Today's Headlines

Bloomberg:
- Billionaire financier Wilbur Ross Jr. plans to seek about $4 billion from investors including Arab sovereign wealth funds to buy US depositary banks.
- Monsanto Co.(MON) jumped 6%, the highest since its October 2000 IPO after Goldman Sachs(GS) raised their 2008-2009 earnings estimates and lifted their price target to $140. The company also announced a new three-year share repurchase program.
- The Federal Reserve said economic growth has slowed in nine of its 12 districts since February.
- Jack Welch, who handpicked Jeffrey Immelt to succeed him as CEO at General Electric(GE), said his protégé “has a credibility issue” following the company’s surprise first-quarter profit shortfall.
- Confidence in the global economy improved for the first time in five months in April after the US Fed cut interest rates to avert a recession, a survey of Bloomberg users on five continents showed.
- Bush, Democrats Sell Fear Itself on US Economy. The economy is to the Great Depression what an April drizzle is to Hurricane Katrina.
- Banks worldwide are demanding 60% more in collateral from investors such as hedge funds to cut the risk of derivatives trades going bad, the Intl. Swaps and Derivatives Assoc. said.
- The risk of US companies defaulting fell, according to traders of credit default swaps. Contracts on the Markit CDX North America Investment Grade Index of 125 companies in the US and Canada dropped 2 basis points.
- Crude oil and gas rose to records after the EIA reported gasoline supplies dropped on a another plunge in refinery utilization.

Wall Street Journal:
- US airlines – abuzz over the blockbuster merger deal between Delta Air(DAL) and Northwest Air(NWA) – are already focusing on the next potential pairing as the fragmented industry struggles to cope with a harsh operating environment.
- NY Times Co.(NYT) said it expects its flagship newspaper will resort to newsroom layoffs as buyouts offered to trim the paper’s ranks haven’t lured enough volunteers.
- President Bush will propose stopping growth in US greenhouse-gas emissions by 2025 and curb increases in output from power stations within 10-15 years.
- With small-business customers finding it harder to finance high-tech purchases, Microsoft(MSFT) plans to increase the amount it lends them for purchases, by as much as 60%.
- Airline Mergers Make Sense, Anderson, Steenland Say.

NY Times:
- US States Boost Aid to Avoid Home Foreclosures.
- Kenneth G. Langone, a billionaire financier and a founder of Home Depot(HD), is giving another $100 million donation to NY University Medical Center, matching the one that he made anonymously in 1999.

NY Post:
- Bad blood could be stirring between JPMorgan(JPM) CEO Jamie Dimon and Ken Griffin, the Wall Street wunderkind who’s beefing up his buzz-gathering hedge fund.

USA Today:
- Barack Obama often boasts he is “the only candidate who isn’t taking a dime from Washington lobbyists,” yet his fundraising team includes 38 members of law firms that were paid $138 million last year to lobby the federal government, records show.

Newsweek:
- Free Trade Not Behind Job Losses, Samuelson Writes.

FINalternatives:
- Global hedge funds assets reached $2.65 trillion at the beginning of 2008, with over 390 firms in the Billion-Dollar Club.

Daily Telegraph:
- Silvio Berlusconi, who won national elections for prime minister this week, will form an alliance with French President Nicolas Sarkozy against the European Central Bank, which he blames for the euro’s strength. “A very strong euro is hurting Italy’s economy,” Berlusconi said. “I will discuss intervening with the ECB with Sarkozy.” Bernard Connolly, global strategist at Banque AIG, said Spain could join a French-Italian alliance “before too long.”

iHNed.cz:
- Czech T-Mobile may offer Apple’s(AAPL) iPhone by Christmas.

Al-Hayat:
- The value of shares on the Iraqi stock market increased 10.5% to $1.8 billion last year, citing the head of the exchange. The number of shares traded increased to 158 billion in 2007 from 58 billion the year before, citing stock market CEO Taha Ahmed Abdul-Salam.

al-Bayan:
- Persian Gulf states need to invest $375 billion on telecom infrastructure over the next 10 years to maintain competitiveness, citing a telecom study.

