Today's Headlines

Bloomberg:

- Dennis Blair, the director of U.S. National Intelligence, said it will be “difficult” to persuade the Iranian government to give up developing nuclear weapons if it decides to build an atomic bomb. Many within the Iranian leadership see nuclear weapons as important to national security and foreign policy objectives, Blair said in a report submitted to the Senate Armed Services Committee yesterday in Washington.

- China’s textile exports slumped 20.6% to $7.29 billion in the first two months of the year from a year earlier and clothing exports dropped 11% to $14.6 billion, the Customs Bureau said. Shipments of mechanical and electrical products dropped 21.8% to $90 billion and exports of “high-tech” goods, which overlap with electrical exports, declined 24.6% to $43.8 billion.

- Greenwich, Connecticut, home sales dropped 77 percent in February, the most on record, as Wall Street firms cut jobs and buyers retreated from multimillion- dollar purchases, Prudential Connecticut Realty said.

- Mortgage applications in the U.S. increased last week, led by a rebound in refinancing as borrowing costs dropped. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan rose 11 percent to 723.4 in the week ended March 6, from 649.7 the prior week. The group’s refinancing gauge jumped 13 percent and its purchase index gained 7.1 percent. The average rate on a 30-year fixed-rate loan slid to 4.96 percent from 5.14 percent the prior week, the report showed. It reached a record-low 4.89 percent in early January.

- The cost to protect against a default by banks including Citigroup Inc. and Bank of America Corp. fell for a second day as the stock-market rally prompted traders to pare bets that had pushed the contracts to records. Credit-default swaps on New York-based Citigroup fell 35 basis points to 535 basis points, according to broker Phoenix Partners Group. Contracts on Charlotte, North Carolina-based Bank of America fell 45 to 295. Contracts tied to Wells Fargo & Co. of San Francisco declined 41 to 230, Phoenix and CMA DataVision prices show. Contracts on the Markit CDX North America Investment-Grade index of 125 companies in the U.S. and Canada declined 5 basis points to 236.5 basis points as of 11:04 a.m. in New York, Phoenix prices show. In London, the Markit iTraxx Financial index of 25 European financial companies fell eight basis points to 193 basis points, according to JPMorgan Chase & Co. The index is still trading wider than the broader iTraxx Europe index of 125 companies with investment-grade ratings. The iTraxx Europe declined 10 basis points to 192.5 basis points, JPMorgan prices show.

- Corn fell for the first time in four sessions and soybeans erased an earlier gain after the U.S. Department of Agriculture cut its forecast for global demand and said inventories will be bigger than expected a month ago. World corn reserves before this year’s harvest in the Northern Hemisphere will be 144.62 million metric tons, up 5.8 percent from 136.66 million estimated in February and higher than the 129.96 million held a year earlier, the USDA said in a report. Global soybean inventories on Sept. 30 will be 49.95 million tons, up from 49.87 million forecast in February, as global consumption drops 1.7 percent this year, the USDA said.

- German manufacturing orders collapsed in January as the global recession smothered exports. Orders plunged 38 percent from a year earlier, the biggest drop since data for a reunified Germany started in 1991, the Economy Ministry in Berlin said today. From December they fell 8 percent, four times as much as economists expected and extending their worst decline on record.

Wall Street Journal:

- Sports sponsorships by investment banks are the latest victim of the financial downturn, even in Asia, as banks are beginning to find the brand benefits associated with such events costly.

- Toyota Motor Corp. said hybrid sales under its namesake and Lexus brands have topped one million in the U.S., hitting the mark in less than nine years as consumers gravitated to the more fuel-efficient vehicles.

MarketWatch:
- An unexpected rise in petroleum supplies weighed on drilling and oil company shares on Wednesday as the sector fell back into the red after big gains in the previous session. Crude inventories rose by 700,000 million barrels, while analysts had expected a decline of 1 million barrels.

NY Times:

- Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens. The conditions are necessary to prevent Wall Street executives from paying lavish bonuses and buying corporate jets, some experts say, but others say the conditions go beyond protecting taxpayers and border on social engineering.

