Stocks Lower into Final Hour on More Shorting, Profit-taking, Rising Energy Prices

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Medical longs, Retail longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is mildly negative as the advance/decline line is slightly lower, most sectors are declining and volume is heavy. Investor anxiety is about average. Today’s overall market action is neutral. The VIX is rising 8.06% and is very high at 43.27. The ISE Sentiment Index is above average at 180.0 and the total put/call is below average at .69. Finally, the NYSE Arms has been running around average most of the day, hitting 1.47 at its intraday peak, and is currently 1.39. The Euro Financial Sector Credit Default Swap Index is plunging 9.6% today to 170.0 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is falling 4.95% to 226.36 basis points. This index is still below its Dec. 5^th record high of 285.99. The TED spread is falling 5.0% to 104 basis points. The TED spread is now down 359 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is down 2.32% at 63.25 basis points. The Libor-OIS spread is falling 6.04% to 100.0 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 8 basis points to 1.33%, which is down 131 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 .19%, which is down 2 basis points today. It is a huge positive to see most gauges of credit market angst down significantly today. As well, despite the profit-taking in financials, the broad market is holding up very well considering recent gains. Today’s action, as a whole, appears to be a healthy consolidation of recent gains before another surge higher. On the negative side, the market is extended short-term and gauges of short-term investor angst are relatively low. Nikkei futures indicate a -25 open in Japan and DAX futures indicate a -1 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on declining credit market angst, less economic fear and bargain-hunting.

Today's Headlines

Bloomberg:

- UBS AG led a decline in the cost of protecting European bank bonds from default after Switzerland’s biggest lender offered to buy back 1 billion euros ($1.3 billion) of its subordinated debt to boost capital. Credit-default swaps on the Zurich-based bank’s junior bonds dropped 56.5 basis points to 365, according to CMA Datavision prices at 4:45 p.m. in London. The Markit iTraxx Financial index tied to the subordinated debt of 25 banks and insurers fell 36 to 360, JPMorgan Chase & Co. prices show. “As events in 2008 have shown, certain peers of UBS were able to raise capital faster and with greater flexibility in their choice of instruments than UBS due to the availability of existing authorized capital,” the UBS statement said. The bank’s plan triggered a decline in the cost of credit- default swaps on Credit Suisse Group Inc.’s junior debt, which fell 35.5 to 300, CMA prices show. The Markit iTraxx Financial index of credit-default swaps on senior financial company debt declined 13 basis points to 173, JPMorgan prices show. Contracts on UniCredit SpA, Italy’s second biggest bank, dropped 29 basis points to 176, CMA prices show. Frankfurt-based Commerzbank AG decreased 20 to 135, Banco Santander SA slid 18 to 136 and BNP Paribas SA fell 14 to 108.5.

- U.S. mortgage rates may fall to the lowest since World War II on the Federal Reserve’s plan to buy up to $300 billion of Treasuries and increase purchases of mortgage-backed bonds. Rates for 30-year fixed home loans dropped to 4.98 percent this week, Freddie Mac said today. They may reach 4.5 percent as the Fed’s purchases progress, said Mike Larson, real estate analyst at Weiss Research in Jupiter, Florida. “It’s a big bullet the Fed’s firing here,” he said. “The Fed is kind of going all in.”

- The biggest bankruptcy in history might have been avoided if Wall Street had been prevented from practicing one of its darkest arts. As Lehman Brothers Holdings Inc. struggled to survive last year, as many as 32.8 million shares in the company were sold and not delivered to buyers on time as of Sept. 11, according to data compiled by the Securities and Exchange Commission and Bloomberg. That was a more than 57-fold increase over the prior year’s peak of 567,518 failed trades on July 30. The SEC has linked such so-called fails-to-deliver to naked short selling, a strategy that can be used to manipulate markets. A fail-to-deliver is a trade that doesn’t settle within three days. “We had another word for this in Brooklyn,” said Harvey Pitt, a former SEC chairman. “The word was ‘fraud.’”

- The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars fell by the most since Jan. 13 after the Federal Reserve said it will start buying Treasuries. The rate dropped six basis points to 1.23 percent, its seventh decline, according to the British Bankers’ Association. The Libor-OIS spread, a gauge of bank reluctance to lend, fell seven basis points to 100 basis points. “We would expect money-market pressures to ease going forward,” said Matteo Regesta, an interest-rate strategist in London at BNP Paribas SA, France’s biggest bank. “After the Bank of England started quantitative easing, the pace of descent of Libor increased.”

