Friday Watch

Late-Night Headlines
Bloomberg:

- Asia-Pacific bond risk declined after JPMorgan sold $3 billion in bonds and reported profit that beat analysts’ estimates, spurring confidence the worst of the global credit crunch has passed. The Markit iTraxx Japan index of credit-default swaps fell 12.5 basis points to 292.5 at 10:08 am in Tokyo, Barclays Capital data show. The iTraxx Asia index of 50 investment-grade borrowers outside Japan was 5 basis points lower at 295 at 9:10 am in Hong Kong, according to BNP Paribas SA. The Markit iTraxx Aust4alia index fell 2.5 basis points to 302.5 at 10:30 am in Sydney, according to Citigroup.

- Senate Democrats are scaling back legislation that would let bankruptcy judges alter mortgage terms because lawmakers don’t have enough votes for passage, a spokesman for Senate Majority Whip Richard Durbin said. The main “sticking point” is whether the measure, which passed the House of Representatives in March, should be limited to certain loans or a specific timeframe, Max Gleischman, a spokesman for Durbin, an Illinois Democrat, said today.

- Google Inc.’s(GOOG) YouTube reached agreements with Hollywood studios including Sony Corp., CBS Corp. and Metro-Goldwyn-Mayer Inc. to put movies and television shows on the Internet. YouTube will add two tabs to its homepage to highlight shows from sites such as Sony’s Crackle, and offer new material to subscribers who log in, the San Bruno, California-based company said today on its Web site. The accord extends efforts by Hollywood studios to offer mostly older full-length movies and television shows on advertiser-supported Web sites. Google is also separating professional clips on YouTube from home videos to charge more for ads. The site will increase its use of so-called in-stream ads that viewers must sit through, similar to a TV show. “Our initial focus is on advertising,” Google Chief Executive Officer Eric Schmidt said of the company’s plans to add content to YouTube. “We do expect over time to see micro- payments and other forms of subscription to come,” Schmidt said today on a conference call after quarterly earnings.

- Hynix Semiconductor Inc. led shares of computer-memory chipmakers higher in Asia as rising prices helped fuel expectations that the industry may be recovering from record losses. Hynix gained 9.1 percent to 14,450 won, while top memory chipmaker Samsung Electronics Co. rose 2.9 percent at 9:56 a.m. in Seoul trading. Japan’s Elpida Memory Inc. added 3.3 percent on the Tokyo Stock Exchange. In Taiwan, all five listed memory chipmakers, including Nanya Technology Corp., advanced. Prices of the benchmark dynamic random access memory, or DRAM, chips climbed 7.6 percent to $1.13 yesterday, the highest since Oct. 14, according to Dramexchange Technology Inc., operator of Asia’s biggest spot market for semiconductors. Nanya Technology, Taiwan’s second-biggest DRAM maker, said yesterday it plans to raise prices for the second time this month after industrywide production cuts helped ease a glut. The “price recovery has just started, in line with our bullish expectation,” Henry Kim, an analyst at Citigroup Inc., wrote in a note yesterday. Kim predicts spot prices of the DRAM chip will increase 50 percent in the current period.

- Crude oil fell, poised for the biggest weekly decline since February, amid forecasts the recession will curb demand at a time when U.S. inventories are already at their highest in almost 19 years. U.S. crude-oil inventories rose 5.67 million barrels to 366.7 million last week, the highest since September 1990, the Energy Department said April 15. The International Energy Agency reported April 10 that worldwide consumption will shrink by 2.8 percent in 2009 as the global economy contracts. “There’s potential for oil prices to slide off the current plateau and fall back to perhaps a number like $40 a barrel, just because inventories are at such an elevated level and may not have peaked yet,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. U.S. fuel demand in the first quarter fell to the lowest for the period in 11 years, the American Petroleum Institute said in a monthly report yesterday. Deliveries of petroleum products, a measure of consumption, averaged 19.2 million barrels a day, 3.4 percent less than during the same period in 2008, the industry-funded API said.

- Gold and silver fell to the lowest prices in a week on speculation that the pace of inflation will be slower than investors expected, eroding demand for the precious metals as a store of value. U.S. consumer prices slipped in March to the first 12-month decline since 1955, the Labor Department said yesterday. The euro declined for a third straight day against the dollar, the longest losing streak in six weeks, as industrial output fell. “Gold is showing signs of weakness amid the drop in prices of goods to consumers, indicating that inflation has yet to rear its head,” Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said in an e- mailed note. “Investor- and industrial-demand remain weak at these levels as well.” “With gold prices continuing to be capped under $915 an ounce, I would look for the market to roll over and play bear,” Ralph Preston, a commodity analyst at Heritage West Futures Inc. in San Diego, said in an e-mail. “A close under $853 an ounce projects another move down towards $800 an ounce.”

