Friday Watch

Evening Headlines
Bloomberg:

• Trichet Halts Greece's Courting of IMF, Stirs European Tensions. European Central Bank President Jean-Claude Trichet pressed Greece to halt its flirtation with International Monetary Fund aid and work with European allies to tame its record budget deficit. As protesters besieged the Greek Finance Ministry to denounce 4.8 billion euros ($6.5 billion) of tax increases and spending cuts, the Athens government said the absence of European support might force it into the hands of the IMF. Trichet yesterday spoke out against appealing to the Washington-based lender “as a supplier of help,” keeping the pressure on Greece to cut the highest deficit in the euro’s 11- year history -- and on European governments to step in if Greece can’t go it alone. “For Trichet, using the IMF would be an admission that Europe can’t deal with its own business,” said Gilles Moec, a senior economist at Deutsche Bank AG in London and a former Bank of France official. “Trichet’s very keen on saying that Europe has its own system of safeguards. He went almost as far as saying Europe has something in the pipeline.” The region’s premier deficit sinner collides with Europe’s paymaster tonight when Greek Prime Minister George Papandreou meets in Berlin with German Chancellor Angela Merkel, co-author of a Feb. 11 European pledge of “determined and coordinated action, if needed” to aid Greece. Yesterday brought mixed messages about Greece’s romance with the IMF. Finance Minister George Papaconstantinou called the IMF a last resort if the European Union fails to “rise to the occasion.” That shifted the focus back to Greece’s efforts to get out of the fiscal jam on its own, a job made harder by protests against austerity steps by a socialist government that came to power in October on promises of higher wages and pensions. “Grossly unfair” was the verdict of Dimitris Bratis, president of the Greek teaching federation, on NET TV yesterday. Teachers plan to walk off the job today, along with the main public transport union.
• Postal Service Urged to Weigh Three-Days-a-Week Mail. The U.S. Postal Service, facing a $238 billion budget deficit by 2020, should consider cutting delivery to as few as three days a week as the agency attempts to pare costs, a consulting firm said. Those cuts are among changes McKinsey & Co. presented in a report this week at a postal conference in Washington. Options also included expanding business lines and restructuring retiree health benefits. The Postal Service, projecting mail volume will drop 15 percent in the next decade as consumers switch to electronic communications, is pressing Congress to change a law requiring delivery six days a week and limiting post-office closings. A request by the service to trim delivery by one day, to five days a week, has met resistance from lawmakers. “Action in any one area will not be enough to close this gap,” McKinsey, which was one of three consulting companies the Postal Service commissioned to review its future, said in the March 2 report. Making changes allowed under current law, such as reducing its workforce through attrition and expanding commercial- shipping contracts and other products and services, would still leave the Washington-based Postal Service with a cumulative loss of $115 billion by 2020, McKinsey said. “Lifestyles and ways of doing business have changed dramatically in the last 40 years, but some of the laws that govern the Postal Service have not,” Postmaster General John Potter said in a March 2 statement. “These laws need to be modernized to reflect today’s economic and business challenges and the dramatic impact the Internet has had on American life.”
• Copper Demand Is 'Weak' in China Now, Tongling Says. Copper demand in China, the world’s largest consumer of the metal, is “weak” because of lackluster consumption from the power industry, Tongling Nonferrous Metals Group Co. said. “From what we learned from our customers, copper demand is now weak,” Chairman Wei Jianghong said today in an interview in Beijing. Tongling is the country’s second-largest copper smelter. Demand “isn’t very strong,” bigger rival Jiangxi Copper Co. also said today. Slowing demand in China may indicate stockpiles in the country may continue to climb after reaching the highest level in more than seven years in February. “About 60 percent of copper is used in the power industry, and our sales to wire-and-cable users reflected that demand is rather weak,” Wei said while attending the National People’s Congress. “The demand is not very strong in the first place,” Jiangxi Copper Chairman Li Yihuang said in Beijing at the congress. “But a lot of people have long positions in the market, so I think in the first half of this year, copper prices will be good.”
