Bull Radar

Style Outperformer:

• Large-Cap Value (+.06%)

Sector Outperformers:

• HMOs (+3.35%), Hospitals (+1.21%) and Telecom (+.69%)

Stocks Rising on Unusual Volume:

• LH, WBSN, STEC, CADX, IMGN, DCTH, CRN, PHG and STU
  

Stocks With Unusual Call Option Activity:

• 1) DGX 2) WY 3) SVU 4) LLY 5) MED
  

Monday Watch

Weekend Headlines
Bloomberg:

• Clinton Says He Got Wrong Advice on Derivatives. Former President Bill Clinton said his Treasury Secretaries Robert Rubin and Lawrence Summers were wrong in the advice they gave him about regulating derivatives when he was in office. "I think they were wrong and I think I was wrong to take” their advice, Clinton said on ABC’s “This Week” program. Their argument was that derivatives didn’t need transparency because they were “expensive and sophisticated and only a handful of people will buy them and they don’t need any extra protection,” Clinton said. “The flaw in that argument was that first of all, sometimes people with a lot of money make stupid decisions and make it without transparency.” “Even if less than 1 percent of the total investment community is involved in derivative exchanges, so much money was involved that if they went bad, they could affect 100 percent of the investments,” Clinton said. Summers, director of Obama’s National Economic Council, said in a Bloomberg Television interview last week that the Obama administration supports “the principles that derivatives need to be traded in the sunshine, that there needs to be centralized clearing.”
• North Korea's Kim May Visit China Soon to Seek Aid, Asahi Says. North Korean leader Kim Jong-Il may visit China later this month to seek support for his nation’s economy, the Asahi newspaper reported citing people familiar with the matter.
• South Korean Ship Likely Sunk by External Explosion. South Korea said an external explosion likely sank one of its warships close to the disputed border with North Korea last month, killing at least 38 sailors. “There is a high possibility of an external explosion, rather than an internal one,” Yoon Duk Yong, the lead investigator into the March 26 sinking, said at a briefing in Seoul today. His team is still exploring all possibilities before drawing a conclusion, he said. The sinking of the 1,200-ton patrol ship Cheonan created a “grave national security situation,” Defense Minister Kim Tae Young said at the same briefing. “We will respond in a very clear and firm manner” once South Korea determines what caused the explosion, he said. Today’s finding was the strongest indication of possible North Korean involvement in the blast off the peninsula’s west coast, which witnessed naval skirmishes between the two nations in 1999, 2002 and November last year.
• Oil Falls a Third Day on Speculation Gains Have Outpaced Demand. Crude oil fell for a third day on speculation the commodity’s gains in the past 10 weeks have outpaced a recovery in global demand. Prices are being driven by speculation and currency movements and there is no need for the Organization of Petroleum Exporting Countries to review output before the group meets in October, Qatar’s Oil Minister Abdullah bin Hamad al-Attiyah said yesterday. Oil also eased as the dollar climbed against the euro, reducing the appeal of commodities priced in the U.S. currency. “We’ve still got higher than average stockpiles in various markets, including the U.S.,” said Toby Hassall, commodity analyst at CWA Global Markets Pty in Sydney. OPEC “will want to see those stockpiles drawn down further before they consider increasing supply.” Crude oil for May delivery fell as much as $1.10, or 0.3 percent, to $82.25 a barrel, in electronic trading on the on the New York Mercantile Exchange.
• China's Rules to Curb Property 'Madness' Will Take Effect Now. China’s central bank pledged to immediately implement new lending rules to cool real-estate speculation and one of its policy advisers said the market is having its “last madness.” The central bank commented in a statement on its Web site last night. Li Daokui, a newly appointed academic adviser to the monetary policy committee, spoke in an interview broadcast by state television on April 15. Asset-price bubbles inflated by a credit boom could derail the recovery of the world’s fastest-growing major economy, which expanded 11.9 percent in the first quarter from a year earlier. China’s cabinet, the State Council, announced higher mortgage rates and down-payment ratios for second homes on April 15 after property prices jumped by a record in March. Investors “don’t realize how strong and resolute the political will is among top leaders to curb price gains,” Li said on Central Television. The market is having its “last madness” and speculation may dissipate in a year or 18 months on extra action by local authorities and an increased supply of low-price, so-called policy homes, Li said.
• Rajaratnam Sought Tips on Berkshire's Goldman Buys, U.S. Says. Galleon Group founder Raj Rajaratnam, who faces federal insider trading charges, sought to acquire secret information about Berkshire Hathaway Inc.’s(BRK/A) 2008 purchase of preferred shares in Goldman Sachs Group Inc.(GS), federal prosecutors said in a court filing.