- Research In Motion Ltd.(RIMM) Co-Chief Executive Officer Mike Lazaridis plans to keep hiring to spur the flow of new BlackBerry models, signaling the phone maker is withstanding a recession that forced rivals to trim payrolls. The mobile-phone maker has more than 600 positions to fill, mostly in North America. RIM boosted its workforce by 50 percent to about 12,000 last year.

- Luxury cars in the U.S., for those who can afford them, have never been cheaper. General Motors Corp. knocked an average $6,724 off the price of Cadillacs last month, Bayerische Motoren Werke AG discounted cars by $5,234 and Daimler AG sweetened the purchase of a Mercedes-Benz by $4,697, according to Edmunds.com, a Santa Monica, California-based auto data provider. Overall, incentives on luxury cars in March jumped 45 percent from a year ago. “It’s ‘buy-low’ time, almost across the board,” said Jack Nerad, executive market analyst for Kelley Blue Book in Irvine, California, which tracks vehicle pricing. “We’re seeing brands that had not discounted as much, really doing so now.”

- President Barack Obama and Mexican president Felipe Calderon announced a new framework for the two countries to lower carbon output, promote clean energy technology and combat climate change. The agreement seeks to promote renewable energy, energy efficiency and green jobs, Obama said at a news conference with Calderon in Mexico City. The pact also aims at strengthening the reliability of cross-border electricity grids and encourages border states to cooperate on energy.

- Jean-Claude Trichet is facing the biggest split on the European Central Bank’s Governing Council in his six years as president. Months after other central banks cut their key interest rates close to zero and started pumping money into their economies, the ECB’s 22-member council is still divided over whether to follow suit. The stand-off has delayed new measures to stem the euro region’s deepest recession since World War II. “I fear the ECB will be bogged down by internal squabble,” said Ken Wattret, chief euro region economist at BNP Paribas in London. “It seems to be turning into a battle between the activists and those with a more conservative persuasion. It’s the biggest dispute under Trichet.”

Wall Street Journal:

- Steven Rattner, the leader of the Obama administration's auto task force, was one of the executives involved with payments under scrutiny in a probe of an alleged kickback scheme at New York state's pension fund, according to a person familiar with the matter. A Securities and Exchange Commission complaint says a "senior executive" of Mr. Rattner's investment firm met with a politically connected consultant about a finder's fee. Later, the complaint says, the firm received an investment from the state pension fund, then paid a $1.1 million fee. The "senior executive," not named in the complaint, is Mr. Rattner, according to the person familiar with the matter. He is co-founder of the investment firm, Quadrangle Group, which he left to join the Treasury Department to oversee the auto task force earlier this year.

- In its latest attempt to restart financial markets, the Federal Reserve is weighing a twist in one of its rescue programs that it hopes will encourage investors to buy long-term commercial-mortgage-backed securities. The Term Asset-backed Securities Loan Facility, or TALF, offers three-year loans to investors who use them to buy asset-backed securities. Fed officials are considering whether to offer investors in commercial real-estate securities loans of as long as five years to make the program more appealing.

- Danny Pang, the California investment-fund manager whose credentials have come under question, has stepped aside as chairman and chief executive of PEMGroup pending the outcome of an internal probe, the firm said in a press release.

- In a move likely to be watched by peers, the giant California pension fund Calpers is considering expanding its own internal hedge-fund investments even as it presses established external funds to cut fees and make other client-friendly changes that many money managers have resisted. Calpers is raising the prospect of providing start-up money to new and relatively unknown teams of traders and portfolio managers, with hopes that the best would spin out later as bigger, independent firms with many additional clients, according to public documents from Calpers.

- The Federal Bureau of Investigation earlier this year launched a nationwide operation targeting white supremacists and "militia/sovereign-citizen extremist groups," including a focus on veterans from Iraq and Afghanistan, according to memos sent from bureau headquarters to field offices. The initiative, dubbed Operation Vigilant Eagle, was outlined in February, two months before a memo giving a similar warning was issued on April 7 by the Department of Homeland Security. Disclosure of the DHS memo this week has sparked controversy among some conservatives and veterans groups. Appearing on television talk shows Thursday, Homeland Security Secretary Janet Napolitano defended the assessment, but apologized to veterans who saw it as an accusation.

Dow Jones:

- Verizon Communications(VZ) is still interested in buying out Vodafone Group’s(VOD) share of their joint wireless business.

CNBC.com:
- Google's(GOOG) quarterly profit topped expectations, helped by cost controls, but Chief Executive Eric Schmidt said the economic environment remains tough with users still searching but buying less. Shares of the No. 1 U.S. Internet search company initially rose 5 percent on the stronger-than-expected results, but then erased gains to trade flat after hours. The stock had risen about 30 percent in the past three months.