CNNMoney.com:

- Worldwide smartphone sales grew 3.7% on the year to 38.1 million units in the fourth quarter 2008, research firm Gartner said Wednesday. Research In Motion (RIMM), the maker of Blackberry smartphones, increased its market share to 19.5% from 10.9%, as its sales grew 85% to 7.4 million units. Apple's (AAPL) market share increased to 10.7% from 5.2%, as its sales more than doubled, to 4.1 million units from 1.9 million.

Detroit Free Press:

- Greektown Casino increased its share of Detroit's gaming market in February -- as the three casinos reported that revenues were up more than 9% from January. "We are attracting folks that play at other properties ... it says that players are interested in what we have here, and folks are playing more with us than they had been," said Amanda Totaro, an executive with the Fine Point Group, a Las Vegas consultant working with Greektown.

PCMagazine:

- Is your second-generation iPod shuffle getting a bit too bulky? Not chatty enough?Not to worry. Apple(AAPL) on Wednesday unveiled a super-slim, 4GB iPod shuffle that holds up to 1,000 songs and includes a speech function that will read your song choices aloud. The revamped shuffle comes in at 1.8 inches tall and 0.3 inches thick, nearly half the size of the previous model, Apple said. All the controls are housed in the earphone cord. Can't remember the name of a song? Press a button and the VoiceOver feature will speak the names of song titles, artists, and playlist names. The option currently supports 14 languages, including French, Mandarin Chinese, and Swedish.

Reuters:
- Apple will take third-quarter delivery of newly developed 10-inch touchscreens from Taiwan, a source said on Wednesday, amid talk the U.S. firm is developing a touchscreen PC. Taiwan touchscreen specialist Wintek already makes small screens for Apple iPhones, and has received orders for the larger ones that are roughly the same size as those used in mini PCs, said the source close to the Taiwan firm.

- U.S. lawmakers unveiled a proposal on Wednesday to allow government approval of cheaper generic copies of biotechnology medicines that often cost tens of thousands of dollars per year. Democratic Rep. Henry Waxman and co-authors of the legislation said biotech drugs were the fastest-growing and most expensive components of the nation's prescription drug bill, and generic copies would save money for patients, employers, insurers and the federal government. Waxman's measure would give brand-name companies five years of market exclusivity for original products, and three years for modifications of existing products in some cases. The period could be extended by up to one year for pediatric studies or new uses, according to a summary of the bill.

- JPMorgan Chase & Co (JPM) Chief Executive Jamie Dimon said he sees "modest signs" of an economic recovery and endorsed a plan to create a U.S. systemic risk regulator. Dimon, speaking at a U.S. Chamber of Commerce economic conference, also said mark-to-market accounting may have been applied "to a ridiculous point."

- Bank of America Corp (BAC) has put a private bank it inherited from Merrill Lynch & Co on the block, and the largest U.S. bank may try to sell other assets as well. But unlike rival Citigroup Inc (C), which is planning a radical overhaul, Bank of America may not need capital so badly that it has to swallow hard and sell key assets it would rather keep, industry experts said.

- Top officials from Intel (INTC), Advanced Micro Devices (AMD) and other chipmakers met with lawmakers on Wednesday to argue against taxing corporations on profits made overseas and to lobby for more visas for skilled workers. President Barack Obama has proposed changing laws that allow U.S. firms to defer taxes on income earned overseas until the money is actually repatriated. The deferral was allowed since most countries do not tax overseas profits. "If you want to decrease our competitiveness, ... then raising our tax rate is absolutely the right thing to do," Intel Chairman Craig Barrett told reporters after visiting Capitol Hill.

- U.S. money market fund assets rose by $10.7 billion to $3.835 trillion in the latest week, the Money Fund report said on Wednesday.

- Some U.S. firms are not exercising enough judgment when applying mark-to-market accounting standards, a board member of the Financial Accounting Standards Board said on Wednesday. Lawrence Smith also said the accounting standards setter will "in the real short term" issue guidance on mark-to-market, or fair value, accounting that will address whether a market is active or inactive and whether a transaction is distressed.