• India to Decide on Ending Wheat Export Ban Next Week. India, the second-biggest grower of wheat and rice, will next week discuss lifting a ban on exports of the grains to pare growing stockpiles, Farm Minister Sharad Pawar said. Resumption of shipments may add to losses in global prices of the two food staples. Wheat has tumbled 25 percent from last year’s high of $6.77 a bushel in Chicago amid increasing world supplies, and rice has dropped 18 percent from a high of $16.27 per 100 pounds in December as the Philippines, the biggest buyer, ended a series of tenders for 2010 supplies. Bigger harvests may swell wheat reserves to 14.71 million tons on April 1, double the volume needed to meet emergencies, and rice stocks may be 11.5 million tons on Oct. 1, more than the 7.2 million tons needed, Pawar said Jan. 13. Stockpiles of the two combined totaled 46 million tons at end of January, prompting the finance ministry to say last week that “urgent attention” must be given to cutting storage costs that are placing a “lot of stress on the fiscal system.”
• Sharpton Calls 'Emergency' Summit on Paterson, Rangel. The Reverend Al Sharpton called an “emergency leadership” meeting tonight in Harlem to discuss how to “protect issues that are of major concern” related to New York Governor David Paterson and U.S. Representative Charles Rangel. Paterson faces charges from a state ethics panel that he violated a gifts ban, as well as an investigation by the state attorney general into allegations he interfered in the domestic- abuse case of an aide. Rangel told reporters yesterday that he asked for a leave of absence as chairman of the House Ways and Means Committee after being admonished for breaking rules on accepting gifts. The Associated Press, citing an unidentified state Democrat, reported that black Democratic leaders in Harlem will call on the governor to resign.
• Utilities May Go First With Carbon Rules, Crane Says. U.S. power companies may be willing to go first with new rules to curb greenhouse-gas pollution as long as they don’t have to go alone, NRG Energy Inc.(NRG) Chief Executive Officer David Crane said. Lawmakers are trying to come up with an alternative approach after climate-change legislation backed by utilities stalled in Congress. One plan being mulled is a “cap-and- trade” program limited to the electricity sector, Senator Mary Landrieu, a Louisiana Democrat, said in an interview yesterday. That may work as long as other companies are required to act as well, Crane said in an interview yesterday. Senators Lindsey Graham, a South Carolina Republican, John Kerry, a Massachusetts Democrat, and Connecticut independent Joseph Lieberman are attempting to craft compromise legislation after proposals for a broad emissions-trading program drew barbs from both political parties. Critics say a cap-and-trade system, which would limit emissions blamed for climate change and establish a market in trading pollution allowances, would hurt an already struggling economy.
• China's 'Latent Risk' Rising in Country's Banks, Wen Says. China’s banks are facing increasing risk in their lending policies, Premier Wen Jiabao said today in his annual report to the country’s legislature. “Latent risk in the banking and public finance sectors are increasing,” Wen said, according to a copy of his speech distributed today at the National People’s Congress meeting.
• China to 'Resolutely' Curb Rises in Housing Prices, Wen Says. China will “resolutely” curb rises in housing prices, according to a copy of a speech to be given by Premier Wen Jiabao at the National People’s Congress in Beijing today.
• Astellas Needs to Increase OSI(OSIP) Offer by 15%, Owner OrbiMed Says.
• MetLife(MET) Said to Be Near Agreement to Acquire AIG(AIG) Unit. MetLife Inc., the biggest U.S. life insurer, may reach an agreement as early as this weekend to buy a unit of American International Group Inc. after a tax decision cleared the way for the deal, said a person with knowledge of the matter. The Internal Revenue Service decided that AIG, recipient of a $182.3 billion U.S. government bailout, doesn’t owe taxes on life insurance sold to non-U.S. customers by an international division, the person said. AIG was told about the decision yesterday regarding its American Life Insurance Co., which New York-based MetLife is negotiating to buy for about $15 billion, said the person, who declined to be identified because the talks are private.
• ICBC, Bank of China Plan to Slow Lending This Year From Record. Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, and rival Bank of China Ltd. plan to slow lending in 2010 as the government seeks to curb last year’s record expansion. ICBC’s lending in 2010 will “definitely be less than last year, but it will still be at a stable level,” Jiang said. “There might be fluctuations, but we will try to smooth it throughout the year.” China’s policy makers aim to avert asset bubbles and restrain inflation by limiting new credit at 7.5 trillion yuan this year. Real estate “is a highly speculative industry” that should be monitored, Liu told reporters before the National People’s Congress.