- U.S. mortgage rates fell back toward record lows this week and stayed a percentage point below levels a year ago just as the important spring sales season heats up. Freddie Mac said Thursday. Low mortgage rates are a boon for owners looking to cut monthly payments by refinancing and should attract new buyers.

NY Times:

- Chrysler is close to a deal with the United Automobile Workers to finance retiree health care that is crucial to the company’s bid for more government aid, according to people with knowledge of the negotiations.

- Edward M. Liddy, the dollar-a-year chief executive leading the American International Group since its bailout last fall, still owns a significant stake in Goldman Sachs(GS), one of the insurer’s trading partners that was made whole by the government bailout of A.I.G.

- Just three short months ago, many of the nation’s biggest banks were on life support. Now, a number are showing glimpses of a recovery, aided by a tentative improvement in some corners of the economy and new business picked up from rivals that stumbled in the wake of the financial crisis. On Thursday, JPMorgan Chase became the latest bank, after Goldman Sachs and Wells Fargo, to announce blockbuster profits in the first quarter. The reports fed a rally in financial stocks that began more than five weeks ago, when Citigroup and Bank of America, two of the banks hit hardest by the crisis, suggested the worst might already be over.

TechCrunch:

- Amazon’s(AMZN) Kindle 2, which first shipped in late February, is selling at roughly double the rate of the first generation device, says a source close to Amazon. Approximately 300,000 of the Kindle 2s have been shipped to date, suggesting Amazon has made over $100 million in revenue from sales of the $359 device alone this year.

Seeking Alpha:

- A Visit to Kingdom Hedge Fund 2009.

Investors.com:

- A lot of IBD's New America stories will tell you how a company will benefit from President Obama's stimulus package. But LHC Group (LHCG) is prospering in spite of the administration rather than because of it.

Politico:

- Here's quite a blockbuster from the Connecticut Post: Out of the $1 million that Sen. Chris Dodd (D-Conn.) raised this quarter, only $4,250 -- less than a half-of-a-percent -- of it came from home-state donors:

USA Today.com:

- The federal government agreed Thursday to begin taking public comment on a proposal that could boost the amount of ethanol in gasoline by 50% — a small, early victory for suppliers seeking to expand sales of ethanol, usually made from corn.

Reuters:

- Shopping malls sold in bankruptcy by General Growth Properties may finally set prices in a stalled market and release billions of dollars stockpiled for good buys in U.S. commercial real estate. "The public companies we think are best positioned to capitalize on General Growth's unraveling are Simon Group Inc SPG.N, Taubman TCO.N, Westfield WDC.AX, and Vornado VNO.N," J.P. Morgan real estate investment trust (REIT) analysts wrote in a research note.

- The United States is in a "bone-crushing recession" but wide-ranging Federal Reserve policies to unlock credit markets should accelerate a recovery, Dallas Fed President Richard Fisher said on Thursday. Fisher, in remarks prepared for a forum at Tsingua University in Beijing, reiterated his recent themes: the U.S. jobless rate will top 10 percent by year-end; inflation is not an imminent threat; and the Fed will not "monetize" the huge increase in its balance sheet. "The innovative policies being pursued by the Federal Reserve will facilitate and, indeed, expedite the recovery process," he said.

- Sony Corp's Sony Pictures on Thursday became the sixth major studio to support a theater-chain upgrade to digitally convert 20,000 U.S. and Canadian cinema screens, at an estimated cost of more than $1 billion. Other studios announced in October they would back a theater-upgrade program with the Digital Cinema Implementation Partners (DCIP), a group of theater chains comprising Regal Entertainment Group, Cinemark Holdings Inc and AMC Entertainment Inc. The other studios include Walt Disney Co, Viacom Inc Paramount Pictures, News Corp's Twentieth Century Fox, General Electric Co's Universal Pictures and Lions Gate Entertainment. In October, the DCIP estimated it could complete the conversion within 3 to 3-1/2 years of a start date in early 2009, although some of the conversions have gotten pushed back due to the credit crisis. Once outfitted with digital projectors, theaters can then be modified to show 3-D films. Hollywood studios are investing heavily in 3-D on expectations these films will draw bigger audiences at premium ticket prices.

- GMAC LLC, the General Motors Corp (GM) financing affiliate that received a government bailout, said its mortgage unit is hiring 1,000 people to handle a surge in refinancings and jumbo loans.

- Two top Federal Reserve policy-makers took divergent views on the U.S. economy on Thursday, with the head of the Atlanta Fed seeing a return to growth later this year, while the head of the San Francisco Fed saw the potential for an even deeper contraction. Both policy-makers -- Dennis Lockhart, president of the Atlanta Fed, and Janet Yellen, president of the San Francisco Fed -- told a conference in New York that it was important to address how to regulate systemically important institutions, those seen as "too big to fail." Lockhart said he expects the recession to end by mid-year with growth slowly picking up in the following months."Today, the economy is still very weak, but there are some encouraging signs that support cautious optimism," Lockhart told the conference at the Levy Economics Institute in New York.

