Today's Headlines

Bloomberg:

• Corporate Bond Risk Falls on Greece Rescue Plan: Credit Markets. The cost to protect against default on corporate bonds fell around the world as a rescue plan to stem Greece’s budget woes eased concern of a wider debt crisis. Credit-default swaps on Greek sovereign debt tumbled 62 basis points to 364, the biggest one-day decline, according to CMA DataVision prices at 3:30 p.m. in London. The Markit iTraxx Crossover Index of swaps on 50 European companies dropped 8 basis points to 410, the lowest since March 17, JPMorgan Chase & Co. prices show. “The immediate impact is to remove the prospect of a Greek default,” said Gary Jenkins, head of credit strategy at Evolution Securities Ltd. in London. “There is still the question of whether the EU is just kicking the Greece problem down the road.” The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, declined 0.2 basis point to a mid-price of 85.2 basis points, according to Markit Group Ltd.
• Alcoa(AA) Profit May Disappoint as Analysts Cut Estimates. Alcoa Inc., the largest U.S. aluminum producer, may report first-quarter profit today that’s 47 percent lower than analysts estimated a month ago as rising costs erode the benefit of higher metal prices. The average estimate for Alcoa earnings excluding some items has dropped to about 9 cents a share in a Bloomberg survey of 17 analysts. Two top-ranked analysts also project the average estimate for first-quarter profit still may be too high. Citigroup’s Yu still maintains his “buy” rating on Alcoa shares, saying that some investor disappointment with first- quarter results may have already been incorporated into the stock with the price decline in the past three months. “Valuation is more attractive today than the $17.45 a share right before fourth-quarter earnings,” Yu wrote in his April 5 report. “Our conversations with investors suggest that many recognize consensus estimates are likely optimistic.”
• Biggest Wheat Glut in Eight Years Means Bear Market Worsening. The world will have so much wheat this year that U.S. farmers could leave every acre unplanted and still have a surplus, a sign of more losses after futures had their worst first quarter in 15 years. A 34 percent jump in the combined harvests of Australia and Russia over two years is creating the biggest wheat glut since 2002, even as American growers sow the fewest acres in 39 years and the U.S. Department of Agriculture raises its estimate of world output each month since June. Analysts surveyed by Bloomberg expect an 8.6 percent price drop by July. “It’s a mammoth surplus and we have to get rid of it before prices have any hope of rallying,” said Bill Gary, the president of Commodity Information Systems Inc. in Oklahoma City. Gary, who began trading grain in 1961, predicts $4 a bushel by August, a 17 percent decline.
• Buy Korea Puts on China Slowing, Morgan Stanley Says. Morgan Stanley is recommending investors buy bearish options on oil and copper, along with South Korean and Australian interest-rate swaps, to profit from a potential “hard landing” in China. “A hard landing -- which is a Chinese economy really, really slowing down to the equivalent of a recession -- would have major implications,” Viktor Hjort, a Hong Kong-based credit strategist, said in a phone interview. “It’s not our base scenario, but investors need to hedge their risks.” Under a hard-landing scenario, China’s economy would slow to about 5 percent growth as accelerating inflation forces the central bank to rapidly increase interest rates while non performing loans at the nation’s banks increase, he said. Chinese state and local governments are among the most leveraged to property-related borrowings and the nation will “ultimately” have to nationalize a lot of the bad loans that will arise from the end of the bubble, hedge fund manager James Chanos said last week. “Korea’s exports are highly dependent on China,” Hjort said. “Australia’s exposure is more explicitly linked to commodities.” Morgan Stanley also recommended buying out-of-the-money put options on crude oil, copper and soybeans as a slowdown would cut demand for these commodities. China comprises between 10 percent and 50 percent of global demand for these commodities, he said. “Crude oil is a cheaper hedge but copper is a more targeted China hedge,” Hjort said.