Wall Street Journal:

• Hedge Funds Have Bigger Appetite For Bank Stocks. Hedge funds have taken a renewed interest in bank stocks. The funds have significantly increased their investments in banks in the last year, particularly buying more stock in the fourth quarter, regulatory filings show. Hedge funds now own 19% of Popular Inc. (BPOP), more than 9% of SunTrust Banks Inc. (STI), 6% of Citigroup Inc. (C) and Zions Bancorp (ZION), and more than 4% of Wells Fargo & Co. (WFC).
• Abortion and the Health Bill. There is no middle ground. Either taxpayers will fund it or they won't. It's now becoming clear that Barack Obama is willing to put everything on the table in order to be the president who passes health-care reform. Everything, that is, except a ban on federal funding for abortion.
• Voting-Machine Deal to Be Cleared by U.S. The Justice Department is poised to allow the merger of the U.S.'s two largest makers of voting machines, but the combined company will be required to divest a key electronic voting system, said people familiar with the matter. In September, closely held Election Systems & Software Inc. agreed to buy No. 2 voting-machine manufacturer Premier Election Solutions Inc., a money-losing unit of Diebold Inc.
• Equity Firms Cheer Reutrn of 'Staple'; Critics Dont'. It is the surest sign yet that corporate credit markets are roaring anew: The "staple" is back. During the private-equity frenzy of past decade, investment bankers worked both sides of deals, advising sellers while offering financing to prospective buyers. That practice, known as staple financing because lending terms were stapled to a deal's term sheet, helped fuel the largest buyout boom in history. While their financing packages are still a far cry from those arranged for the megadeals of yore, the staple is quietly showing up in a number of new transactions. That is welcome news for private-equity firms, which aren't only looking to sell portfolio companies, but also are keen to acquire businesses with their billions of dollars in unused capital. The staple is now a factor in the $3 billion auction for financial data provider Interactive Corp. Goldman Sachs Group Inc.(GS) is offering a staple of five times the company's earnings before interest, taxes, depreciation and amortization, or Ebitda, according to people familiar with the deal.That in turn has prompted Bank of America Merrill Lynch to offer 5.5 times Ebitda to buyers, a group that includes McGraw Hill Cos.; Apax Partners; Kohlberg Kravis Roberts & Co.; and Bain Capital LLC and Advent International Corp., these people said. Staple financing came under sharp legal criticism during the buyout boom for causing a number of conflicts of interests among banks. But no one in the market seems overly concerned about that today, as they are happy to have more capital available after the historic credit crunch of 2008 and 2009. "It is suddenly the new reality for these deals. You have to do it," said one banker advising on a staple-financed deal. "It is on smaller deals than the last time, so a little more responsible. Still, we never learn."

BusinessWeek:

• The Best B-Schools vs. the Recession.

CNBC:

• Time's Running Out to Own Apple(AAPL). If you don’t own Apple yet, Cramer said Thursday, you might want to buy it now.

IBD:

• Web Outfit Takes Lead As A Bazaar For Photo Memories. And that's fine with e-commerce photo outfit Shutterfly (SFLY), which provides 4x6 prints directly to consumers or through Target (TGT) stores.

NY Times:

• Market Defies Fear of Real Estate Bubble in China. Everyone agrees China is in the middle of a spectacular real estate boom. The question is whether it is in the middle of a rapidly growing real estate bubble. When other recent booms collapsed — in the United States, for instance — they depressed entire economies. In China’s case, a bursting bubble could affect much of the world.
• A.I.G., Greece, Who's Next? The big banks claim that derivatives are used to hedge risk, not for excessive speculation. The best way to monitor that claim is to execute the transactions on fully regulated exchanges, pass rules and laws to ensure stability, and appoint and empower regulators with independence and good judgment to enforce compliance. Without effective reform, the derivative-driven financial crisis in the United States that exploded in 2008, and the Greek debt crisis, circa 2010, will be mere way stations on the road to greater calamities.