- Giant-screen movie theater company Imax Corp is not seeing the recession damage its box-office performance, its chief executive said on Thursday. "It seems that consumers are willing to pay a premium price for a premium experience, even in this environment," Richard Gelfond told Reuters in an interview. "I would be surprised to see the economic factors affect our box office unless (the environment) materially worsens."

Financial Times:
- Credit default swaps, the derivatives instruments that have figured prominently in the global financial crisis, are now being blamed for playing a role in two bankruptcy filings this week. Bankers and lawyers involved in restructuring efforts say they are concerned some lenders to troubled companies, such as newsprint producer AbitibiBowater and mall owner General Growth Properties, stand to benefit from a default because they also hold default swaps, which entitle them to payments in such events. “We have seen CDS becoming a significant factor” when negotiations on out-of-court restructurings fail, said Alan Kornberg, the partner in charge of the bankruptcy practice at Paul, Weiss, Rifkind, Wharton & Rice, speaking generally. “We used to talk about the practice theoretically but now we see cases where it is hard to get lenders to agree to tender or to compromise and then you find out that these holdouts had significant CDS protection.” Abitibi , which filed for bankruptcy protection on Thursday, ran into trouble as the dire state of the newspaper industry eroded its cash flow and left it unable to service its debt load. It sought to persuade debt holders to exchange bonds due in August for new debt with longer dated maturity and higher yields, but failed to do so as creditors squabbled. Such exchange offers require the support of a significant number of lenders, 97 per cent in the case of bondholders in this case. But those who withhold support often have powerful incentives to do so, either because they hope to be made whole or because they are seeking to force a filing that would trigger payments under their credit protection agreements, bankers and lawyers say. Some creditors, including Citigroup, which held a small exposure to AbitibiBowater, hedged themselves in the CDS market, meaning their economic interest in the deal was different to lenders who had not bought credit insurance, according to people familiar with the matter.

- General Motors(GM) is prepared to argue that hundreds of its suppliers are “critical vendors” who require timely payments if it seeks bankruptcy protection, setting the stage for what would be the most sweeping attempt ever to win special treatment for such contractors, people close to the matter say. Bankruptcy experts say GM would stand a good chance of winning protection for more suppliers than is usual because of the large number that provide “just-in-time” car parts to the company. By seeking permission to pay hundreds of suppliers, GM could mitigate damage to the car parts industry. People close to GM say the company would make the request regardless of where it filed its bankruptcy petition. “No matter what court they go into, they’ll get authority to pay whatever suppliers they need,” said one person close to GM. “In a GM bankruptcy, there won’t be very much fallout for suppliers except perhaps for suppliers of Saturn and Hummer.” Those two brands will be shut if they are not sold. More suppliers could drop outside the key vendor pool if GM is pressed to cull its portfolio further, targeting brands such as Pontiac.

- Barack Obama is “not always up to standard on decision-making or efficiency”, José Luis Rodríguez Zapatero is “perhaps not very intelligent” while Angela Merkel “had no choice but to come round to my position” when she saw the state of German banks. President Nicolas Sarkozy is well known for his blunt speaking and ascerbic observations. But even by his standards, insulting his American, Spanish and German counterparts – three of his closest allies – over a brief lunch is quite an achievement. In the space of three courses at the Elysée palace on Wednesday the French president suggested the new US president was inexperienced, hesitant and vague on certain policy issues, that the Spanish prime minister lacked brain power while the German chancellor did not share Mr Sarkozy’s foresight about the financial and industrial crisis unfurling across Europe last autumn.

China Business News:

- The China Iron and Steel Assoc. said a report that Japanese steelmakers may accept a 30% cut in iron ore prices was incorrect, citing Vice Chairman Luo Bingsheng. “As far as I know the report is untrue,” Luo said. Contract prices should fall more than 40% as steel prices have dropped to 1994 levels, citing the association’s general secretary Shan Shanghua.

Nation:

- Thailand’s economy may contract between 4.5% and 5% this year, more than earlier forecast, citing Finance Minister Korn Chatikavanij.

Business Times:

- Singapore landlords are charging lower rents for office space in the island’s central business district to retain tenants. Landlords are in negotiations for rents of less than S$10 per square foot in buildings including OUB Centre and Equity Plaza, located in Raffles Place. Tenants in Singapore Land Tower, owned by Singapore Land Ltd., have received offers of about S$7 a square foot. That’s down from the average monthly rent of S$12.30 for so-called Grade A space at the end of March, citing property broker CB Richard Ellis.