International Herald Tribune:

- The hard-hit hedge fund industry is expected to shrink back to 2005 levels of about $1 trillion this year as cash-needy investors, rocked by the Bernard Madoff scandal and further performance losses, get a chance to exit. There is little relief in sight for funds as U.S. institutional investors pull out cash to meet commitments to private equity, while portfolios that locked up investor money last year will shortly see disillusioned investors leave. "I think we'll have two quarters of significant redemptions," said Chris Manser, the global head of funds of hedge funds at AXA Investment Managers. "Because of Madoff and very difficult performance, a lot of funds will be receiving high levels of redemptions."

Handelsblatt:

- RWE AG, Daimler AG and an alliance of more than twenty European carmakers and utilities want to fix a common standard in order to begin building a service network for electric cars. The companies want to reach an agreement on plug sockets, filling stations and other fixtures next month so that electric cars can be charged up anywhere.

Globe and Mail:

- Buried deep in the Water Quality Investment Act of 2009 - a proposed piece of U.S. legislation that would grant billions to state and local governments - Buy American is alive and well. The bill, which would finance more than $15-billion (U.S.) worth of water and sewage projects over the next five years, bars the use of all foreign-made iron, steel and other manufactured goods on such projects. "Overnight, it's going to cause huge damage to a lot of Canadian companies, including our own," said John Hayward, president of Hayward Gordon Ltd., a small Halton Hills, Ont.-based pump maker. "It's creating a lot of panic."

Al-Seyassah:

- OPEC is likely to cut output at its March 15 meeting to boost oil prices, citing Emad al-Ateeqi, a member of Kuwait’s Supreme Petroleum Council.

Bear Radar

Style Underperformer:
Large-cap Value (-.31%)

Sector Underperformers:
Oil Tankers (-3.40%), Insurance (-3.0%) and HMOs (-2.59%)

Stocks Falling on Unusual Volume:
EBS, CAH, MBT, ABT, HES, CHTT, PCLN, SPWRA, ATHN, UTHR, GENZ, ESRX, NTES, SAM and MCK

Stocks With Unusual Put Option Activity:
1) EXC 2) BDK 3) SPWRA 4) XTO 5) BWA

Bull Radar

Style Outperformer:
Small-cap Growth (+1.61%)

Sector Outperformers:
Banks (+4.59%), I-Banks (+4.10%) and Computer Hardware (+3.29%)

Stocks Rising on Unusual Volume:
CS, PNC, CMA, RTP, SLF, FCX, REP, EAT, SLH, PFCB, HPT, HMY, APA, WAG, DXPE, LHCG, APEI, CMTL, ZEUS, AAON, MCHP, LOPE, GTIV, JDAS, ANEN, ASCA, BWLD, PENN, SIVB, FSYS, RATE, XSD, WPC, TGP, AKO/A, KSP, TOO, BKE, JCG, BGH and MTN

Stocks With Unusual Call Option Activity:
1) CMCSK 2) MU 3) YRCW 4) NSM 5) PRU

Links of Interest

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Wednesday Watch

Late-Night Headlines
Bloomberg:

- Jeremy Grantham, who oversees $85 billion as chief investment strategist of Grantham Mayo Van Otterloo & Co., urged investors to start moving money from cash to stocks before “rigor mortis” sets in. “Typically, those with a lot of cash will miss a very large chunk of the market recovery” because they are paralyzed by fear, Grantham wrote in a March 4 commentary posted today on the Boston-based firm’s Web site. “Remember that you will never catch the low,” wrote Grantham, one of the co-founders of GMO. He expects stocks to return 10 percent to 13 percent after inflation in the next seven years.

- Bernard Madoff, the New York money manager accused of leading the largest Ponzi scheme in U.S. history, will plead guilty later this week to 11 criminal charges, his lawyer told a federal judge. Madoff, 70, will admit he directed a fraud that prosecutors alleged began in the 1980s. By last November, Madoff told 4,800 investors their accounts held $64.8 billion, according to court papers filed in Manhattan federal court. Prosecutors will seek forfeiture from Madoff of as much as $170 billion. Madoff, free on $10 million bail, faces 150 years in prison.