Wall Street Journal:

• Extended Airspace Closures Will Hurt EU Recovery. The extended closure of European airspace because of a cloud of volcanic ash threatens to snuff out the region's feeble economic recovery and has prompted airlines to take unusual measures in an effort to regain some control of the situation. As aviation authorities prolonged the ban on flights into Monday, bringing the number of canceled flights to more than 63,000, hard-hit European airlines conducted test flights over the weekend to assess the safety of operating through ash and dust spewing out of an Icelandic volcano since Thursday.
• SEC Investigating Other Sourced Deals. The Securities and Exchange Commission, after having hit Goldman Sachs Group Inc. with a civil fraud charge, is investigating whether other mortgage deals arranged by some of Wall Street's biggest firms may have crossed the line into misleading investors. The SEC's case against Goldman Friday has exposed an open secret on Wall Street: As the housing market began to wobble a few years back, some big financial firms designed products aimed at allowing key clients, such as hedge funds, to bet on a sharp housing downturn.
• Mortgage Delinquencies Decline Again. In another encouraging sign for the U.S. housing market, mortgage delinquencies fell in March for the second month in a row, according to new data. The number of mortgage loans that were at least 30 days past due or in foreclosure declined 8.6% in March, according to LPS Applied Analytics, which tracks loan performance. The biggest slide came in loans that were 30 days past due. Such loans fell by a record 342,000 to roughly 1.45 million, a level not seen since spring 2008.
• Toyota Agrees to $16.4 Million Fine. Toyota Motor Corp. is expected to agree as early as Monday to pay $16.4 million to settle charges by the U.S. government without admitting that it knowingly hid evidence of defects from safety regulators, a senior U.S. Transportation Department official said Sunday night. An agreement that doesn't require Toyota to admit wrongdoing could help the company defend itself against the numerous civil lawsuits pending in U.S. courts, the official said.
• Training for Green Jobs Is The Easy Part. Joliet is discovering what cities across the U.S. have found: Declaring that a city is going to replace yesterday's lost jobs with new green ones is a lot easier than actually doing so. Cities from Tulsa to Honolulu proclaim themselves destined to become leaders in green jobs, a broad classification for work tied to renewable energy and energy efficiency that includes insulators and solar-panel installers.
• Americans Are More Skeptical of Washington Than Ever. By almost every conceivable measure, Americans are less positive and more critical of their government these days. There is a perfect storm of conditions associated with distrust of government—a dismal economy, an unhappy public, and epic discontent with Congress and elected officials. These are among the principal findings from a new series of Pew Research Center surveys.

BusinessWeek:

• China Lends Venezuela $20 Billion, Secures Oil Supply. China will lend Venezuela $20 billion and form a joint venture with a state company to pump crude oil from an Orinoco Belt block, President Hugo Chavez said as he promised to meet the Asian country’s energy needs. The financing from China is separate from a $12 billion bilateral investment fund, Chavez said, and will pay for Venezuelan development projects. Venezuela currently sends China 460,000 barrels a day of crude oil. The oil is used to repay the Asian country for $8 billion Venezuela used from the fund for infrastructure projects. “We agreed on a huge, long-term financing plan,” Chavez said on state television on April 17. “This is a larger scope, a super heavy fund. China needs energy security and we’re here to provide them with all the oil they need.”
• Oil Tumbling in Options on OPEC Quotas, U.S. Demand. OPEC violating production quotas at the same time as demand from industrialized nations stagnates is spurring bets in the oil market that the 13-month rally in crude is coming to an end. Options that profit if prices fall in the next month are 24 percent higher than wagers oil will rise. Open interest in June $50 and $60 puts to sell at those levels exceeded 129,000 contracts on April 15, dwarfing the 49,000 bets on $100 a barrel. Puts account for about 55 percent of all June options contracts compared with 51 percent a year earlier. The Organization of Petroleum Exporting Countries may be creating a glut after output jumped 5.6 percent to 29.2 million barrels a day in March from a year earlier, according to Bloomberg estimates. Shipments will rise 0.9 percent in the four weeks ending May 1, according to tanker-tracker Oil Movements. “Oil at $87 a barrel seems pretty unreasonable given the fundamentals of the market,” said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut- based procurement adviser. “Forget China and India for a minute. The U.S. remains the biggest consumer, and U.S. demand hasn’t recovered.”

IBD:

• 'No Haggle' Sales Translate To Fat Profits For Auto Superstores. Into this murky breach steps CarMax (KMX), which operates 100 used-car "superstores" in 46 markets.