The Economic Times:

- NEW DELHI: For the first time in the past five years, Mumbai’s commercial real estate market is headed for an oversupply with a total of 16.02 million sq ft of new commercial office space expected to enter the market in 2009. However, demand has been dipping steadily. According to property consultancy Jones Lang LaSalle Meghraj (JLL-M), the demand for office space has dropped 60-80% compared to the peak period from late 2005 to early 2008. “Rentals are set to go down a further 20-25% in Mumbai owing to the mismatch in supply and demand. BFSI, which generated the most demand for the Mumbai market, has been hit the most in the recent times,” said Vivek Dahiya, CEO of property consultancy GenReal. The first quarter of 2009 saw a total supply of 2.47 million sq ft of new space in Mumbai, of which the total absorption of space is only 35%. The total absorption was only 896,454 sq ft. Rentals have been steadily falling in most major micro-markets of Mumbai. Rentals in Nariman Point are down 13% compared to last quarter and about 30% down compared to a year-ago. Worli, Lower Parel, Bandra Kurla Complex and Andheri-Kurla are the worst-hit, with rentals declining by 38%, 39%, 27% and 33%, respectively, over the last one year.

Nikkei:

- Toshiba Corp.may beat its full-year operating loss forecast because of cost cuts and a halt in chip-price declines.

Asahi:

- Nippon Steel Corp. and other Japanese steelmakers agreed with Toyota Motor Corp. to cut the price of steel by more than 10% for the year through March 2010. The price will be cut by about $151 a metric ton, the first reduction in seven years. Toyota may seek further reductions depending on the result of iron ore price talks.

Late Buy/Sell Recommendations
Citigroup:

- Rated (SPN) Buy, target $25.

- Reiterated Buy on (APH), target $37.

CSFB:

- Reiterated Underperform on (SQM), lowered target to $28.

Night Trading
Asian Indices are -.25% to +1.75% on average.
S&P 500 futures -.45%.
NASDAQ 100 futures -.843%.

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Economic Releases

10:00 am EST

- The Preliminary Univ. of Mich. Consumer Confidence reading for April is estimated at 58.5 versus 57.3 in March.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Hoenig speaking, Fed Chairman Bernanke speaking at Fed Conference, (SNY) annual meeting, (DHX) stockholders meeting and the (SSD) shareholders meeting could also impact trading today.

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

Stocks Finish Near Session Highs, Boosted by Technology, Financial, REIT, Education and Homebuilder Shares

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Stocks Soaring into Final Hour on Less Economic Fear, Diminishing Credit Market Angst, Less Financial Sector Pessimism, Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Medical longs, Retail longs and Financial longs. I have not traded 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 above average. Today’s overall market action is very bullish. The VIX is falling 2.52% and is very high at 35.27. The ISE Sentiment Index is slightly below average at 137.0 and the total put/call is slightly below average at .78. Finally, the NYSE Arms has been running around average most of the day, hitting 1.60 at its intraday peak, and is currently .72. The Euro Financial Sector Credit Default Swap Index is falling 4.12% today to 144.33 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 3.01% to 175.18 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is rising .57% to 98 basis points. The TED spread is now down 365 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising 2.22% to 57.50 basis points. The Libor-OIS spread is falling 1.10% to 91 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is down 4 basis points to 1.28%, which is down 136 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 .13%, which is down 1 basis point today. Technology, Real Estate and Financial shares are propelling today’s rally. Given the news, the 6.5% surge in the heavily-shorted REIT Index is especially impressive today. I suspect many net short or market neutral portfolio managers are starting to get very nervous as the S&P 500 approaches flat ytd. The Nasdaq is now 6.4% higher for the year. One of my longs, (GOOG), reports after the close today. While the stock has risen substantially off its lows, I wouldn’t be a seller around current levels and will look to accumulate more shares on any meaningful pullback. Considering its stature as one of the leading technology growth stocks in the world and somewhat recession resistant biz, its 18.7x forward p/e is very cheap, in my opinion. As well, any sign of traction with Google’s monetization of YouTube should be viewed as a major positive. Finally, Google’s put/call open interest ratio is right near a record high at 1.12, which is also a positive. Nikkei futures indicate an +240 open in Japan and DAX futures indicate an +44 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, less economic fear, diminishing credit market angst, portfolio manager performance anxiety and less financial sector pessimism.

Bull Radar

Style Outperformer:
Small-cap Growth (+.39%)

Sector Outperformers:
Computer Hardware (+2.14%), Education (+1.86%) and Networking (+1.42%)

Stocks Rising on Unusual Volume:
NOK, CTV, MCRS, TECD, TLK, DELL, RTP, CNS, ITU, CIB, GMKT, CSKI, PLXS, OSIP, CAKE, NTES, LUFK, SHPGY, JOSB, SNDA, GOOG, RYAAY, SHW, JAH, CCK, PII, HOG, PH, PKE and BAX

Stocks With Unusual Call Option Activity:
1) VMC 2) CI 3) RF 4) CAKE 5) WYN

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Thursday Watch

Late-Night Headlines
Bloomberg:

- China’s gross domestic product, battered by collapsing exports, grew at the slowest pace in almost ten years, probably marking the low point for the world’s third-biggest economy. GDP expanded 6.1 percent in the first quarter from a year earlier, after a 6.8 percent gain in the previous three months, the statistics bureau said in Beijing today. The figure compares with the 6.2 percent median estimate of 13 economists surveyed by Bloomberg News.