• Greek Rescue Package May Boost Global Rally, UBS Says. The European rescue plan for Greece may extend a global stock-market rally, according to David Cassidy, a Sydney-based strategist at UBS AG. “It’s certainly a big number,” said Cassidy, ranked first among Australian equity strategists in three of the past five annual fund manager surveys by BRW/East Coles. “It’s a positive for markets for the next few months.”
• Iranian Tankers Expand Oil Storage to Echo 2008 Surge. Iran, OPEC’s second-biggest crude producer, expanded the number of supertankers being used to store surplus oil, echoing a program that contributed to a tripling of freight rates two years ago. At least nine such vessels are idling in the Persian Gulf, Gulf of Oman and to the south of Egypt’s Suez Canal, according to data from the ships collected by AIS Live Ltd. Two months ago, there were three. Their depth in the water indicates they are loaded, with as many as 18 million barrels of oil being stored, almost enough to supply Europe for a day.
• Merkel 'Buckled' on Greek Aid Terms, Lawmakers Say. German government lawmakers slammed Chancellor Angela Merkel for signing up to a European Union plan that offers Greece loans at below-market rates, saying she backtracked on a demand that “subsidies” be ruled out. “Germany buckled under the pressure -- we shouldn’t kid ourselves that such loans are anything but subsidies,” Frank Schaeffler, deputy finance spokesman for Merkel’s Free Democrat junior coalition partners, said in an interview yesterday. “The loans would hurt the euro, help Greece only temporarily. We would be standing on very thin ice, legally, economically.”
• UN Climate Talks 'Fracturing' as Decision Delayed. Negotiators at United Nations climate talks put off a decision on how to treat a U.S.-brokered agreement on global warming, reducing the chances for a new plan on limiting emissions of greenhouse gasses after 2012. After three days of discussions, delegates from 175 countries left it up to Margaret Mukahanana-Sangarwe, a diplomat from Zimbabwe chairing the talks, to decide what parts of the accord signed by President Barack Obama in December 2009 in Copenhagen to include in the UN’s official negotiating text. U.S. delegation chief Jonathan Pershing said he was “upset” by tactics he labeled “completely out of line” when countries that had declared support for the Copenhagen deal joined Sudan and Saudi Arabia in seeking to sideline that accord. The dispute, said the UN diplomat leading the talks, makes it unlikely an agreement will be finished when this year’s global warming discussions conclude in December in Cancun, Mexico.
• DynCorp(DCP) to Be Acquired by Cerberus for $1.5 Billion. DynCorp International Inc., the defense contractor that’s helped train Iraqi police, agreed to be acquired by Cerberus Capital Management LP for about $1.5 billion, including the assumption of debt. Cerberus will pay $17.55 for each share, Falls Church, Virginia-based DynCorp said today in a statement. The price is 49 percent more than DynCorp’s closing share price on the New York Stock Exchange on April 9.
• Double-Dip Doesn't Figure With Inventory Rebuilding. Companies from Tiffany & Co. to Home Depot Inc. are restocking shelves in a move that will boost economic growth and may keep the recovery on track through 2010. Tiffany, based in New York, is planning for a “high single-digit percentage increase” in inventories this year as the world’s second-largest luxury jeweler retailer opens new stores, Chief Financial Officer James Fernandez told analysts March 22. Home Depot, the largest U.S. home-improvement retailer, “will be building inventory” this year in support of stronger sales, Carol Tome, chief financial officer of the Atlanta-based company, said on a Feb. 23 analysts call. “We’re moving into the restocking phase,” said David Hensley, director of global economic coordination for JPMorgan Chase & Co. in New York. “We’ll see successive additions to growth in the first quarter, second quarter and third quarter.”
• AIG(AIG) Rises on Speculation Treasury May Lower Stake. American International Group Inc. rose in New York trading on speculation the Treasury Department may lower its stake in the bailed-out insurer. AIG advanced $1.61, or 4.2 percent, to $39.75 in New York Stock Exchange composite trading at 11:24 a.m. Treasury officials are discussing ways to extricate the U.S. from its stake of almost 80 percent in AIG, the Wall Street Journal reported today, citing unidentified people familiar with the situation.