CNNMoney:

• World's Most Admired Companies.

US News & World Report:

• The Obama Health Reform Bill's Dishonesty on Cost. Any bill that counts 10 years of taxes but only six years of spending as a way to bring down the deficit is dishonest. Hopefully enough congressional Democrats will vote against this and start the process over again, in a more fiscally responsible way. As Ryan said to the president, "[W]e are all representatives of the American people. We all do town hall meetings. We all talk to our constituents. And I've got to tell you, the American people are engaged. And if you think they want a government takeover of healthcare, I would respectfully submit you're not listening to them."

Rasmussen Report:

• 23% Favor Government with More Services, Higher Taxes. Just 23% of U.S. voters say they prefer a more active government with more services and higher taxes over one with fewer services and lower taxes, according to a new Rasmussen Reports national telephone survey. This finding has remained fairly consistent since regular tracking on this question began in November 2006. Two-thirds (66%) of voters prefer a government with fewer services and lower taxes.

Politico:

• House Passes Jobs Bill. The House narrowly passed a $15 billion jobs bill on Thursday, but only after Democrats beat back surprisingly vocal opposition from their conservative and liberal flanks. The bill, which has a series of tax credits aimed at job creation, passed 217-201, narrowly avoiding an embarrassing loss for Democrats on a top electoral priority. Because the House made a small change to the bill, it still has to make one brief stop in the Senate before it heads to the president’s desk to be signed into law.
• Delahunt to Retire. Massachusetts Democratic Rep. Bill Delahunt will announce his retirement Friday, the seven-term congressman told the Boston Globe in an exclusive interview published Thursday evening. In his interview with the Globe, Delahunt denied that any political calculations figured into his decision.
• Hoyer: Separate Abortion Bill Possible. House Majority Leader Steny Hoyer (D-MD) said Thursday that he is in negotiations with Rep. Bart Stupak about how to resolve a dispute over abortion language in the health care reform bill. Hoyer indicated that moving a separate bill could be a possible solution to what is quickly becoming a major sticking point—and potential roadblock—in getting a finished product to President Barack Obama's desk. But while Hoyer proposed that an additional bill could be a viable route forward, the feasibility of that option remains in serious question. As recently as Tuesday, Senate Majority Whip Dick Durbin (D-Ill.) said that "there is no conversation" about a "clean-up" bill in the Senate to resolve Stupak's qualms. Asked whether abortion language is the major sticking point in moving forward to a final bill, Hoyer ducked the question.

Orange County Register:

• Screw the Public. What Do They Know Anyway? The headline on the e-mail I get daily from TNR put it more succinctly and reflects the elitist mindset of those who call themselves liberals or progressives these days: “Americans Aren’t Enthused About Obama’s Agenda. Screw ‘em.” They toned it down in the headline they actually put on the article(link), but not much. It’s an acknowledgment that a solid majority of Americans oppose ObamaCare, whether the House version, the Senate version, or the 11-page outline the White House put forward. But what do the poor rubes know? We wise elite rulers know what is good for them much more than they do. So we’re going to give it to them good and hard. William Galston doesn’t even resort to the ruse that polls show the public supports the most significant pieces of ObamaCare but for some unaccountable reason doesn’t support the whole. I suspect that’s for the very sound reason that most people know, based on a general understanding of the way Congress works, that there are all kinds of hidden payoffs, controls and expenses secreted away in the “c0mprehensive” bill, as there are. So we have Obama and the House leaders doing the full-court press, buying off reluctant moderate Democrats and apparently willing to sacrifice their majority to get this supposedly historic health-care bill done, even if it has to be on a completely party-line vote. The notion that a reordering of one-sixth of the economy should command a stronger consensus than a single party that includes members who have been bludgeoned and bribed into going along, in the face of solid opposition from the public, doesn’t seem to register at all. We’ve wanted this pig since Teddy Roosevelt’s day, and this looks like our last best chance, so break out the bulldozers. Breathtaking.