- U.S. Treasury Secretary Timothy Geithner refrained from labeling China as a currency manipulator, backtracking from an assertion he made during his confirmation hearings in January. In its first semiannual report on foreign-exchange policies since Geithner became secretary, the Treasury said that while the yuan remains “undervalued,” no country “met the standards” for illegal currency manipulation during the period of the report, from July 2008 through December 2008. The conclusion clashes with Geithner’s January 22 statement to a Senate panel that President Barack Obama “believes that China is manipulating its currency.” Today’s shift may anger U.S. lawmakers, companies and trade unions who have sought measures to punish nations perceived to have undervalued exchange rates. “Clearly the Treasury has made more of a political decision than an economic decision here,” Republican Senator Lindsey Graham of South Carolina said in a Bloomberg Television interview. “The truth is the Chinese manipulate their currency.”

- SL Green Realty Corp., Manhattan’s biggest office landlord, led real estate investment trusts higher in New York trading after Goldman Sachs Group Inc. said the industry is showing “signs of liquidity.” New York-based SL Green climbed 17 percent after Goldman analyst Jonathan Habermann raised the stock to “buy” from “neutral.” Simon Property Group Inc., the biggest U.S. mall owner, rose 14 percent. Habermann upgraded the shares to “conviction buy” from “buy.” “We have begun to see many REITs access the capital markets helping to address concerns over liquidity,” Habermann wrote in the report. “In fact, stocks with low earnings multiples have experienced the most significant lift as ‘going concern’ risk has abated with the capital raises.” Many REITs have managed to conserve cash by cutting dividends and selling properties, which should help them lower their debt obligations, he said. Habermann cited Indianapolis-based Simon Property, which raised more than $1 billion of capital, including a sale last month of $650 million of unsecured senior notes, and 15 million common shares. That “marks an important step in increasing the flexibility of Simon’s balance sheet and positions the company well for future distress,” he said. SL Green shares are “undervalued,” he said. While the company’s debt-to-equity ratio is “high” at 65 percent, “the company’s ability to address near-term debt maturities seems adequate. With nearly $700 million in cash on its balance sheet, we believe SL Green could self-fund its 2009 and 2010 obligations.” Federal Realty Investment Trust, a Rockville, Maryland- based retail REIT, today said its refinancing efforts had exceeded its expectations. It has obtained unsecured credit of $250 million from five banks, more than its $200 million target, and is working toward a line of as much as $350 million. The shares jumped $4.49, or 8.8 percent, to $55.71.

- The cost of protecting investors in Asian bonds fell, credit-default swaps show. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan declined 5 basis points to 295 as of 9:13 am in Singapore, according to Barclays Capital. The Markit iTraxx Japan index fell 5 basis points to 290 at 10:07 am in Tokyo, BNP Paribas SA data show. The Markit iTraxx Australia index was quoted unch. at 315 basis points at 9:38 am in Sydney, according to Citigroup Inc. Prices.

- The Federal Reserve should identify U.S. banks funded by its emergency lending because taxpayers are “involuntary investors” who need to know the risks, Bloomberg LP said today in a court filing. The Fed refuses to name the borrowers, the amounts of loans or assets banks put up as collateral under 11 programs, arguing that doing so might set off a run by depositors and unsettle shareholders. Bloomberg, the closely held New York-based company majority-owned by Mayor Michael Bloomberg, sued Nov. 7 under the Freedom of Information Act on behalf of its Bloomberg News unit. “The Board’s arguments are based on wispy speculation, lack evidentiary support and are contradicted by economic theory,” said Thomas Golden and Jared Cohen, lawyers with New York-based Willkie Farr & Gallagher LLP, in a motion asking the judge to require disclosure. “These government actions, which have been shrouded in secrecy, are at the heart of Bloomberg’s FOIA requests.”

- The Obama administration won’t impose additional sanctions on Iran if it freezes nuclear development work and joins talks over the future of its program, European diplomats said. Undersecretary of State William Burns informed Britain, China, France, Germany and Russia of the new U.S. approach to the so-called “freeze-for-freeze” proposal at a meeting in London on April 8, according to the diplomats, who spoke on condition they weren’t identified.