NY Times:

• For Goldman(GS), A Bet's Stakes Keep Growing. Accusations that Goldman defrauded customers who bought investments tied to risky subprime mortgages have only just begun to reverberate through the financial world. The civil lawsuit that the Securities and Exchange Commission filed against Goldman on Friday seemed to confirm many Americans’ worst suspicions about Wall Street: that the game is rigged, the odds stacked in the banks’ favor. It is the first big case — but probably not the last, legal experts said — to delve into a Wall Street firm’s role in the mortgage fiasco. The S.E.C.’s action could also hit Wall Street where it really hurts: the wallet. It could prompt dozens of investor claims against Goldman and other Wall Street titans that devised and sold toxic mortgage investments. On Saturday, several European banks that lost money in the deal said they were reviewing the matter. They could try to recoup the money from Goldman. The public outcry against the bank bailouts was driven in part by suspicions that a heads-we-win, tails-you-lose ethos pervades the financial industry. To many, that Goldman and others are once again minting money — and paying big bonuses to their employees — is evidence that Wall Street got a sweet deal at taxpayers’ expense. The accusations against Goldman may only further those suspicions. “The S.E.C. suit against Goldman, if proven true, will confirm to people their suspicions about the total selfishness of these financial institutions,” said Steve Fraser, a Wall Street historian and author of “Wall Street: America’s Dream Palace.” “There’s nothing more damaging than that. This is way beyond recklessness. This is way beyond incompetence. This is cynical, selfish exploiting.” Wall Street analysts said Goldman and other banks, having navigated the financial crisis, might now face a new kind of risk: angry investors. Most major Wall Street banks also created collateralized debt obligations, which are at the heart of the Goldman case. C.D.O.’s, which are essentially bundles of securities backed by mortgages or other debt securities, turned out to be among the most toxic investments ever devised. “Any investor who bought these C.D.O.’s and lost a significant amount of money is probably looking at their investment and wanting to know: what were the details behind the sale?” said William Tanona, an analyst at Collins Stewart. “Will they contact the S.E.C. and say, ‘Here’s the transaction we participated in, and we’d love to know who is on the other side of it?’ ” The biggest victim among investors, the S.E.C. complaint said, was the Royal Bank of Scotland, which inherited a loss of $841 million after it took over the Dutch bank ABN Amro. According to a person briefed on the matter, the Royal Bank, now controlled by the British government, is studying the documents but is not ready to decide whether to try to recoup money from Goldman. The German bank IKB Deutsche Industriebank, as well as the German government, which in 2007 put up billions to prevent IKB from collapsing, still seemed to be sorting out who might have legal standing to pursue a possible claim. Goldman faces a dilemma in its response. Wall Street firms tend to settle cases like this one, but Goldman’s statement on Friday indicated it intended to dig in its heels and fight, perhaps in part to discourage suits by investors. That strategy could set it up for a long, messy and public battle. Mr. Tourre appears to be a small fish. Federal investigators may try to gain his cooperation and extend their investigation to other Goldman employees. A big question is how far up this might go. The S.E.C. said the deal in its complaint had been approved by a panel at Goldman, the Mortgage Capital Committee. “It’s typical that they’d start with someone lower down on the chain and try to exert pressure on that person,” said Bradley D. Simon of Simon & Partners, a white-collar defense lawyer in New York. “Is it really conceivable that no one else was involved in this?” As the housing market began to fracture in 2007, senior Goldman executives began overseeing the mortgage department closely, said four former Goldman Sachs employees, who spoke on the condition they not be identified because of the sensitivity of the matter. Senior executives routinely visited the unit. Among them were David A. Viniar, the chief financial officer; Gary D. Cohn, then the co-president; and Pablo Salame, a sales and trading executive, these former employees said. Even Goldman’s chief executive, Lloyd C. Blankfein, got involved. Top executives met routinely with Dan Sparks, the head of the mortgage trading unit, who retired in spring 2008. Managers instructed several traders to sell housing-related investments. Indeed, they urged Mr. Tourre and a colleague, Jonathan Egol, to place more bets against mortgage investments, the former employees said.
• Gates Says U.S. Lacks a Policy to Thwart Iran. Defense Secretary Robert M. Gates has warned in a secret three-page memorandum to top White House officials that the United States does not have an effective long-range policy for dealing with Iran’s steady progress toward nuclear capability, according to government officials familiar with the document.Several officials said the highly classified analysis, written in January to President Obama’s national security adviser, Gen. James L. Jones, came in the midst of an intensifying effort inside the Pentagon, the White House and the intelligence agencies to develop new options for Mr. Obama. They include a set of military alternatives, still under development, to be considered should diplomacy and sanctions fail to force Iran to change course.
• Top Leaders at Goldman(GS) Had a Role in Mortgages. Mr. Tourre was the only person named in the S.E.C. suit. But according to interviews with eight former Goldman employees, senior bank executives played a pivotal role in overseeing the mortgage unit just as the housing market began to go south. These people spoke on the condition that they not be named so as not to jeopardize business relationships or to anger executives at Goldman, viewed as the most powerful bank on Wall Street. According to these people, executives up to and including Lloyd C. Blankfein, the chairman and chief executive, took an active role in overseeing the mortgage unit as the tremors in the housing market began to reverberate through the nation’s economy. It was Goldman’s top leadership, these people say, that finally ended the dispute on the mortgage desk by siding with those who, like Mr. Fabrice and Mr. Egol, believed home prices would decline. By the third quarter of 2007, the mortgage unit was minting money, while Goldman’s rivals were losing big. Mr. Viniar, the chief financial officer, told analysts that the mortgage unit was posting record profits because of its short bets that mortgage investments would lose value. “Our risk bias in that market was to be short, and that net short position was profitable,” Mr. Viniar said.

