s foreign and local currency ratings were cut to A3 from A2, while Moody’s confirmed Estonia’s A1 rating. All three countries have a negative outlook. “The depth and pace of the economic adjustment is much more severe than previously anticipated” for Latvia, said Kenneth Orchard, a vice president and senior analyst in Moody’s Sovereign Risk Group.

- Mexican corporate defaults on high- yield foreign bonds may jump to 31 percent this year as the global recession crimps revenue and chokes off companies’ access to credit markets, JPMorgan Chase & Co. said. The default rate on overseas debt sold by Mexican companies will rise from 22 percent in 2008, already the highest in Latin America, JPMorgan analysts including Luis Oganes and Fabio Akira wrote in a report dated yesterday. Brazilian corporate defaults on high-yield foreign debt will climb to as high as 9 percent from 4 percent, according to JPMorgan.

- China probably isn’t adding to its copper stockpiles to diversify its foreign exchange reserves, contrary to some speculation in the metals markets, Commerzbank AG said.

- President Barack Obama is seeking to substitute Bush administration political appointees for intelligence-agency professionals as targets of public outrage over interrogation techniques used on suspected terrorists. Obama’s decision to rule out prosecuting those who conducted the interrogations reflects his need to avoid antagonizing the Central Intelligence Agency as the U.S. fights two wars and faces terrorist threats. Still, he risks a bruising political fight with Republicans furious over potential prosecutions of senior Bush administration officials. “When you get one administration prosecuting its predecessor, you start creating the conditions of a banana republic,” said Philip Heymann, a law professor at Harvard University in Cambridge, Massachusetts, who served as deputy attorney general under President Bill Clinton. “Every Republican in the country would think this was a dangerous attack on the two-party system.” Prosecuting Republican appointees may destroy any semblance of national security bipartisanship, as well as further expose Obama to opposition-party accusations that he’s jeopardizing the nation’s safety in case of another terrorist attack. Senator Russell Feingold, a Wisconsin Democrat, urged the president to hold open the possibility of prosecuting the interrogators. The American Civil Liberties Union and the other groups said they would present Attorney General Eric Holder with more than 250,000 signatures demanding an independent prosecutor begin a criminal investigation.

- European industrial orders fell the most in at least 13 years in February as the worldwide economic slump lowered demand for factory equipment and metals. Industrial orders in the euro area declined 34.5 percent from the year-earlier month, after a revised 34.3 percent drop in January, the European Union’s statistics office in Luxembourg said today. The February drop is the seventh straight decline and the largest since the data series began in 1996.

- Barclays Plc said the global financial crisis has aided its ambition to be one of the world’s largest banks as it indicated first-quarter performance was “well ahead” of last year. The third-biggest U.K. bank will continue to diversify its holdings after an “extraordinary shift” in the competitive environment over the past 18 months, Chief Executive Officer John Varley told shareholders at the company’s annual meeting today in London. Barclays has risen 86 percent this year, making it the best-performer in the FTSE 350 Banks Index, after announcing a profit for the second half of 2008, passing regulatory stress tests and selling its iShares unit for 4.4 billion pounds ($6.4 billion). The bank shunned government financing as Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc slipped into state control.

- Potash Corp. of Saskatchewan Inc.(POT), the world’s largest fertilizer producer by market value, said 2009 profit will be less than it previously expected after North American sales of the crop nutrient reached “a virtual halt.” Earnings this year will be $7 to $8 a share, Saskatoon, Saskatchewan-based Potash Corp. said today in a statement. That’s less than the $10 to $12 a share the company forecast in January and trails the $9.33 average estimate of 14 analysts surveyed by Bloomberg.

Wall Street Journal:

- Auto loan delinquencies fell in March, especially among subprime borrowers, but first-quarter net losses on prime auto loan asset-backed securities jumped despite an 8% increase in the value of used vehicles, Fitch Ratings said.

- Combined DRAM and NAND revenue is likely to rise 3.6% in the second quarter from the first part of 2009. The sequential increases are expected to be 22% and 18% in the third and fourth quarters, respectively, iSuppli said.

CNBC:

- It’s one of the best times to buy real estate, Donald Trump, chairman and president of the Trump Organization, said in an interview with CNBC. It’s an amazing time to buy,” Trump said. “This is the best time I’ve ever seen to buy both real estate and probably other things. This is one of the great opportunities."