Wall Street Journal:

• A Pulse Returns to Leveraged Loan Market. Leveraged loans, a source of funding for private-equity acquisitions, are drawing investor interest again after a long period in the doldrums. In the U.S., there are signs of life in the collateralized-loan-obligation market, with the year's first deal not only refinancing an existing CLO but bringing in new money, too.
• Leveraged ETFs Are Under SEC Scrutiny.
  

CNBC:

• US Banks in Line to Deliver Strong Results.
• 'Green Shoots' and 'Animal Spirits' Signal Economic Growth.
  

NY Times:

• Tax Audits of Big Business Are Declining, Study Says. Despite the federal government’s repeated pledges to crack down on big businesses that underpay their taxes, the Internal Revenue Service has decreased in recent years the time it spends auditing the returns of the nation’s largest corporations, according to a new study. And in 2009, the government audited just one in four of the largest corporations, lower than any rate in more than 20 years, according to the analysis, released Sunday by the Transactional Records Access Clearinghouse, a nonpartisan research group affiliated with Syracuse University. Researchers said the audit data and other memos, which had both been obtained from the government under the Freedom of Information Act, suggested that a “perverse quota system” within the I.R.S. may be pressuring auditors to focus on small and medium-size businesses and give less scrutiny to the largest corporations — those with $250 million or more in assets.
• Recession Arbiters, Wary of Certifying an Upturn. For the record, this recession isn’t over yet. A committee of economists, charged with determining the official turning points in the nation’s business cycles, certifies the beginnings and ends of recessions. But this time, the committee members say, the evidence is not so easy to decipher.

NY Post:

• Apple(AAPL) Plans Launch of High-Definition 3D 'iSpecs'. Apple Inc. submitted a patent application that confirmed the computing giant is venturing into three dimensions on the small screen, it was revealed Monday. The innovative technology company from Cupertino, Calif., plans to launch a pair of glasses that will provide high-definition 3D video to users on the go. The gadget, nicknamed "iSpecs" by technology fans, will allow users to slot their Apple iPod or iPhone into it. The headset then uses special lens technology to split the picture between the eyes, allowing 3D viewing. The device is also mounted with an external camera and infrared sensor, the patent said, meaning that a live video stream of the view in front of the glasses could be automatically displayed if someone approached the wearer.

Business Insider:

• 15 Mayors Who Must Radically Cut Spending To Save Their Bankrupt Cities.
• Citi: Here's Why Stocks Are About To Blow Away Earnings Estimates AGAIN This Season.
  

NY Daily News:

• Zazi, Al Qaeda Pals Planned Rush-Hour Attack on Grand Central, Times Square Subway Stations. Chilling new details about the foiled Al Qaeda plot to blow up the city's busiest subways have emerged as a fourth suspect was quietly arrested in Pakistan, the Daily News has learned. The unidentified man, who helped plan the plot, is expected to be extradited to the U.S. to betried in Brooklyn Federal Court with Adis Medunjanin and Zarein Ahmedzay of Flushing, Queens, sources said. The cooperation of would-be lead bomber Najibullah Zazi has helped law enforcement officials piece together a fuller picture of the evil plan to kill innocent straphangers around the 9/11 anniversary last year. Zazi and his two Queens friends allegedly planned to strap explosives to their bodies and split up, heading for the Grand Central and Times Square stations - the two busiest subway stations in New York City. They would board trains on the 1, 2, 3 and 6 lines at rush hour and planned to position themselves in the middle of the packed trains to ensure the maximum carnage when they blew themselves up, sources said. During Zazi's brief visit to Queens from his home in Denver last September, he rode the subway multiple times to the Grand Central and Wall St. stations, scouting where to best spread death and mayhem, the sources said.

Washington Post:

• GAO: Postal Service Business 'Not Viable'. Happy Monday! The U.S. Postal Service's current business model "is not viable" and the mail agency should make deeper job and wage cuts, hire more part-time staff and consider outsourcing operations, according to a draft of a government audit acquired by The Federal Eye. Auditors also urge Congress to remove restrictions on the Postal Service's ability to cut Saturday mail delivery and close post offices, according to the report, which offers recommendations similar to the USPS's own proposed 10-year business plan.