CNNMoney:

• Rubini on the Middle East. He is simply known within market circles as Dr. Doom, since he precisely called the credit crisis and subsequent downturn in global financial markets. Today, Roubini is sharing the same concerns about asset bubbles as a result of continued low interest rates and the flood of capital pouring into equity markets and commodities. He is also not convinced about what many have defined as “V” shaped or sharp recovery. But in my time with the economist, who is of Iranian decent and grew up in Istanbul, I decided to link our conversation to the key issues surrounding the region - notably the durability of the dollar as a reserve currency, Gulf monetary union, oil prices and Dubai’s debt crisis. As a result of the Greek crisis, Roubini believes the dollar’s role as the world's reserve currency is not under threat. “There is no clear alternative," he said. "The Euro may not survive and the British pound is weak.” “Not survive?” I quickly responded. “It is a possibility … " he said. "You could have weaker states of the Eurozone like Portugal or Greece eventually exit the union and that will weaken the Euro.” Dollar weakness over the past year has been one contributing factor behind the rise of oil, with the region’s most precious commodity priced in the greenback. Nevertheless, the NYU economist does not feel that fundamentals are supporting the recent 18 month high of $87 a barrel. “Part of it is this wall of liquidity chasing assets because of easy money,” said Roubini. As a result he believes "oil at $60 is justified, but oil at $80 I don’t think is justified.” Roubini says Dubai sent out mixed signals by indicating initially that the state would not have a role, only to have neighboring Abu Dhabi step in on two separate occasions. Dr. Doom bluntly said that may have established the wrong precedent, "If we keep on socializing all the private losses the build up of the debt implies that you have to raise taxes, cut spending or eventually even default.”
• GE(GE): 7,000 Tax Returns, $0 U.S. Tax Bill. General Electric filed more than 7,000 income tax returns in hundreds of global jurisdictions last year, but when push came to shove, the company owed the U.S. government a whopping bill of $0. How'd it pull off that trick? By losing lots of money. GE had plenty of earnings last year -- just not in the United States. For tax purposes, the company's U.S. operations lost $408 million, while its international businesses netted a $10.8 billion profit.
• Unemployment Rises in 24 States. Nearly half of all U.S. states reported rising unemployment rates in March, the government said Friday, with rates above the national average in 11 states and the District of Columbia.

Business Insider:

• John Paulson Should Be Kicked Out Of The Securities Industry For Life.

LA Times:

• Southern California Office Market Continues to Weaken. Vacancies are increasing and rents are falling. The trend is tough for landlords but great for tenants who are looking for new space or negotiating to renew their existing leases. Overall office vacancy in Los Angeles County reached 17.6% in the first quarter, up from 14.3% a year earlier, according to Cushman & Wakefield. The average rent landlords asked for dropped to $2.60 a square foot per month from $2.82 in last year's first quarter.The office market remains traumatized by bloodletting in corporate America, industry observers said.

The Hill:

• Hedge Fund Manager in Goldman Sachs(GS) Case is Major Democratic Donor. The billionaire hedge fund manager at the center of an alleged fraud hatched at Goldman Sachs, a leading investment bank, has given tens of thousands of dollars to both parties. Campaign fundraising records show that John A. Paulson, founder and chairman of the hedge fund Paulson & Co., gave $30,400 to the Democratic Senatorial Campaign Committee in June, qualifying him as a major Democratic donor. He also gave $2,300 to Senate Majority Leader Harry Reid’s (D-Nev.) reelection campaign in February of last year and $4,800 to Senate Banking Committee Chairman Chris Dodd (D-Conn.) last April, according to records filed at the Federal Election Commission.

Forbes:

• The Danger of a Value-Added Tax. The hidden nature of the VAT means it consistently moves higher--without taxpayers' knowledge.
• Ten Technology Incubators Changing The World. Want a sneak peek of tomorrow? Check out these innovation hubs.

NY Daily News:

• Whistleblower Bradley Birkenfeld: Some U.S. Politicians Kept Off-Shore Accounts With UBS. A former banker who blew the whistle on thousands of secret bank accounts rich Americans held at Swiss giant UBS claimed Thursday some U.S. politicians also kept off-shore accounts with the bank. "We had an office in Washington that we all referred to as the PEP office - for 'Politically Exposed People,'" Bradley Birkenfeld said. He was speaking by phone - on tax day, no less - from Schuylkill County federal prison in Pennsylvania, where he is serving a 40-month sentence for his role in the tax evasion scheme. "Only top managers from the bank knew the names of the political clients," Birkenfeld said.