- Retail sales of prescription drugs rose the slowest in the U.S. in at least 47 years, as cheaper pills and the recession cut spending. Sales for 2008 grew 1.3 percent to $291 billion, said IMS Health Inc., which compiled the data, in a statement today.

- The Standard & Poor’s 500 Index’s 17 percent ascent from March 9 through yesterday exceeded any advance by the main benchmark for American equities over a seven-day period since 1939.

- Commodities surged, led by precious metals and energy, on speculation that the Federal Reserve’s steps to revive the U.S. economy will spur demand for raw materials as a hedge against inflation. Silver headed for the biggest gain since 1979. Gold jumped the most since September, and crude oil topped $52 a barrel. Every commodity in the Reuters/Jefferies CRB Index of 19 prices climbed, while the dollar tumbled.

- General Electric Co.(GE) said its GE Capital finance unit won’t need more outside funding and at worst will break even under scenarios the Federal Reserve is using to test banks during a global recession and credit crunch. GE made the forecast at a meeting today in New York where Chief Financial Officer Keith Sherin and other executives are trying to allay investors’ concerns with the most detail yet about the unit’s funding, holdings, reserves and potential writedowns and losses. The unit’s businesses include credit cards, real estate, plane leasing and corporate lending. “We’re running GE Capital to be safe and secure in this environment,” Sherin told the audience, adding that GE is “committed” to having a finance business. “We have enough capital to be able to weather a very adverse set of cases.”

- Congressional Democrats are growing increasingly nervous about the ability of Treasury Secretary Timothy Geithner and the Obama administration’s economic team to manage the crisis and effectively convey a coherent policy. On the same day that President Barack Obama expressed “complete confidence” in Geithner, some Democratic lawmakers said the administration’s handling of the bonuses paid by American International Group Inc. was the latest in a series of missteps that have plagued Geithner and other top officials since the presidential inauguration. “The economic team has got to get its act together,” said Senator Ron Wyden, an Oregon Democrat. “I want the team to begin to get to dealing with these issues in a coordinated way.”

Wall Street Journal:

- Some of the most vocal critics of American International Group(AIG) Inc.'s bonus payments are also the biggest recipients of campaign contributions from the company, including President Barack Obama and Senate Banking Chairman Christopher Dodd. Last year, as both men were running for president, each raised $104,000 from AIG employees. Mr. Dodd, a Connecticut Democrat, is the top all-time beneficiary of AIG contributions, with a total of $280,000 in donations from the company's employees and fund-raising arm since 1990, according to campaign-finance data collected by the nonpartisan Center for Responsive Politics. Messrs. Obama and Dodd are among the top Democrats who have taken donations from AIG but now are criticizing the company. Another one, Sen. Charles Schumer of New York, threatened this week to increase taxes on the AIG bonuses if they aren't returned. Mr. Schumer has accepted $112,000 in donations from AIG's employees and its political action committee, making him the second-largest recipient among active lawmakers since 1990. That could prove awkward to the White House and Congress as they now move to crack down on the firm -- particularly for Mr. Dodd, who faces re-election next year. For much of his career, he has been close to the financial-services industry and has been a leading recipient of contributions from the sector. When Mr. Dodd was raising funds from AIG, his donor list included some executives from the company's financial-products division that created the instruments that brought billions of dollars in losses to the company and led to its collapse.

NY Times:

- Aiming to outdo Amazon.com(AMZN) and recapture the crown for the most digital titles in an e-book library, Sony is announcing Thursday a deal with Google(GOOG) to make a half million copyright-free books available for its Reader device, a rival to the Amazon Kindle.

- Boutique investment firms and top hedge funds are slowly lapping up the cream of global banking talent as the financial crisis forces banks to cut staff and limit the pay of their top risk-takers, Reuters says. From Singapore to New York, leading traders and sales chiefs are making the switch as government pressure piles on Wall Street and European banks to cut multimillion-dollar bonuses. ‘‘The firms that still have a lot of assets under management, the hedge funds that have not been hit by redemptions, they are still picking up some of the money-makers from the big banks,’’ Pernille Storm at Hudson, an executive search firm in Singapore, told Reuters.

LA Times:

- Imports into the Los Angeles and Long Beach ports plunged even deeper into a recessionary hole in February, hitting lows not seen since 1997. With exports also sharply lower, the sluggish traffic at the nation's biggest cargo container complex is yet another symptom of the broad malaise that continues to grip world economies. In Southern California, the trade gateway supports more than 280,000 workers, and its slowdown is being felt across the region. But early signals suggest that the declines might be bottoming out.