Bear Radar

Style Underperformer:

Large-cap Value +1.66%

Sector Underperformers:

HMOs (-.74%), Retail (-.38%) and Drugs (+.28%)

Stocks Falling on Unusual Volume:

MBT, FTE, EWBC, SWY, HCSG and STX

Stocks With Unusual Put Option Activity:

1) MCO 2) RWT 3) NOK 4) NSC 5) MDTL

CPI at Expectations, Housing Starts Drop Again, Industrial Production Surges

- The Consumer Price Index for March rose .3% versus estimates of a .3% gain and unch. in February.

- The CPI Ex Food & Energy for March rose .2% versus estimates of a .2% gain and unch. in February.

- Housing Starts for March fell to 947K versus estimates of 1010K and 1075K prior.

- Building Permits for March fell to 927K versus estimates of 970K and 984K prior.

- Industrial Production for March rose .3% versus estimates of a .1% decline and a downwardly revised .7% decline in February.

- Capacity Utilization for March rose to 80.5% versus estimates of 80.3% and a downwardly revised 80.3% in February.

BOTTOM LINE: US consumer prices met economists’ expectations in March, Bloomberg reported. Core prices rose 2.4% year-over-year in March versus a 2.3% gain in February. Energy prices rose 1.9%, the most since November, versus a .5% decline the prior month. New vehicle costs fell .1% and clothing costs declined 1.3%. Food prices rose .2% versus a .4% rise the prior month. The cost of medical care rose .1% for the month. The 10-year TIPS spread, a good gauge of inflation expectations, is falling 2 basis points to 2.35% and is down from 2.68% one month ago. I continue to believe inflation fears have already peaked for the year and gauges will show a meaningful deceleration before year-end.

Housing starts in the US dropped more than twice as much as forecast in March to a 17-year low, Bloomberg reported. Work began on 947,000 homes at an annual rate, down 11.9% from February and the fewest since March 1991. Residential building has subtracted from economic growth since the first three months of 2006, culminating in a 25% decline in 2007 that was the largest in 28 years. MBA Mortgage Applications rose 2.5% this week and continue to trend higher from February lows. According to BankRate.com, the average 30-year fixed rate mortgage is currently 5.73%, down from 6.12% in early March and down from 6.42% in June of last year, which was the highest since April 2002. In May of 2000, the average 30-year fixed rate mortgage was 8.38%. The Homebuyer Affordability Index is at the best level since April 2003. Yesterday, the NAHB reported that its Future Sales gauge rose to 30, the highest since August of last year and up from a record low of 24 in November of last year. New home construction will remain muted over the intermediate-term as homebuilders continue to work down inventories.

Industrial Production in the US unexpectedly rose the most since November last month, helped by an increase in demand for business equipment, Bloomberg reported. Excluding autos, factory output surged .4% during the month. Autos and parts production dropped 5.4% in March versus a 1.3% decline in February. General Motors(GM) has idled or partially closed 27 of its 71 North American plants due to the American Axle strike. Industrial Production continues trending at levels not normally associated with economic contraction and should improve upon the resolution of the American Axle strike.

Bull Radar

Style Outperformer:

Small-cap Growth (+2.35%)

Sector Outperformers:

Steel (+4.76%), Semis (+4.43%) and Road & Rail (+3.74%)

Stocks Rising on Unusual Volume:

DIOD, VSEA, WFC, MICC, BCS, PT, PZE, SNP, HBAN, FTBK, MOH, POZN, FEED, APWR, FCTR, ASML, LUFK, BOKF, ADTN, GLAD, ATPG, OTEX, PNFP, HOGS, NITE, TTES, GTLS, PWRD, AMCN, SBP, EXM, EDU, RTP, VCI and AGU