Accuracy in Media:

• Wall Street and the Rise of Obama. (Nov. 20, 2008) Goldman Sachs Connection This ominous future is why the role of Henry Paulson in sparking the panic should be probed. Paulson “does not act or sound much like a conservative Republican to the GOP remnant at the Treasury,” noted Robert Novak in an October 2007 column. Novak reported that Paulson had “marched to his own drummer” by naming Eric Mindich, chairman of Eton Park Capital Management, to head the Asset Managers’ Committee of the President’s Working Group on Financial Markets. “A former Goldman Sachs colleague of Paulson’s, Mindich is a top-level Democratic fundraiser,” Novak noted. “He was in Sen. John Kerry’s inner circle for the 2004 presidential campaign and backs Sen. Barack Obama for 2008.” Then, during the current crisis, Paulson appointed another former Goldman Sachs banker, Neel Kashkari, to run the new “Office of Financial Stability” and buy bad loans and distressed securities. Significantly, on September 23, Paulson’s former firm, Goldman-Sachs, received $5 billion from Warren Buffett, a major Obama financial backer and booster. Under Paulson and Kashkari, $10 billion of taxpayer money was soon extended to Goldman Sachs. Information from the Center for Responsive Politics identifies Goldman Sachs as a “strongly Democratic” firm, having contributed 73 percent of their almost $5 million in 2008 election cycle contributions to Democrats. Some liberals understand the connection between Goldman Sachs and Obama. “Obama’s number one bundler is Goldman Sachs,” notes John R. MacArthur, publisher of Harper’s Magazine, in a release from the “progressive” group calling itself the Institute for Public Accuracy. He was referring to how money from the firm is packaged for the Obama campaign. “In his book, ‘The Audacity of Hope,’ Obama talks about how much he likes investment bankers, how bright and liberal they are,” says MacArthur. Obama was clearly the firm’s favorite in the presidential race. Lynn Sweet of the Chicago Tribune recently discovered that, on May 3, 2007, Obama had attended an event at the Museum of Modern Art in Manhattan “that was not on his public schedule and is only now surfacing—a private dinner for Goldman Sachs traders with a discussion on issues moderated for the Wall Street firm by NBC’s Tom Brokaw”—the moderator of the second presidential debate. Her column noted other Obama campaign connections, including a report that Obama addressed Goldman Sachs’s annual partners meeting 2006 in Chicago.

Rasmussen Report:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 27% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-two percent (42%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -15 (see trends).
• 57% Have More Trust In Those In Congress Who Voted Against Bailouts. Government bailouts are still a sore subject with most voters. But the Political class remains supportive of efforts to have taxpayers bail out troubled and failing companies. A new Rasmussen Reports national telephone survey shows that 57% of likely U.S. voters have more confidence in the judgment of a member of Congress who voted against bailouts than in the judgment of one who voted for them. Just 21% trust the judgment of a Congress member who voted for bailouts more.

Politico:

• War of Words Over Obama's Soft Tone. “Rogue states” is being pushed aside in favor of the less confrontational “outliers.” “Islamic radicalism” is being converted to the less religiously freighted “violent extremism.” And in one of the most important speeches of his presidency, Barack Obama omitted a term that was the Bush administration’s obsession, terrorism, as part of a larger effort to de-emphasize the issue in America’s relations with Muslim states.

AP:

• Goldman Sachs(GS) Faces Questions in Europe. Goldman Sachs is facing a potential backlash in Europe over the fraud case brought against it in the United States, with Britain's Prime Minister Gordon Brown calling for authorities there to investigate and accusing the investment bank of "moral bankruptcy." Germany also said it would ask for detailed information about the case. Both governments had to bail out banks that lost hundreds of millions of dollars on investments marketed by Goldman, according to the fraud suit brought by the U.S. Securities and Exchange Commission, in Britain's case Royal Bank of Scotland through its acquisition of parts of ABN Amro. The SEC said the Royal Bank of Scotland paid Goldman $841 million to unwind ABN Amro transactions. Royal Bank of Scotland is now 84 percent owned by British taxpayers after being partly nationalized by the government. Germany's IKB Deutsche Industriebank AG, an early victim of the credit crunch, lost nearly all its $150 million investment, the SEC said. Brown on Sunday called for a full inquiry by Britain's Financial Services Authority in conjunction with the SEC. Britain would join Germany, where government officials said they would seek information about the bank's activities. Brown, currently facing a tough re-election battle, seemed additionally angry at Goldman Sachs' plan to pay 3.5 billion pounds ($5.4 billion) in bonuses as reported in British newspapers. "I am shocked at this moral bankruptcy," he said on BBC TV. "This is probably one of the worst cases that we have seen."
  

Reuters:

• PIMCO's Kashkari Says U.S. GDP Growth to Trend Down. Nominal growth of U.S. economy is likely to trend down to between 3 and 4 percent from 6-7 percent previously, an executive at fund manager PIMCO said on Monday. "We at PIMCO believe that nominal US GDP growth will trend lower to 3-4 pct from 6-7 percent previously," said Neel Kashkari, who ran the $700 billion Troubled Asset Relief Program (TARP) under former U.S. Treasury Secretary Henry Paulson. Kashkari, a Goldman Sachs alumni just like his former boss Paulson, is now head of new investment initiatives at Pacific Investment Management Co (Pimco), the world's biggest bond fund manager.