Washington Times:

- As he empathized with recession-weary Americans, President Obama arranged in the days just before he took office to secure a $500,000 advance for a children's book project, a disclosure report shows. The terms of the book deal were disclosed in a Senate financial disclosure report filed Tuesday. Analysts say there don't appear to be any rules that would bar such transactions after a president takes office, but it's unclear whether an incoming or sitting president has ever signed a book deal upon entering the White House.

TheStar.com:

- Warren Buffett tarnished as Main Street oracle.

Detroit Free Press:

- The Obama administration announced today a $5 billion financing plan to aid struggling auto suppliers, the first move by the president toward a broader rescue of the U.S. auto industry.

Reuters:
- Citigroup Inc (C) said on Thursday it may conduct a reverse stock split as part of an exchange offer that could give U.S. taxpayers a 36 percent stake in the bank.

- Package delivery giant and U.S. economic bellwether FedEx Corp said on Thursday it was taking market share despite a recession that drove its profit down 75 percent, and its shares jumped. "If this is what FedEx can do in really tough times, imagine what they can do when things bounce back," said Sandeep Kar, a transportation analyst at consulting company Frost & Sullivan. "They are going to emerge as a lean and mean company that will experience rapid growth." "This is a good stock to get into," he added. FedEx shares rose more than 5 percent in early trading.

Handelsblatt:

- Pfizer Inc.(PFE) may acquire companies and licenses to expand in the market for generic drugs, citing David Simmons, president of the company’s established products unit.

Trend-Tendances:

- European Central Bank governing council member Guy Quaden said the bank could cut its benchmark interest rate further. “Inflation has rapidly diminished and today I’m hearing more often talk about the possibility of deflation that we need to eliminate,” Quaden said.

The Australian:

- George Soros is having a very good crisis. Other investors are wilting, political power structures are being upended and market economists are scrambling to fashion new theories, but the world’s most famous speculator is having a belated heyday. At 68 Soros had just predicted a global financial collapse which did not happen, just as he had done a decade earlier; his pet theory of market behavior, which he calls "reflexivity", had been largely ignored; and his political donations had bought him little sway in Washington. Yet today, he says, all those strands seem to have come together – "the American election, the financial crisis, the theory of reflexivity, so it is actually a very stimulating period". In August 2007, with the first symptoms of the credit crunch on the horizon, Soros came out of semi-retirement to reassume control of his Quantum investment fund, astutely repositioning it for the tsunami about to hit. By year’s end Quantum was up almost 32 per cent for 2007, netting Soros profits of $US2.9 billion at a time when other financiers were struggling to break even. His fortune was estimated at $US11 billion by Forbes in September 2008 and it has grown even larger amid the spreading financial carnage.

Bear Radar

Style Underperformer:
Large-cap Value (-1.35%)

Sector Underperformers:
Banks (-6.54%), I-Banks (-5.37%) and Medical Equipment (-3.92%)

Stocks Falling on Unusual Volume:
MANT, PRGS, BK, PLCE, SOHU, NITE, CAKE, AIPC, CBRL, WTNY, ARE, CLC

Stocks With Unusual Put Option Activity:
1) DNR 2) UPL 3) CF 4) IDEV 5) COCO

Bull Radar

Style Outperformer:
Mid-cap Growth (+.40%)

Sector Outperformers:
Oil Service (+6.17%), Steel (+5.84%) and Energy (+3.64%)

Stocks Rising on Unusual Volume:
CLF, ORCL, CMC, GDP, DNR, NBR, SU, SNCR, MRX, NBTB, BT, BUSE, GHDX, PHI, WDR, APA, CTAS, SSRI, SCHS, GOLD, GHDX, YHOO, PTEN, KLAC, PAAS, ENER, FOSL, RGLD, SPWRA, CEDC, JRCC, TRLG, BUSE, BCH, MRX, CGV, BKS, IHS, SOR, X, WBK, FDX and BVN

Stocks With Unusual Call Option Activity:
1) AUO 2) ETFC 3) DB 4) AIG 5) ORCL

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Thursday Watch

Late-Night Headlines
Bloomberg:

- The cost of protecting Asia-Pacific bonds from default fell after the Federal Reserve unexpectedly announced plans to buy $1 trillion of bonds in an effort to lower borrowing costs and spur the economy. The Markit iTraxx Australia index of credit-default swaps fell 15 basis points to 375 as of 10:38 a.m. in Sydney, Citigroup Inc. data show. The Markit iTraxx Japan index fell 10 basis points to 475 at 9:55 a.m. in Tokyo, Barclays Capital prices show. The Japanese benchmark has fallen from a record 565 basis points on March 12, according to CMA DataVision.