USA Today:

• Senate Reins in Finance Reform, Works on Compromise. The Senate is scaling back President Obama's plans to reform the financial system, enraging critics who wanted to see the government do a better job protecting consumers and preventing banks from growing too big to fail. "It's unconscionable," says Lynn Turner, a former Securities and Exchange Commission official. "Instead of 'We the People' it's become 'I the Bank.' " Early indications are that the Senate version will:
• World's Cheapest EV: Tata Nano Electrifies Geneva Show. The world's cheapest car, transformed into the world's cheapest electric car, went on display at the Geneva Motor Show.

Financial Times:

• Lloyd's of London Hits at 'Difficult' India. India is among the most protectionist countries in the insurance industry in the fast-growing Asian region, the chairman of Lloyd’s of London said, in a forthright criticism of the country’s regulatory system. India, which imposes a 26 per cent ownership limit on foreign investors in insurance companies, is reviewing raising this to 49 per cent but legislation has become bogged down in parliament.India is “the one place I would complain about. India is a very, very difficult market”, Lord Levene said in an interview on Thursday. “It’s one of the few places in the world where I blame regulation [for keeping foreign insurance companies out].” Like many other industries, India’s insurance sector is mired in red tape relating to foreign-ownership restrictions. Overseas companies complain these are onerous, but domestic operators view them as necessary to allow them to get a foothold in their respective industries.
• End this 'inflation fundamentalism'. What happens in Greece will not stay in Greece. Even though the country accounts for only 0.5 per cent of the world’s economy, the crash of that profligate nation will have global consequences. The financial irradiation from Greece may be the biggest threat so far to the euro and, indeed, to the European project. Too much spending, too little tax-collecting and book-cooking are at the core of Greece’s troubles. But this is not the entire story: Spain and Ireland are in trouble even though their public debt as a percentage of gross domestic product is much smaller than that of Germany. Italy, also in the financial markets’ crosshairs, has high public debt but a lower deficit than the eurozone’s average. Good fiscal management did not inoculate Spain against mass unemployment. At the root of these countries’ problems is the fact that their prices and wages have risen much faster than those of Germany and other eurozone members. This loss of competitiveness can no longer be compensated for by currency devaluation. Property bubbles in Ireland and Spain contributed to the troubles. Wage pressure and rigid labour laws across most of these countries did not help either. Since abandoning the euro looks, at least for now, unthinkable, these countries risk years of wage and budget cuts with anaemic growth, high unemployment and deflation.
• Pandit Blames Trades for Citi's(C) Woes. Vikram Pandit, chief executive of Citigroup, yesterday blamed short selling rather than any weakness for the bank's near-collapse in 2008 and thanked taxpayers for its government bail-out. His comments, made in testimony to the Congressional Oversight Panel, will be disputed by some analysts who identified fundamental problems with Citi's balance sheet. However, they come as hedge funds that typically engage in short selling are facing fresh anger from governments in Europe for their trades in the euro and in credit default swaps. "There were a number of instances post the Lehman Brothers' collapse . . . where the markets were not really functioning in a rational way - they were frozen," Mr Pandit said. "There are ways that fear overtakes it and particularly that's the tool that short sellers need to make money."

TimesOnline:

• Greece Attracts Strong Demand for Bond Issue. One day after announcing a new wave of austerity measures, Greece has moved to tap international capital markets with the issue of about €5 billion (£4.5 billion) through a syndicated 10-year bond issue that is already oversubscribed. The new bond issue received a positive market response in what is seen as a first test since the €4.8 billion-worth of austerity measures announced on Wedbnesday, equivalent to 2 per cent of gross domestic product, to help to cut Greece’s huge budget deficit and restore fiscal order. Greece's Public Debt Management Agency (PDMA) said that the new 10-year bond was oversubscribed within a couple of hours of the book opening, with about €11 billion in offers received. The five banks acting as lead managers for the sale, which is due to be priced later, are Barclays Capital, HSBC, Nomura, National Bank of Greece and Piraeus Bank.