Stocks With Unusual Call Option Activity:

1) AKS 2) UTX 3) POZN 4) SIGM 5) SINA

Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance
Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
Movers & Shakers
Upgrades/Downgrades
In Play
Exchange Volume vs. Average
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Intraday Chart/Quote
Dow Jones Hedge Fund Indexes

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Japan’s two biggest brokerages said the US dollar will rebound against the euro and yen by year-end as economic conditions in Europe and Japan deteriorate and US interest-rate cuts near an end. The European Central Bank will be forced to lower borrowing costs in the second half as growth in the region slows, according to Daiwa Securities SMBC Co. Yen buying isn’t “sustainable” because the Japanese economy will cool and interest rates abroad are more attractive, said Nomura Securities. The dollar will gain 8% to 110 yen this year and 9% to $1.45 per euro, said Takahide Nagasaki, senior currency stategist at the unit of Daiwa Securities Group.
- Intel Corp.(INTC) posted first-quarter profit that met analysts’ estimates and forecast sales that may top projections as demand holds up in the face of an economic slowdown in the US, sending the shares up 8%.
- Stacy Smith, CFO of Intel Corp.(INTC), sees core business strengthening in 2008. (video)
- Credit-default swaps worldwide expanded to cover $62.2 trillion debt in 2007 as investors rushed to protect against losses triggered by the collapse of the US subprime mortgage market.
- The cost to protect US corporate bonds from default fell to the lowest in a week amid optimism that banks and securities firms may have seen the worst of the global credit crisis. Contracts on the Markit CDX North America Investment Grade Index of 125 companies in the US and Canada The cost to protect Australian corporate bonds from default decreased credit default swaps show. The Markit iTraxx Australia Series 9 Index fell 9 basis points to 131.5 basis points. dropped 0.5 basis points to 121.5 basis points.

Wall Street Journal:
- Last year, hedge-fund manager John Paulson pocketed billions by betting the housing market would collapse, but in the Hamptons he’s just listed his three-acre retreat for $19.5 million, more than 50% above what he paid for it two years ago. The founder of Paulson & Co., managing roughly $32 billion, recently bought a 10.4-acre lakefront compound less than a mile away for $41.3 million. Last year, Mr. Paulson made as much as $3 billion to $4 billion for himself – thought to be a record one-year payday on Wall Street. This year the former Bear Stearns(BSC) investment banker bet against the financial sector and profited from weakening among banks, including Bear.
- Some of the Middle East’s biggest and flushest investors see today’s financial turmoil as a buying opportunity.

CNBC.com:
- Republican presidential hopeful John McCain on Tuesday called for a summer gas tax holiday for Americans wincing at high pump prices as part of a wide-ranging plan to help the ailing US economy.

BusinessWeek.com:
- China’s three sovereign wealth funds – China Investment Corp., National Social Security Fund and China-Africa Development Fund – are likely to outsource a combined $320 billion to foreign asset managers over the course of the next three years, according to a report by Z-Ben Advisors.

Forbes.com:
- The World’s Billionaire Women.

Portfolio.com:
- The 73 Biggest Brains in Business.

USA Today.com:
- Survey: Online banking satisfaction up.
- Ford(F) to build 30% more of its Focus small cars this year.
- Save it? Spend it? Pay debts? Our plans for tax rebate vary.
- Men arm themselves with anti-aging weapons.

Reuters:
- Deutsche Bank AG, Germany’s biggest lender, sold about $5 billion of loans financing leveraged buyouts to two private equity firms. The bank is likely to sell a similar amount in Europe. Deutsche Bank sold the loans at about 90 cents on the dollar.
- Critics blasted a Treasury Department call for the $1.8 trillion hedge fund industry to better police itself, saying voluntary guidelines did little to protect investors and regulate the pools of capital.
- Real estate agents are beginning to see signs of life among people looking for homes to buy around the United States. It’s too early to talk of a trend, but lower house prices and mortgage rates are bringing buyers out of hibernation.
- Britain’s prime minister Gordon Brown on Tuesday called on OPEC to boost production to counter rapidly rising prices. Demand in the US may be losing steam. US crude oil imports fell in February to the lowest level in a year. They declined by 486,000 barrels per day, or 4.9%, from the month before to 9.514 million bpd, the EIA said.