Financial Times:

• Blankfein Faces Grilling on Capitol Hill. The pressure on Goldman Sachs will intensify this month when Lloyd Blankfein, the US bank’s chief executive, faces tough questioning from a high-powered Senate panel as part of a probe of Wall Street groups. People close to the situation said Mr Blankfein would testify before the Senate’s permanent subcommittee on investigations on April 27 after months of questioning of Goldman executives by the panel’s staff, including sworn depositions about the bank’s activities leading up to the global financial meltdown. The subcommittee conducts some of the most thorough investigations in Washington and has the time and resources to use its subpoena power aggressively. Carl Levin, the Democratic senator who heads the panel, has been tight-lipped about the probe, but told reporters it had discovered levels of greed that were “frankly disgusting”. Mr Levin’s staff declined to comment on the hearing or disclose the witness list, which may include other Wall Street executives. But Mr Levin and staff have signalled interest in investment banks’ trading practices and Wall Street’s use of complex instruments. He has said the probe would examine “how securitisations and financial engineering ran wild . . . and how credit default swaps turned investing in America into gambling on the demise of one American company or another”. Next week, the panel will release details about its probe into failures at credit rating agencies.
• Best Buy(BBY) to Open Small US Mobile Stores. Best Buy, the US consumer electronics retailer, plans to open hundreds more of its new small mobile stores, as it pursues a larger share of the booming demand for smartphones and other handheld devices. Brian Dunn, chief executive, told the Financial Times that the retailer expects eventually to have “a number somewhere between here and 1,000” of Best Buy Mobile stores in shopping malls across the US, on top of the 77 it has already opened. It will add this year another 75-100 of the 1,500 sq ft locations. Mr Dunn, a company veteran who became CEO last year, said the small mall-based stores were bringing in new customers, in spite of being located within two miles of larger Best Buy stand-alone stores. “Typically this consumer is female . . . a mom with a couple of kids. These are incremental connections we are making,” he said. Mr Dunn said last summer that Best Buy could eventually take 15 per cent of the total US market for mobile phones, up from around 4 per cent currently. It has doubled its marketshare from just under 2 per cent since it launched its mobile initiative in 2008, with support from its UK ally Carphone Warehouse. The store drive reflects the extent to which mobile technology has become a vital battlefield for US electronics retailers. Best Buy is taking aim at both Walmart and Radio Shack, estimated to have around one-third and a quarter of the market respectively.
• Clinton Fears 'Regional Conflict' Without Iran Accord. Hillary Clinton, US secretary of state, has warned of the risk of regional conflict if new United Nations sanctions are not imposed on Tehran’s nuclear programme, telling the Financial Times that “ignoring the threat posed by Iran will put the world in a more precarious position within six months to a year”.Senior Pentagon officials last week said Iran could develop enough fissile material for a bomb within a year. “What’s the alternative?” she asked. “The alternative is to permit them to continue pursuing nuclear weapons, either actual production or full capacity, which will trigger an arms race among their neighbours and would put one of the most volatile regions in the world at risk and could even trigger a conflict. And I don’t believe that that’s a chance worth taking.” Barack Obama’s administration has urged Israel not to strike Iran amid fears the US could be drawn into a conflict.
• Greece's Bail-Out Only Delays the Inevitable. The European Union finally agrees a bail-out, and the much-predicted rally of Greek bonds turns into a rout. A week later, spreads on Greek bonds had reached their highest levels since the outbreak of the crisis. The financial markets have recognised that, bail-out or no bail-out, Greece is in effect broke. The bail-out prevents a default this year, but makes no difference whatsoever to the likelihood of a subsequent default. Just do the maths: Greece has a debt-to-gross domestic product ratio of 125 per cent. Greece needs to raise around €50bn ($68bn, £44bn) in finance for each of the next five years to roll over existing debt and pay interest. That adds up to approximately €250bn, or about 100 per cent of Greek annual GDP. In 2010, the Greek economy will contract, on the most credible estimates, by between 3 and 5 per cent. Inflation will fall towards zero, so nominal growth will also contract sharply. Nominal GDP will probably contract even more sharply in 2011, and will continue to contract, perhaps at a slower rate, in 2012 and the following years. The reason for the persistent contraction in nominal GDP is that Greece needs to turn a primary deficit of more than 7 per cent into a primary surplus – before interest payments – of at least 5 per cent, a turnround of more than 12 percentage points, while at the same time improving its competitiveness through wage cuts. The latter implies deflation. As the Greek economy goes through the adjustment process, the debt-to-GDP ratio will deteriorate towards 150 per cent or so. To avoid long-run insolvency, Greece will need to find a way to stabilise the debt-to-GDP ratio. This would in turn require a multi-annual deficit reduction plan and a programme of structural reforms to raise the potential growth rate. The Greek government has so far presented a one-year plan to cut the deficit from 13 per cent of GDP to about 8.5 per cent. While this sounds ambitious, it is not very credible, as it is based heavily on tax increases, with no structural reforms.