- Paulson & Co., the hedge-fund firm run by billionaire John Paulson, may have made 311 million pounds ($428 million) since September by short selling Lloyds Banking Group Plc and HBOS Plc, bringing its potential profit from shorting U.K. banks to 606 million pounds. Paulson, which oversees about $30 billion, made more than $3 billion in 2007 by betting the U.S. housing market and subprime mortgages would collapse. The firm has held a short position of 1.17 percent in Barclays Plc since Oct. 30, according to regulatory filings. Shares of the third-largest U.K. bank have fallen 67 percent since that date.

- The cost of protecting Asia-Pacific bonds from default fell from records, according to traders of credit-default swaps. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 17 basis points to 433 as of 9:15 am in Hong Kong, according to ICAP Plc. The Markit iTraxx Japan index fell 15 basis points to 540 at 10:15 am in Tokyo, BNP Paribas SA prices show. The level reached a record 556 yesterday, according to CMA DataVision. The Markit iTraxx Australia index fell 30 basis points to 415 as of 12:15 pm in Sydney, Citigroup Inc. prices show.

- China, the world’s largest steel producing nation, exported 1.56 million metric tons of the metal in February, the lowest level since 2006, industry researcher Umetal Research Center said today.

- Prime Minister Vladimir Putin said Russia has enough oil and gas to meet demand for the next century as OAO Gazprom seeks to increase its market share in Europe with two new pipeline projects. “Russia has enough hydrocarbon resources to meet our own growing needs and the demand of our European consumers for at least 100 years,” Putin said after meeting with Hungarian Prime Minister Ferenc Gyurcsany in Moscow today.

- Orders for Japanese machinery fell for a fourth month in January, the longest losing streak in at least 20 years, as exports crashed and profits evaporated. Bookings, an indicator of capital investment in the next three to six months, declined 3.2 percent from December, the Cabinet Office said today in Tokyo. The median estimate of economists surveyed was for a 4.8 percent drop.

- President Barack Obama’s administration is committed to Iraq’s stability and U.S. policy hasn’t been altered by a recent spate of suicide attacks in the country, White House press secretary Robert Gibbs said. Attacks like one today that killed at least 30 people on the western outskirts of Baghdad aren’t altering Obama’s plans for withdrawal of U.S. combat forces, Gibbs said.

- Royal Dutch Shell Plc and other international oil companies may get greater access to reserves as resource-rich nations seek capital and technology for fields that have become harder to develop since crude prices slumped. “Oil prices are lower, and may continue to stay low for a period, and that will ease access to reserves,” Shell Chief Executive Officer Jeroen van der Veer told Bloomberg News in an interview in London on March 4. “It is not happening now, but it will happen.” Cost deflation will make it easier for Shell to negotiate contracts with oil service companies and suppliers, according to van der Veer. It typically takes about “12 to 18 months” for the drop in prices to take hold, he said.

- The U.S. urged China to reconsider its policies in Tibet, saying they have created tensions and had a “harmful impact” on religion and culture in the region. In a statement marking the 50th anniversary of a Tibetan uprising yesterday, the State Department said it is “deeply concerned by the human rights situation in Tibetan areas.”

- China’s exports fell 25.7 percent in February from a year earlier and imports dropped 24.1 percent, the customs bureau said in a statement on its Web site.

Wall Street Journal:

- House Energy and Commerce Chairman Henry Waxman defended proposals for a public insurance option as part of health-care reform efforts, telling an audience of doctors Tuesday that a government plan is not "socialized medicine." Waxman, D-Calif., in a speech before a national meeting of the American Medical Association, defended proposals by some congressional Democrats for the creation of a government-run health plan to compete with private insurers as part of larger health-care reforms.

- Cities, counties and states across the nation are launching home-grown economic-stimulus plans aimed at spurring local spending and keeping small businesses afloat during the recession. Some are taking the traditional route of cutting corporate taxes. Others are trying all sorts of ideas: Paying residents to shop in local stores; giving real-estate brokers bonuses for bringing tenants to empty strip malls; reducing fees on new development; even critiquing local restaurants and giving owners feedback on how best to bring in customers.