- Oracle Corp.(ORCL), the world’s second- largest software maker, reported third-quarter profit that topped analysts’ estimates after support contracts helped make up for slowing orders. The company also announced its first dividend, sending the shares up 7.3 percent in late trading. Excluding some costs, profit rose to 35 cents in the period ended Feb. 28, Oracle said today in a statement. That compared with a 32-cent average estimate in a Bloomberg survey of analysts.

- The outrage expressed by President Barack Obama and Democrats in Congress over $165 million in bonuses paid to American International Group Inc. may be undercut by their tacit approval of the payouts only a month ago. The $787 billion economic stimulus bill approved by Congress Feb. 13 and signed into law by Obama three days later contains language that effectively authorizes bonus arrangements at companies receiving taxpayer bailouts as long as they were in place before Feb. 11. The provision, on page 404 of the 407-page law, carves out those arrangements from new restrictions on pay at bailed-out companies that took effect with Obama’s signature. Now Obama and many of the same lawmakers who voted for the law, such as New York Senator Charles Schumer and Banking Committee Chairman Chris Dodd, are demanding AIG employees surrender their bonuses. Dodd told CNN today he put the provision in the final version of the stimulus measure at the insistence of the administration, which was worried about lawsuits if existing compensation contracts were revoked. The provision has proven awkward for Democrats who have led expressions of outrage in Congress this week, because most of them voted for the stimulus last month. No House Republicans and only three Senate Republicans voted for the stimulus measure. “The fact is that the bill the president signed, which protected the AIG bonuses and others, was written behind closed doors by Democratic leaders of the House and Senate,” Iowa Republican Senator Charles Grassley said in a statement today. “There was no transparency, so the only way the public will ever know who added the language to protect bailout company bonuses is if someone from the small group of Democrats in the room says so,” Grassley said.

- Investors pulled out a total of $25 billion from hedge funds in February, the seventh consecutive month of redemptions, as stocks worldwide tumbled amid signs a global recession is deepening, an industry report shows. Total hedge-fund assets stood at $1.36 trillion at the end of February, down about $600 billion from their peak in June 2008, according to a monthly asset flow report by Eurekahedge Pte. In January, final net withdrawals totaled $95 billion, according to the Singapore-based research firm.

- China Huiyuan Juice Group Ltd., fell by a record 52 percent in Hong Kong trading after Chinese regulators blocked Coca-Cola Co.’s $2.3 billion takeover bid for the country’s biggest domestic juicemaker.

- Goldman Sachs Group Inc.(GS), the largest U.S. securities firm to convert to a bank, closed above $100 in New York trading for the first time since Oct. 24 as investors gained confidence the company will become profitable. The shares rose $6.26, or 6.3 percent, to $105.25 in New York Stock Exchange composite trading, bringing the increase to 25 percent this year. Goldman Sachs, led by Chief Executive Officer Lloyd Blankfein, was the world’s biggest and most-profitable securities firm until it converted to a bank holding company following the bankruptcy of Lehman Brothers Holdings Inc. in September. The New York-based company also received $10 billion from the U.S. government in October.

- Nike Inc.(NKE), the world’s largest athletic-shoe maker, said third-quarter profit fell as sales declined for the first time in more than seven years. Sales dropped 2 percent to $4.4 billion, the Beaverton, Oregon-based company said today in a statement. Futures orders dropped 1 percent in the U.S., 25 percent in Nike’s Europe, Middle East and Africa region, and 1 percent in Asia Pacific.

- European Union leaders are likely to decline to pump more money into the stricken economy at a two-day summit starting today, bucking evidence of a deepening worldwide recession. The bloc’s 27 chiefs gathering in Brussels are set to stand by a planned 400 billion-euro ($525 billion) stimulus package while haggling over which infrastructure projects are eligible for the final 5 billion euros. “Significant additional fiscal stimulus does not seem to be on the cards in Europe,” said Nick Kounis, chief European economist at Fortis Bank in Amsterdam. “Not many countries actually have much further room.”