Telegraph:

• Chad Hurley: YouTube's Got TV in its Sights. Internet video chief says he wants YouTube to be watched in the same way as television, up from 15 minutes a day to an average of five hours. Such a move in watching time would have the potential to open up the global $450bn (£292bn) television advertising market to YouTube, which was bought by Google(GOOG) for $1.65bn in 2006.
• No Prospect of Any More German Rescues as Portugal Hits a Brick Wall. Portugal, not Greece, poses the greater existential threat to Europe's monetary union. Portugal did not cheat (much) and did not start as an arch-debtor. It did mishandle the run-up to EMU in the 1990s, failing to offset a fall in interest rates from 16pc to 3pc with fiscal tightening. Boom-bust ensued. But that was a long time ago. Portugal has since settled down to a decade of sobriety. The reward never came. Brussels admitted last week that Portugal's external accounts have switched from credit in the mid-1990s to a deficit of 109pc of GDP. This has been caused by the incentive structures of EMU itself. "The more broadened access to credit induced a significant reduction in the saving rate, while consumption kept growing faster than GDP. This development led to an increase in Portuguese indebtedness," it said.

TimesOnline:

• Chaotic Greece Shows How the UK Must Reform.

El Pais:

• European policy makers are endangering the single currency because their response to the Greek debt crisis is too weak and too slow, Noble Laureate Joseph Stiglitz said. The euro "risks disappearing if we don't see a wave of solidarity," Stiglitz said. "The slowness and weakness of the response calls into question the survival of the euro."
  

Globe and Mail:

• Canada's Brewing Debt Storm. For every $1 of disposable income, Canadians owe a record $1.47. How did it come to this? Canadian borrowers are fast approaching a day of reckoning. Lured by cheap money to buy up, buy in, expand and make over, families have pushed credit levels to a record high. Household debt has surged three time faster than income in recent years and now stands at a record high of more than $1-trillion. With debt levels this high, even a small hike in interest rates will be ugly for those whose incomes aren't rising fast enough to meet their day-to-day expenses. Their woes could have a snowball effect: As debt-strapped consumers pull back, their credit woes spill over into the broader economy and risk putting a damper on the recovery.

Folha de S. Paulo:

• Apple Inc.(AAPL) is considering producing its iPhone and MacBook notebook computer in Brazil in a bid to cut prices for consumer in Latin America's biggest economy.

Nikkan Kogyo:

• Fuji Heavy Industries Ltd., which makes Subaru vehicles, will spend several billion yen by July to increase U.S. production by 40%.

Nikkei:

• The International Monetary Fund will shortly upgrade its forecast for 2010 world economic growth from its January projection of 3.9%, citing an interview with Managing Director Dominique Strauss-Kahn.

China Securities Journal:

• China needs to tighten monetary policy and loosen fiscal policy, central bank advisor Li Daokui was cited as saying. Li said that M2 money supply accounts for a large portion of China's gross domestic product and will in the long term cause pressure on the economy. Traditional monetary policy tools will be sued repeatedly over the next several years to keep savings within the banking system and to prevent the formation of asset bubbles.

Weekend Recommendations
Barron's:

• Made positive comments on (BK), (STT), (GS), (CME), (MSFT), (ESRX) and (PCAR).

Citigroup:

• Reiterated Buy on (BAC), raised estimates, boosted target to $26.
• Reiterated Buy on (WMT), target $65.

Night Trading

• Asian indices are -2.25% to -1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 95.0 +5.0 basis points.
• S&P 500 futures -.35%.
• NASDAQ 100 futures -.29%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ZION)/-.92
• (HAL)/.25
• (HAS)/.15
• (LLY)/1.11
• (C)/.00
• (MTB)/1.00
• (ATHR)/.51
• (IBM)/1.93
• (LNCR)/.59
• (IEX)/.41
• (STLD)/.26
• (CCK)/.27
• (CR)/.50
• (BRO)/.31

Economic Releases
10:00 am EST

• Leading Indicators for March are estimated to rise +1.0% versus a +.1% gain in February.
  

Upcoming Splits

• (BRLI) 2-for-1
  

Other Potential Market Movers

• The Fed's Evans speaking, Fed's Duke speaking and Fed Chairman Bernanke speaking could also impact trading today.

BOTTOM LINE: Asian indices are sharply lower, weighed down by financial and commodity stocks in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the week.

Weekly Outlook

Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Calendar by TradeTheNews.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on tax hike worries, profit-taking, China bubble concerns, rising financial sector pessimism, increasing sovereign debt angst and more shorting. My intermediate-term trading indicators are giving mostly bullish signals and the Portfolio is 75% net long heading into the week.