- The Senate Tuesday approved a $410 billion spending bill for 2009, handing the Democrats a legislative and fiscal victory but putting them on the defensive regarding earmarks and the deficit. The 62-35 vote on the key procedural vote, including support from eight Republicans, reflected relatively strong backing for the long-delayed bill, which funds the government for the rest of fiscal 2009, which began Oct.1. Passage came on a voice vote after a barrage of criticism that the measure was too expensive and contained billions of dollars in earmarks. This first annual spending measure of the new Democratic era showed an 8% increase over last year and reflected new priorities. On the Senate floor, Senate Minority Leader Mitch McConnell (R., Ky.) charged Tuesday that the bill showed "no recognition whatsoever of the current economic climate," and that "this bill costs far too much for a government that should be watching every dime." The vote, however, did not fall strictly along party lines. The eight Republicans who supported the bill included members of the Senate Appropriations Committee who had helped to draft it. And three Democrats -- Sens. Evan Bayh of Indiana, Russ Feingold of Wisconsin, and Claire McCaskill of Missouri -- opposed the bill as wasteful. "The bloated omnibus requires sacrifice from no one, least of all the government," Mr. Bayh wrote in the Journal on March 4, announcing his opposition. The Democratic defections were small but could signal problems for Mr. Reid as he tries to hold his troops together as Congress faces an array of complex bills. Congressional Democrats said the omnibus was important and thoughtful, but White House officials did not defend it, saying only that it was time to pass it and move on.

- Federal Reserve officials, preparing for a policy meeting next week, are considering whether to pump more money into the economy by expanding their lending and securities-purchase programs. Struck by the sharp deterioration in stock markets -- despite Tuesday's rally -- and renewed strains in credit markets, Fed officials are likely at next week's meeting to assess what success they have had with existing efforts and what more they can do to ease financial strains and prop up the economy

- Big Labor's drive to eliminate secret ballots for union elections has united American business in opposition, so labor chiefs are putting on the brass knuckles: The new strategy is to threaten companies with government retaliation if they don't stop lobbying against turning U.S. labor markets into Europe.

MarketWatch.com:
- Short interest on the New York Stock Exchange and the Nasdaq rose during the final two weeks of February, a period when stocks in some of the country's largest companies fell sharply, the two stock exchanges said Tuesday. The NYSE Group, Inc. said the number of short-selling positions not closed out -- or short interest -- rose to 14.624 billion in the two weeks ended Feb. 27, up 3% from 14.189 billion shares in the two weeks ended Feb. 13. This was the highest level since the week ended Nov. 28, the NYSE said in an update to its Web site late Tuesday. Nasdaq OMX Group Inc. said short interest rose to 7.037 billion, up about 2% from 6.893 billion in the prior two weeks.

NY Times:

- Wal-Mart Stores(WMT) is striding into the market for electronic health records, seeking to bring the technology into the mainstream for physicians in small offices, where most of America’s doctors practice medicine. The company plans to team its Sam’s Club division with Dell for computers and eClinicalWorks, a fast-growing private company, for software. Wal-Mart says its package deal of hardware, software, installation, maintenance and training will make the technology more accessible and affordable, undercutting rival health information technology suppliers by as much as half.

Politico:

- The vast new left-wing conspiracy sets its tone every morning at 8:45 a.m., when officials from more than 20 labor, environmental and other Democratic-leaning groups dial into a private conference call hosted by two left-leaning Washington organizations.

USA Today.com:

- Recession Boosts Number of Stay-at-Home Mothers.

- U.S. officials say the Taliban's new top operations officer in southern Afghanistan is a former prisoner at the Guantanamo detention center. Pentagon and CIA officials say Abdullah Ghulam Rasoul was among 13 prisoners released to the Afghan government in December 2007. He is now known as Mullah Abdullah Zakir, a name officials say is used by the Taliban leader in charge of operations against U.S. and Afghan forces in southern Afghanistan. One intelligence official told The Associated Press that Rasoul's stated mission is to counter the growing U.S. troop surge.