MarketWatch:
- Castle Hall Alternatives, the hedge fund industry's leading provider of operational due diligence, today published its latest White Paper, "The New Standard of Operational Due Diligence: Five Principles to Guide Best Practice." Chris Addy, Castle Hall's President and CEO, said "after the events of recent months, investors are re-examining their current and potential relationships with hedge fund managers. Many of the issues under discussion, including fees, liquidity, transparency and valuation, are driven by hedge funds' operational and business risks, not investment strategy and performance. This has created a new environment where skilled operational due diligence is now vital, not optional."

- Shares in Credit Suisse(CS) jumped over 12% Thursday after the bank said it returned to profit in the first quarter of 2009, easily beating market expectations thanks to a rebound from its investment-banking arm.

FINalternatives:

- The Big Apple remains the undisputed capital of the hedge fund world, according to the latest ranking of the world’s largest hedge fund managers. Almost six in 10 of the biggest hedge fund firms reside in New York or its suburbs, according to Alpha magazine’s annual ranking. Forty-four of the top 100 firms are based in the city itself, including six of the top 10 and 13 of the top 25. The city’s suburbs boast another 13 of the 100 largest hedge fund managers. Ten are based in Connecticut, including the world’s biggest, Bridgewater Associates, with one each in Long Island, New Jersey and Westchester County, N.Y.

Politico:

- Sen. John McCain (R-Ariz.) warned Thursday that any attempt by the Obama administration to prosecute the Bush-era lawyers who wrote memos signing off on waterboarding would start a “witch hunt.” “If you criminalize legal advice, which is basically what they're going to do, then it has a terribly chilling effect on any kind of advice and counsel that the president might receive,” McCain said during an interview on CBS’s “Early Show.”

Reuters:
- Banks and the U.S. housing market are past the crisis stage and are now on a path to recovery, a top U.S. regulator said on Thursday. "We're in the clean-up stage now," Sheila Bair, chairman of the Federal Deposit Insurance Corp, said at a financial reform conference.

- China celebrated its military confidence at sea on Thursday, when anniversary celebrations for the founding of its navy climaxed with a show of the warships and submarines projecting its spreading power. The fleet parade off the mist-shrouded eastern port city of Qingdao marks 60 years since the founding of the People's Liberation Army Navy, long the somewhat neglected arm of China's military forces. The spectacle included two of China's nuclear-powered Long March submarines, vessels capable of firing ballistic missiles far from the country's shores, the China Daily reported.

- The hedge fund and private equity industries attacked a draft European Commission directive designed to regulate their activities and due to be published next week. Trade associations representing both sectors on Thursday characterized the draft as a rush job heavily influenced by politicians seeking to score short-term electoral points.

TimesOnline:

- An unprecedented number of cancelled orders is thought to have cost Asian shipyards more than $25 billion (£17 billion) in lost revenues. Two of the world's largest fleet owners estimate that worldwide between 250 and 300 orders for bulk carrier, liquefied natural gas (LNG) tankers and container ships may have been cancelled this year, The Times was told in Tokyo on Wednesday. Plunging commodity demand from China has created a large surplus supply in bulk carriers, which is thought to have accounted for as much as half the order cancellations. Taking such a step is usually viewed as a last resort for ship owners because of the expensive loss of deposits and, in some cases, additional penalty payments. Moreover, Roy Thomson, a regional marine manager in Asia for Lloyds Register, speaking at the Sea Asia 2009 conference in Singapore, said that the number of cancellations would rise. “We have not got to the root of it yet,” he said. Brokers in London said that as much as half the global order book might be cancelled, a process that could hasten a recovery in shipping rates. The problems are not restricted to bulk carrier fleets. Analysts are warning that it is “only a matter of time” before a big container ship operator declares bankruptcy in a collapse that would add a fresh layer of disruption to the already turbulent world of global shipping.

Financial Times Deutschland:

- German house prices dropped 9% in the first quarter because of the global financial crisis, citing the Hypoport Index. The average price for a house fell to 168,375 euros from 185,000 euros during the quarter, the biggest percentage decline since the index was created in January 2005. An excess of properties on the market was exacerbated by the credit crunch.

National Business Daily:

- Three-fourths of Chinese industries are experiencing a trend of profit declines, citing Lou Qinjian, vice minister of the Ministry of Industry and Information Technology. The nation’s automobile industry has capacity to produce 12 million vehicles a year, while demand is only about 9.5 million cars annually, Lou said.