Market Week in Review

S&P 500 1,192.13 -.19%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,192.13 -.19%
  
• DJIA 11,018.66 +.19%
  
• NASDAQ 2,481.26 +1.11%
  
• Russell 2000 714.62 +1.66%
  
• Wilshire 5000 12,318.83 +.02%
  
• Russell 1000 Growth 530.95 +.17%
  
• Russell 1000 Value 615.98 -.42%
  
• Morgan Stanley Consumer 716.77 -.31%
  
• Morgan Stanley Cyclical 935.10 +.58%
• Morgan Stanley Technology 617.88 +1.30%
  
• Transports 4,645.75 +3.06%
  
• Utilities 379.46 -1.42%
  
• MSCI Emerging Markets 42.83 -1.75%
  
• Lyxor L/S Equity Long Bias Index 1,009.40 +.41%
  
• Lyxor L/S Equity Variable Bias Index 870.15 +.45%
  
• Lyxor L/S Equity Short Bias Index 843.21 -.70%
  

Sentiment/Internals

• NYSE Cumulative A/D Line +91,474 +3.55%
  
• Bloomberg New Highs-Lows Index +1,208 +421
  
• Bloomberg Crude Oil % Bulls 44.0 +46.67%
  
• CFTC Oil Net Speculative Position +113,364 -11.53%
  
• CFTC Oil Total Open Interest 1,392,323 +3.64%
  
• Total Put/Call .85 +23.19%
  
• OEX Put/Call 1.31 +10.08%
  
• ISE Sentiment 107.0 -18.32%
  
• NYSE Arms 3.01 +267.07%
  
• Volatility(VIX) 18.36 +13.75%
  
• G7 Currency Volatility (VXY) 10.94 -1.08%
  
• Smart Money Flow Index 9,790.37 +1.73%
  
• Money Mkt Mutual Fund Assets $2.913 Trillion -1.7%
  
• AAII % Bulls 48.48 +13.11%
  
• AAII % Bears 29.70 -2.17%
  

Futures Spot Prices

• CRB Index 276.29 +.06%
  
• Crude Oil 83.06 -2.19%
  
• Reformulated Gasoline 227.60 -.64%
  
• Natural Gas 4.05 -1.0%
  
• Heating Oil 221.51 -.49%
  
• Gold 1,137.40 -2.14%
  
• Bloomberg Base Metals 234.71 +2.91%
  
• Copper 354.50 -1.76%
  
• US No. 1 Heavy Melt Scrap Steel 351.67 USD/Ton unch.
  
• China Hot Rolled Domestic Steel Sheet 4,698 Yuan/Ton +2.62%
• S&P GSCI Agriculture 309.99 +4.13%
  

Economy

• ECRI Weekly Leading Economic Index 131.20 -.46%
  
• Citi US Economic Surprise Index +28.0 -14.2 points
  
• Fed Fund Futures imply 86.0% chance of no change, 14.0% chance of 25 basis point cut on 4/28
• US Dollar Index 80.82 +.39%
  
• Yield Curve 281.0 -1.0 basis point
  
• 10-Year US Treasury Yield 3.76% -12 basis points
  
• Federal Reserve's Balance Sheet $2.322 Trillion +1.39%
  
• U.S. Sovereign Debt Credit Default Swap 36.0 -12.19%
  
• Western Europe Sovereign Debt Credit Default Swap Index 91.33 +9.27%
  
• 10-Year TIPS Spread 2.34% unch.
  
• TED Spread 15.0 unch.
  
• N. America Investment Grade Credit Default Swap Index 84.46 -1.48%
  
• Euro Financial Sector Credit Default Swap Index 78.43 -.78%
  
• Emerging Markets Credit Default Swap Index 211.33 -2.65%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 226.0 -21 basis points
  
• M1 Money Supply $1.707 Trillion -.75%
• Business Loans 614.10 +3.77%
  
• 4-Week Moving Average of Jobless Claims 457,800 +1.7%
  
• Continuing Claims Unemployment Rate 3.6% +10 basis points
  
• Average 30-Year Mortgage Rate 5.07% -14 basis points
  
• Weekly Mortgage Applications 484.60 -9.64%
  
• ABC Consumer Confidence -47 -4 points
  
• Weekly Retail Sales +3.30% -60 basis points
  
• Nationwide Gas $2.86/gallon unch.
  
• U.S. Cooling Demand Next 7 Days 36.0% below normal
• Baltic Dry Index 3,001 +2.70%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 67.50 +3.85%
  
• Rail Freight Carloads 203,549 +3.72%
  
• Iraqi 2028 Government Bonds 82.38 +.89%
  

Best Performing Style

• Small-Cap Growth +2.04%

Worst Performing Style

• Large-Cap Value -.42%

Leading Sectors

• Semis +5.09%
• Education +4.48%
• Defense +3.83%
• Disk Drives +3.79%
• Networking +3.01%

Lagging Sectors

• Agriculture -2.77%
• REITs -3.46%
• Coal -3.68%
• Steel -4.15%
• Gold -5.13%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change