- China is tightening controls on foreign news organizations in the country by restricting the work of Chinese news assistants, backsliding on a pledge to allow greater media freedom, Human Rights Watch said. Under a code of conduct introduced last month, assistants of foreign correspondents in China are barred from “independent reporting” and required to “propagate positive information,” the New York-based group reported.

Wall Street Journal:

- More financial companies that are being propped up with federal money are facing political heat over bonus payments to executives. Fannie Mae is due to pay retention bonuses of between $470,000 and $611,000 this year to some executives, despite enormous losses at the government-backed mortgage company. Fannie's main rival, Freddie Mac, also plans to pay such bonuses but hasn't yet provided details.

- Iconic American companies - ranging from the brick-and-mortar to the Internet-based - are paying more attention to their mobile offerings, often partnering with start-ups to reach on-the-go customers. “We want to move with this fast-moving tide,” said Douglas Brown, senior vice president of mobile product development at Bank of America Corp., which now has 2.3 million customers doing their banking via mobile devices. Brown joined other executives in a panel discussion Wednesday about “mobilizing business” at the Dow Jones Wireless Innovations 2009 conference in Redwood City, Calif.

- Priceline.com Inc.(PCLN) is expected to announce Thursday that it will launch a price guarantee on airline ticket purchases and package bookings made through June 1, similar to programs announced recently by other online travel agencies. The "Pricedrop Protection" program promises to automatically reimburse travelers if they book an airline ticket or package on priceline.com, and then someone else books the same ticket or package at a lower price.

- How Hedge Funds Siphoned AIG Bailout Cash. Hedge fund manager Patrick Morris of Hagen Capital explains to Dow Jones Newswires’ Simon Constable how money to fund the beleaguered insurance giant found its way to unregulated money managers. (video)

Barron’s:

- A More Bullish Picture Emerges. The technicals are pointing in a positive direction, both for the short and long term.

CNBC.com:
- Is Fed Getting Hold on Crisis? The Federal Reserve surprised Wall Street Wednesday and said it will buy long-term Treasury bonds for the first time in four decades in an effort to revive the recession-hit economy. The move sent 30-year mortgage rates to around their lowest levels on record. Now investors are wondering if Fed Chairman Ben Bernanke had this bazooka ready to fire when he sat down with 60 Minutes on Sunday. At the time he said, “I do think that we will get (the economy) stabilized, and we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it will pick up steam over time."

NY Times:

- The Federal Reserve sharply stepped up its efforts to bolster the economy on Wednesday, announcing that it would pump an extra $1 trillion into the financial system by purchasing Treasury bonds and mortgage securities.

Slate:

- The Real AIG Scandal by Eliot Spitzer. It’s not the bonuses. It’s that AIG’s counterparties are getting paid back in full. Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars? Why did Goldman(GS) have to get back 100 cents on the dollar? Didn't we already give Goldman a $25 billion capital infusion, and aren't they sitting on more than $100 billion in cash? Haven't we been told recently that they are beginning to come back to fiscal stability? If that is so, couldn't they have accepted a discount, and couldn't they have agreed to certain conditions before the AIG dollars—that is, our dollars—flowed? The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation.

Dow Jones:

- Citigroup Inc.(C) plans to seek shareholder approval fro 40 billion new shares to help cover employee compensation in addition to the bank’s capital restructuring, citing two people familiar with the matter. Morgan Stanley(MS) may also seek shareholder approval to authorize more shares to pay compensation.

USA Today.com:

- From Indianapolis comes the story that federal prison officials are easing restrictions on American-born Taliban soldier John Walker Lindh, moves that his attorney said Wednesday will allow Lindh to tell his story for the first time.

- Jeff Zucker, the chief executive of NBC Universal, called comedian Jon Stewart's attacks on business network CNBC "incredibly unfair." At a media conference Wednesday in New York, Zucker said the Daily Show host's recent criticisms of CNBC, its Mad Money host Jim Cramer and business media in general were "completely out of line."

- Mortgage applications jumped last week, as low interest rates fueled refinancing activity. The Mortgage Bankers Association said Wednesday its weekly application index climbed 21.2% for the week ended March 13. The index came in at 876.9, up from 723.4 a week earlier. On an unadjusted basis, the index rose 20.7% compared with the previous week, the trade group said. The average rate for traditional, 30-year fixed-rate mortgages dipped to 4.89% from 4.96% a week earlier, according to the MBA report.