FXStreet.com:

• Credit Default Swaps Threaten the System by John Mauldin.

AppleInsider:

• Number of High School Students Planning to Buy an iPhone Doubles. Interests in Apple's iPhone amongst high school teenagers is on the rise, according to a new study from investment research firm Piper Jaffray, which found that nearly twice as many students are planning to buy one of the touchscreen handsets in the next 6 months compared to last year.

Rasmussen Reports:

• Support for Repeal of Health Care Plan Up to 58%. Three weeks after Congress passed its new national health care plan, support for repeal of the measure has risen four points to 58%. That includes 50% of U.S. voters who strongly favor repeal. The latest Rasmussen Reports telephone survey of likely voters nationwide finds 38% still oppose repeal, including 32% who strongly oppose it.

Politico:

• Boehner Focused on Health Care Law. House Minority Leader John Boehner (R-Ohio) insists that repealing the health care law is his “number one priority” as Congress comes back into session this week after a two-week recess. Boehner, talking on a Tampa, Fla., radio talk show, said that Democrats are trying to “put their imprint” on the future of American governance with hefty investments in the auto industry, a major Wall Street overhaul and reform of the health care industry. “They got everything else in the entire bureaucracy that they need to control our health care system is all in place with the signing of this bill,” Boehner said on The Bud Hedinger Show. “That’s why repealing this bill has to be our number one priority.” Boehner said “we can repeal this health care bill” but it would “take the American people’s engagement in this process with us to make it happen.”

Reuters:

• Pimco's El-Erian: Greece Aid Tackles Liquidity, Not Solvency.

Financial Times:

• Business Apps Help Sales of Apple Devices. Apple’s reputation as a consumer darling is paying unexpected dividends in the corporate market. Companies are snapping up hundreds of iPads, the touch-controlled tablets Apple released this month, software vendors have told the Financial Times. And so many groups are handing iPhones to staff, analysts say the devices could catch up to Research in Motion’s BlackBerry, the business leader, in a couple of years. ChangeWave Research estimated the iPhone had taken 27 per cent of the US corporate market by February, in line with its consumer share and up from 22 per cent in November. RehabCare, a US medical services group, has more than 500 iPhones spread among its 14,000 employees, almost twice its fleet of BlackBerries. The company is set to buy another 500 iPhones and more than 6,000 iPod Touches. The group utilised an iPhone program from Salesforce.com – a software rental company – that cut admission screening times from a day or more to less than an hour, according to Jim O’Brien, Rehab tech-nology executive. Specialists in the field get instant guidance on how to treat patients. “Our therapists didn’t have e-mail,” he said. “It’s a way to finally connect to these folks.” Part of what is driving such rapid corporate adoption is the boom in applications such as those from Salesforce, which has had 200,000 downloads of its customer relations app to the iPhone and 60,000 to the BlackBerry. MeLLmo is another company offering iPhone and iPad apps. It delivers interactive statistics and other reports generated by SAP and Salesforce programs. Santiago Becerra, chief executive, said its new Roambi app would support additional “business intelligence” analytics from IBM and Microsoft. Apple has been paying closer attention to the needs of corporate technology buyers. Big business purchases rose after the July release of iPhone 3GS, which added encryption and other features. On Thursday, Apple announced version 4.0 of its iPhone operating system, which will add further functionality for corporate users. Virtualisation – particularly the remote storage of software, files and programs – has made it easier for IT departments to handle a larger variety of hardware and software. “Now you can access your information from any sort of device type,” said Raj Mallempati, a marketing executive at virtualisation company VMware. “It’s a very user-oriented way of managing, after so many years of being locked into a single Windows device.”

El Mundo:

• Venezuelan President Hugo Chavez ordered the takeover of the Uveritos pine tree forest owned by Chilean wood panels maker Masisa SA, citing comments made yesterday. Chavez said that a "transnational" company had failed to build a promised saw mill in the area.