BBC:

• Baltic Sea Ice Traps Passenger and Cargo Ships. A number of ships, including ferries with more than 1,000 passengers on board, have become stuck in ice in the Baltic Sea, officials say. The ferries are stranded in the waters between Stockholm and the Aland Islands, while cargo boats are stuck in the Bay of Bothnia.

Evening Recommendations
Citigroup:

• Reiterated Buy on (GPS), raised estimates, target $25.
• Reiterated Buy on (GOOG), target $640. We believe the recent 12% pullback in GOOG shares creates a good buying opportunity. We see material 15% upside to GOOG shares based on four key updates to our long thesis. Our $640 target is based on 20x our '11 eps of $31.86. Update #1: We believe Google's four recently introduced paid search ad products(sitelinks, product advertising, local/map advertising and comparison ads) not only reflect continued and necessary innovation at Google but also provide further evidence of search's growth runway and the potential for paid click growth reacceleration - a key investor focus - as well as further monetization growth. Update #2: Display advertising has become a major priority for Google over the past year, and we believe market characteristics(a highly fragmented, inefficiently served $20B+ global market) and GOOG's positioning(1MM+ websites content network) create a large opportunity. We est. $1B - $2B in '11 gross network display ad rev for GOOG. Update #3: YouTube continues to grow at a remarkably robust rate, despite its size. With over 480MM worldwide unique users, YT is still growing its visitors, page views, and streams at consistent 30%+ levels. And YT's monetization continues to ramp as well, with increased ad coverage(54% of top 100 videos) and ad frequency, in addition to new ad formats. We see the potential for $1B in '11 gross YouTube revenue for Google. Update #4: Adjusting for $24B in GOOG cash & mkt. sec., we calculate GOOG's p/e to be 17x, approx. in-line with NASDAQ's forward multiple. Given GOOG's growth outlook, competitive moats, biz model & management strength, we view this relative valuation as attractive.
• Reiterated Buy on (URBN), target $42.
• Reiterated Buy on (GLW), target $24.
• Reiterated Buy on (CSGS), target $25.
• Reiterated Buy on (MRVL), raised estimates, target $25.
  

Night Trading

• Asian indices are +.25% to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 102.0 -6.0 basis points.
• S&P 500 futures +.17%
• NASDAQ 100 futures +.07%

Morning Preview

• BNO Breaking Global News of Note
• Google Top Stories
• Bloomberg Breaking News
• Yahoo Most Popular Business Stories
• MarketWatch News Viewer
• Asian Financial News
• European Financial News
• Latin American Financial News
• MarketWatch Pre-Market Commentary
• U.S. Equity Preview
• TradeTheNews Morning Report(9:30 am EST)
• Briefing.com In Play
• SeekingAlpha Market Currents
  
• Briefing.com Bond Ticker
• CNN US AM Market Call
• NASDAQ 100 Pre-Market Indicator/Heat Map
• Pre-Market Stock Quote/Chart
• WSJ International Market Performance
• Commodities Futures
  
• IBD New America
• Economic Preview/Calendar
  
• Earnings Calendar
• Conference Calendar
• Who's Speaking?
• Upgrades/Downgrades
• Politico Headlines
• Rasmussen Reports Polling

Earnings of Note
Company/Estimate

• None of note

Economic Releases
8:30 am EST

• The Change in Non-Farm Payrolls for February is estimated at -68K versus -20K in January.
• The Unemployment Rate for February is estimated to rise to 9.8% versus 9.7% in January.
• Average Hourly Earnings for February are estimated to rise +.2% versus a +.2% gain in January.

3:00 pm EST

• Consumer Credit for January is estimated at -$4.5B versus -$1.7B in December.

Upcoming Splits

• (FPIC) 3-for-2
  

Other Potential Market Movers

• The (MATK) investor day, (GAS) analyst luncheon and the Brean Murray Resources/Infra Conference could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and financial stocks in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.