Financial Times:
- General Electric(GE) plans to invest up to $2 billion in acquisitions and other deals in China over the next three years as part of a strategy to double its revenues in the country.
- Merrill Lynch(MER) is in “preliminary” talks with Singapore’s Temasek that could result in the US bank becoming the latest Wall Street titan to receive a major cash injection from a sovereign wealth fund.

TimesOnline:
- Britain’s first hydrogen fuel station will open tomorrow in the first stage of a technology revolution offering drivers the prospect of pollution-free motoring.

International Herald Tribune:
- Hedge fund professionals saw their pay climb 50% in 2007 despite the pain from the credit crunch and the increase in market volatility, a report from Alpha Magazine showed on Monday. The survey of more than 800 people at nearly 600 firms found the chief executives of single-manager fund firms took home average compensation of $3.8 million last year. “Some managers have profited enormously from the collapse of the US subprime mortgage market,” the magazine said.

Late Buy/Sell Recommendations
Citigroup:
- Maintained Buy on (INTC), target $26. Reported revenues above consensus, EPS inline. Guided revenue above, EPS above. 2Q08 gross margin guidance well above consensus. 2008 gross margin maintained at 57% versus consensus of 56%. Inventories -2.9%(normal seasonal inventory increase is 6%-8%). We find “little to shake a stick at” in Intel’s earnings. Most surprising is Intel’s gross margin guidance. We are impressed by Intel’s inventory management. Intel’s revenue guidance, at the low-end of seasonality but above consensus is “Goldilocks” like, assuaging concerns about the end-environment dramatically worsening.
- Reiterated Buy on (POZN), target raised to $19.

Piper Jaffray:
- Rated (ACTL) Buy, target $20.

Night Trading
Asian Indices are +.50% to +1.25% on average.
S&P 500 futures +.54%.
NASDAQ 100 futures +1.22%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (KO)/.63
- (ABT)/.62
- (PJC)/.16
- (WWW)/.43
- (BLK)/2.00
- (JPM)/.68
- (ITW)/.76
- (STJ)/.51
- (WFC)/.57
- (GILD)/.50
- (ALTR)/.26
- (IBM)/1.45
- (SLM)/.40
- (ISIL)/.30
- (LEG)/.24
- (AMR)/-1.27
- (TMK)/1.43
- (KMP)/.52
- (JCI)/.47
- (EBAY)/.39
- (VMI)/1.00

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Consumer Price Index for March is estimated to rise .3% versus unch. in February.
- The CPI Ex Food & Energy for March is estimated to rise .2% versus unch. in February.
- Housing Starts for March are estimated to fall to 1010K versus 1065K in February.
- Building Permits for March are estimated to fall to 970K versus 984K in February.

9:15 am EST
- Industrial Production for March is estimated to fall .1% versus a .5% decline in February.
- Capacity Utilization for March is estimated to fall to 80.3% versus 80.4% in February.

10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 1,800,000 barrels versus a -3,148,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,800,000 barrels versus a -3,442,000 barrel decline the prior week. Distillate supplies are expected to fall by -1,650,000 barrels versus a -3,693,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise by .73% versus a .67% rise the prior week.

2:00 pm EST
- Fed’s Beige Book

Other Potential Market Movers
- The Fed’s Yellen speaking, Fed’s Plosser speaking, Fed’s Mishkin speaking, weekly MBA Mortgage Applications report and SunTrust Robinson Humphrey Institutional Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and commodity stocks in the region. I expect US equities to open modestly higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the day.