CNNMoney.com:

- As part of its iPhone 3.0 presentation Tuesday, Apple (AAPL) offered some new statistics on how the iPhone App Store is growing — including its first update since Jan. 16 of the number of App Store downloads. It also introduced some features that could change the nature of the store — and not necessarily for the better. According to Greg Joswiak, VP of iPhone marketing, users have now downloaded more than 800 million applications from the store — a 60% increase in two months.

Reuters:

- Debt-free Panera Bread Co (PNRA) is in expansion mode as many of its rivals shrink and is exploring the idea of embedding its bakery-cafes in retail stores, but the company has no plans to go on a buying spree. Panera plans to open 80 to 90 restaurants this year, taking advantage of its reputation for high-end affordability and a weak economy that has created excess retail space.

- Traders betting that shares of Citigroup (C) and other beaten down financial stocks will fall are finding it extremely difficult to borrow shares needed to make that bet, market participants said on Wednesday.

- Senate Banking Committee Chairman Chris Dodd said on Wednesday he was responsible for a legislative loophole that let AIG (AIG) pay executives $165 million in bonuses, but that he acted at the behest of the Obama administration. "We wrote the language in the bill to deal with bonuses, golden parachutes, excessive compensation -- executive compensation, that was adopted unanimously by the United States Senate in the stimulus bill," Dodd, a Connecticut Democrat, told CNN.

Financial Times:
- Airlines in the Asia-Pacific region are at a “tipping point”. They are only weeks away from grounding as much as 10 per cent of their aircraft as they grapple with weak revenues, falling load factors and excess capacity. The prediction from the Centre for Asia Pacific Aviation, a consultancy, comes a day after Singapore Airlines recorded one of its worst monthly falls in passenger loads. These dropped more than 20 per cent or by nearly 300,000 passengers in February compared with the same time last year. “This region is very, very close to the tipping point, where the network carriers have to move away from taking reactionary or precautionary measures to taking fundamental actions that are different from what they have ever done before,” he said. Mr Harbison estimated that airlines in the region might ground as much as 10 per cent of their aircraft in the “coming weeks”. However, “if things don’t improve by the second half, we could be looking at a figure considerably more than that”.

- Harvey McGrath, the new chairman of Prudential, has defended the lending of shares to hedge funds by insurers, a practice that underpins short-selling and which has come under fire from some rivals. “My view, from first principles, is . . . being able to short, just as [being able to] go long, is an important part of the market’s function,” he said. His comments take place after rival Aviva said it was considering ending stock lending and had sounded out Europe’s biggest insurers about curbing the practice after blaming hedge funds for a slide in its share price.

Sueddeutsche Zeitung:

- German Finance Minister Peer Steinbrueck considers it possible that Germany’s economy may shrink more than expected this year. At present, the government expects the country’s gross domestic product to contract 2.25% in 2009.

Philstar.com:

- The Development Bank of Singapore (DBS) expects the Philippine economy to fall close to recession due to falling exports and declining remittances from overseas Filipino workers (OFWs). In its second quarter outlook, DBS retained its economic growth forecast on the Philippines of 2.5 percent, the slowest pace since the dot-com bubble burst in 2001.

The West Australian:

- Container volumes at Fremantle port fell 13% in February, prompting a warning of job losses at the harbor that services Perth. New motor vehicle imports have dropped 15% this year and steel imports are expected to decline, citing Fremantle Ports CEO Chris Leatt-Hayter.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (NKE), target $61.

- Reiterated Buy on (ORCL), target $21.

Night Trading
Asian Indices are unch. to +1.25% on average.
S&P 500 futures -.58%.
NASDAQ 100 futures -.49%.

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Earnings of Note
Company/EPS Estimate
- (PLCE)/.69

- (FDX)/.46

- (BKS)/1.48

- (ROST)/.76

- (DFS)/-.02

- (PALM)/-.57

Economic Releases

8:30 am EST

- Initial Jobless Claims for last week are estimated to rise to 655K versus 654K the prior week.

- Continuing Claims are estimated to rise to 5323K versus 5317K prior.

10:00 am EST

- Leading Indicators for February are estimated to fall .6% versus a .4% rise in January.

- Philly Fed for March is estimated to rise to -39.0 versus -41.3 in February.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Cole Testifies on Bank Regulation, weekly EIA natural gas inventory report, Cowen Healthcare Conference, GE Capital Investor Meeting, Jeffries Global Clean Tech, UBS Specialty Chemicals Conference and the (HRS) Analyst Meeting could also impact trading today.

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