- The Federal Reserve and other regulators conducting stress tests on the 19 biggest U.S. banks will disclose how they carried out the examinations before any results are released, people familiar with the process said. The regulators plan to publish the paper within the next two weeks, ahead of the release of results by early May, in an effort to bolster credibility in the process.

- President Barack Obama designated three Mexican crime organizations as subject to a law that lets the U.S. Treasury block financial transactions or seize assets, White House spokesman Robert Gibbs said. The move “underscores” U.S. support for Mexican President Felipe Calderon’s efforts to battle drug cartels, Gibbs said today. The groups were designated under the Foreign Narcotics Kingpins Act.

Wall Street Journal:

- Worldwide PC shipments for the first three months of the year were slightly better than expected, reports market tracker IDC Corp. The report adds to the enthusiasm for personal computer industry turnaround generated by Intel Corp.'s (INTC) Chief Executive Paul Otellini's comments about PC sales hitting a bottom. Otellini drew attention to the PC market on Tuesday, when he said during a call to discuss the company's latest quarterly earnings that the PC industry had bottomed out during the first three months of the year. The surprising results makes IDC optimistic that PC sales growth will return by the end of they year, based on continuing demand for inexpensive and compact netbooks and falling prices.

- U.S. Interior Secretary Ken Salazar announced Wednesday that California will receive $260 million in economic-stimulus funds to improve its aging water infrastructure.

- NetFlix(NFLX) May Benefit From Thrifty Fitness Enthusiasts.

- President Barack Obama and his wife, Michelle, reported about $2.7 million in income for 2008, mainly from book sales. The first couple paid about $855,000 in federal income taxes. Their income declined from 2007, when the Obamas reported about $4.1 million, again mostly from books, and paid about $1.4 million in taxes.

- Wireless carriers such as AT&T Corp. are setting their sights on so-called smart grids as a big business opportunity that could juice up earnings by utilizing excess capacity on their cellphone networks. The upshot for consumers is they may eventually be able to monitor and control home-energy use through a cellphone that talks to a digital meter and other devices, though that service is still in development.

Barron’s:

- Apple(AAPL): Goldman Ups Ests; Piper Upbeat On iPhone Units.

MarketWatch.com:
- Foreign language software specialist Rosetta Stone Inc. (RST) sold its initial public offering at $18 a share Wednesday, the first IPO to price above its expected range in nearly a year. The company, scheduled to begin trading Thursday on the New York Stock Exchange under the symbol RST, sold 6.25 million shares for a dollar more per share than its expected range of $15 to $17, which was set by underwriters Morgan Stanley and William Blair & Co.

CNBC.com:
- Six large U.S. banks could pocket nearly $10 billion in federal subsidies if they modify troubled home loans and are able to save homeowners from foreclosure, the Treasury Department said on Wednesday. The mortgage specialty arms of Citigroup(C), JPMorgan Chase(JPM) and Wells Fargo(WFC) would each earn over $2 billion for modifications that have long-lasting success, according to the Treasury's formula.

- GameStop(GME) Wants Cheaper Consoles, Predicts Hot Titles.

- New information from the Fed's Beige Book is stoking speculation that merger mania could soon sweep over parts of the market. And if options action is any indication, than one of the sectors showing signs of life is – technology(XLK). In fact, OptionMonster Jon Najarian is particularly keen on this sector for possible M&A activity.

NY Times:

- Unions began to widen their efforts against imported steel after a train’s foreign freight for an oil pipeline project was spotted in Granite City, Ill.

Atlanta Journal Constitution:

- Thousands of tax protesters streamed Wednesday to state government’s front lawn, creating a sign-waving, anthem-shouting mass as darkness fell. The Atlanta “Tea Party” at the Georgia Capitol stretched for blocks in protest of federal spending and the Obama Administration’s efforts to stimulate the economy.

Business Week:
- Fresh Hope for Broadband. Speedy Internet infrastructure has been slow coming. But states are eager to use stimulus money to change that.

- If Goldman Sachs(GS) CEO Lloyd Blankfein wants to put his money where his mouth is, he won't stop with just giving back the $10 billion in federal bailout money the investment firm got last autumn. He'll also offer to return some of the $13 billion Goldman (GS) got from the U.S. government by way of the bailout of American International Group (AIG). If the government had allowed AIG to file for bankruptcy, Goldman likely would have incurred an even bigger fourth-quarter loss than it reported. So Blankfein owes a bit of gratitude to Uncle Sam. And as my BusinessWeek colleague Roben Farzad pointed out on CNBC on Mar. 27, Blankfein can thank taxpayers by forking over its AIG largesse. Maybe it was a smart move for the government to indirectly bail out AIG's trading partners to prevent a systemic financial collapse. But the government didn't have to make firms such as Goldman completely whole by paying face value for the CDOs that AIG had insured. If nothing else, maybe Goldman should now take the haircut it probably should have taken on those CDOs at the time of the AIG bailout. The bank could start by offering to give some of that $13 billion back, too.