Reuters:

- The $173 billion government rescue of American International Group Inc (AIG) is stoking resentment among investors who see it as a backdoor taxpayer bailout of Goldman Sachs (GS) and other banks. Six months after the U.S. government stepped in save an insurance giant overwhelmed by derivative losses, AIG continues to bleed red ink. Its stock and bond holders have been crushed, but one group has suffered almost no damage: banks that bought credit protection from AIG Financial Products. Regulatory filings show that since the Federal Reserve announced its rescue of AIG on September 15, about $50 billion of government money has passed through the company to banks. "Treasury is providing a massive wealth transfer from taxpayers to Goldman Sachs and other parties, and it's something that absolutely should be investigated," said Eric Hovde, chief executive of Hovde Capital Advisors, where he manages financial services-focused hedge funds. The bailout has stirred resentment not just in the U.S. Congress but on Wall Street, where investors speculate that Goldman and its connections helped it get a better deal. "The whole point of the bailout is to save Goldman Sachs," said Christopher Whalen, head of financial advisory services for Institutional Risk Analytics. "The whole thing is so rancid and so hideous." A Goldman Sachs spokesman declined to comment on the AIG bailout or how much of the government funds it has received. Goldman and Deutsche Bank AG (DBKGn.DE) were the largest trading parties, each receiving about $6 billion, the newspaper said. Goldman has been singled out by critics who question why Chief Executive Lloyd Blankfein attended meetings that discussed a bailout of AIG. A Goldman spokesman said Blankfein, at the invitation of then-New York Fed President Tim Geithner, attended a meeting at the Fed along with co-President Jon Winkelried and a group of investment bankers to discuss a private sector solution for AIG. Then-Treasury Secretary Henry Paulson, who left Goldman in 2006 as CEO, played a lead role in the negotiations. The chairman of the Federal Reserve Bank of New York, which hosted the meeting and invited Goldman officials to attend, is former Goldman head Steve Friedman. The results, investors say, have been poor. With no end in sight for the losses, some investors argue that taxpayers would be better off letting AIG go bankrupt. "AIG should be put through bankruptcy and the federal government should stop funding of all these losses," Hovde said. "I'm opposed to seeing parties that should be taking some financial consequences walking away free and clear off the taxpayer's back."

- U.S. Treasury Secretary Timothy Geithner pledged on Tuesday to "do what is necessary" to jolt the United States out of recession but said the rest of the world should agree to act in a coordinated way. On Public Broadcasting Corp's "Charlie Rose Show," Geithner claimed that steady overseas demand for U.S. Treasury debt was a vote of confidence that the Obama administration was on the right track in countering the "deep mess" the economy is in. "This president is going to do what is necessary to get us through this. ... We're a terrifically strong country with abundant resources, and we will get through this," said Geithner, referring to President Barack Obama's commitment to end the more than year-long U.S. recession. But ahead of this weekend's Group of 20 gathering of finance chiefs near London, and a later one in April for political leaders, Geithner said the United States will push for action by others to match the aggressive U.S. approach.

- U.S. Regulators will consider reviving the "uptick" restriction on short-sellers of stocks and a top monetary official lent his support on Tuesday to modifying an accounting rule that has forced banks to take billions of dollars in writedowns. Federal Reserve Chairman Ben Bernanke said he was opposed to suspending mark-to-market accounting but said the rule tended to reinforce economic trends and improvements could be made. The prospect of the changes helped U.S. stocks to their best day in four months, cheered by Citigroup (C) saying it was profitable in the first two months of 2009.

- Lobbyists, telecommunications industry officials and others crowded into a public meeting on Tuesday to suggest how the government should dole out $7.2 billion to spur development of high-speed Internet service. The meeting at the U.S. Commerce Department marked the first step in deciding which companies will benefit from broadband funding included in the Obama administration's economic stimulus program valued at nearly $800 billion.

- Suspected drug gang hitmen dumped five severed human heads in ice coolers on a road in western Mexico on Tuesday with a message threatening rivals, a state attorney general's office said. Police patrolling a highway on the edge of the Mexican colonial city of Guadalajara found the heads inside five coolers left on the roadside, the Jalisco state attorney general's office said.

Financial Times:
- Disagreements between the European Union and the US over how to combat the global recession widened on Tuesday as EU governments made clear they had little appetite for piling up more debt to fight the collapse in output and jobs. Finance ministers from the 27-nation bloc insisted in Brussels that it was doing enough to support world demand and did not need at present to adopt another fiscal stimulus plan, as Washington is urging.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (RIG), added to Top Picks Live list, target $98.

Night Trading
Asian Indices are +1.0% to +2.75% on average.
S&P 500 futures +.29%.
NASDAQ 100 futures +.41%.

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Earnings of Note
Company/EPS Estimate
- (BKE)/.73

- (KFY)/.10

- (SPLS)/.42

- (AEO)/.19

- (NSM)/-.05

- (MW)/-.17

- (ZQK)/-.10

- (NAV)/1.51

- (TITN)/.21

Economic Releases

10:30 am EST

- Bloomberg consensus estimates call for a weekly crude oil inventory build of +250,000 barrels versus a -757,000 barrel decline the prior week. Gasoline supplies are expected to fall by -1,000,000 barrels versus a +168,000 barrel increase the prior week. Distillate inventories are estimated to rise by +200,000 barrels versus a +1,662,000 barrel gain the prior week. Finally, Refinery Utilization is expected to remain unch. versus a +1.76% increase the prior week.

2:00 pm EST

- The Monthly Budget Deficit for February is estimated at -$205.0B versus -$175.6B in January.

Upcoming Splits
- None of note

Other Potential Market Movers
- The weekly MBA mortgage applications report, (COP) analyst meeting, (PL) investor conference, (BEN) shareholders meeting, Raymond James Institutional Investors Conference, Barclays Capital Healthcare Conference, JPMorgan Aviation & Transportation Conference, UBS Engineering & Construction Conference, Bank of America Consumer Conference, Merrill Lynch Consumer Conference and the Merrill Lynch Cleantech Leaders Conference could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by financial and automaker stocks in the region. I expect US equities to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Soaring into Final Hour on Short-Covering, Lower Energy Prices, Less Financial Sector Pessimism, Diminishing Credit Market Angst

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Medical longs, Retail longs and Biotech longs. I covered all of my (IWM)/(QQQQ) hedges and some of my (EEM) short today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is rising and volume is above average. Investor anxiety is about average. Today’s overall market action is very bullish. The VIX is falling 10.06% and is very high at 44.68. The ISE Sentiment Index is slightly below average at 134.0 and the total put/call is below average at .74. Finally, the NYSE Arms has been running low most of the day, hitting .25 at its intraday trough, and is currently .53. The Euro Financial Sector Credit Default Swap Index is falling 5.20% today to 194.33 basis points. This index is down from its record high, set this morning, of 208.75. The North American Investment Grade Credit Default Swap Index is falling 3.84% to 247.34 basis points. This index is still below its Dec. 5^th record high of 285.99. The TED spread is falling 1.05% to 110 basis points. The TED spread is now down 353 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is falling 5.23% to 77.0 basis points. The Libor-OIS spread is rising 1.06% to 107.0 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 3 basis points to .88%, which is down 176 basis points since July 7th. The 10-year TIPS spread bottomed at .65% in October 1998 during the Asian financial crisis and at 1.24% in October 2001 during the technology bubble-bursting meltdown. The 3-month T-Bill is yielding .23%, which is up 3 basis points today. Comments from Citigroup, hope for a relaxation of the mark-to-market rule and the possibility of bringing back the “uptick” rule are boosting stocks substantially today. While I am happy to hear talk of bringing back the uptick rule, its positive impact on stocks will likely be minimal as long as credit default swap manipulation persists and ultrashort etfs exist. If mark-to-market is relaxed, the uptick rule returns, credit default swap manipulation ends and ultrashort etfs are banned, I would expect to see an incredibly explosive and sustained rally in US stocks. Nikkei futures indicate an +320 open in Japan and DAX futures indicate a -6 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower energy prices, declining credit market angst, technical buying, bargain-hunting and less financial sector pessimism.