- Wireless energy dashboards to monitor usage are coming to many U.S. homes starting this year.

Seeking Alpha:

- Is the Street Now Too Bearish on Google(GOOG)? After a recent round of estimate cuts, the Street now seems to be wondering if maybe it went too far. I would note that GOOG shares have rebounded 44% off the November lows, so there is some risk that even a strong quarter will trigger a round of profit-taking, not unlike what happened in Intel shares Wednesday. Bernstein Research analyst Jefferey Lindsay Wednesday boosted his target on GOOG to $460, from $400, asserting bluntly that “sentiment has become too pessimistic on Google.” He says that while the company “is feeling the downturn like everyone else,” its business “is still highly recession-resistant and is doing better than many expect. Lindsay contends the company is well-positioned to benefit from any economic upturn at the end of the year, “and will be the first major advertising business to register any improvement, since the online auction format of paid search “benefits almost immediately from increased economic activity and advertising spending.” Lindsay also said that, contrary to what some others have asserted, YouTube is getting close to break even.

Politico:

- Texas Gov. Rick Perry’s star is rising among a new constituency — the anti-tax “tea party” crowd — in the wake of his recent endorsement of a Texas state House resolution affirming the state’s sovereignty. The resolution urges that “all compulsory federal legislation that directs states to comply under threat of civil or criminal penalties or sanctions or that requires states to pass legislation or lose federal funding be prohibited or repealed.” The Republican governor’s public embrace of that language — a thinly veiled reference toward the conditions set by the Obama administration’s financial stimulus package — and his efforts to reject some of the stimulus funds have made him popular among the big government opponents who attended Wednesday’s “tea party” events across the nation.

- Sen. Chuck Schumer (D-NY) who has long pushed China on its currency, was none too thrilled with the Obama administration's pronouncement today that Beijing isn't manipulating the Yuan. Schumer, in a statement, says he plans to reintroduce a bill with Lindsey Graham (R-S.C.) that would impose a tariff on Chinese imports whose prices are kept artificially low by China's devaluation of the yuan.

IndexUniverse.com:

- Are you ready for some more hot sauce on your exchange-traded funds smorgasbord? IndexIQ, which recently introduced the first ETF to replicate hedge funds, has filed to launch 15 more. Each will effectively splice and dice hedging strategies into different categories. Assuming the Securities and Exchange Commission finds no special quirks to halt a launch, the new ETFs will be the:

Reuters:

- The U.S. economy continued to weaken in March and early April but the speed of contraction was fading amid scattered signs the country's recession may be nearing an end, the Federal Reserve said on Wednesday. "Five of the 12 districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level," according to the Fed's Beige Book summary of anecdotal reports from its 12 regional banks.

- China's refined copper production is expected to rise about 6 percent to more than 4 million tonnes in 2009, the official Shanghai Securities News said on Thursday, citing an executive in the industry group. The growth was due to capacity expansion including a 300,000-tonne project run by Jiangxi Copper, China's largest smelter, the newspaper cited the China Nonferrous Metals Industry Association executive as saying.

Financial Times:
- NYSE Euronext CEO Duncan Niederauer said the surge in stocks last month was propelled by traders taking advantage of price fluctuations rather than “real money” investors, who are waiting to see whether the gains will hold. “We’re waiting for another rally, in my opinion, in around June and July,” when institutional and other long-term investors start putting more money into equities.

- Asia is the last bastion of the strong dollar policy. US policymakers still repeat the mantra of a strong currency. But it is Asia’s central bankers that have backed up their words with action, accumulating thousands of billions’ worth of US Treasuries. The dollar remains the world’s premier currency as a result. It still accounts for nearly two-thirds of all foreign reserves. The risk of the dollar losing its reserve status remains slim for the foreseeable future. First, central banks are likely to keep holding most of their reserves in dollars as global trade remains denominated in dollars. Second, the incentive for reserve managers to diversify into other foreign currencies to increase portfolio returns is mitigated by all the G7 central banks now setting interest rates close to zero. Third, central banks across Asia and elsewhere have seen how Russia rapidly lost one third of its $600bn reserves as the rouble came under severe pressure. Fourth, the alternatives to the dollar remain unattractive. Liquidity in the US Treasury market is superior to eurozone bond markets. Holding euro-denominated assets also incurs the long-term risk that the single currency may one day break up. As for the other choices, Japanese government bonds only offer very low returns, while the gold market is too small to be a liquid alternative for most central banks. Finally, allocating foreign reserves is as much a political decision as an economic choice. The US’s allies in Asia and the Middle East are hardly likely to dump the assets of the country whose military umbrella they shelter under. Thus the dollar is likely to retain its premier reserve status.

Sankei:

- Nippon Steel Corp., Japan’s largest steelmaker, and domestic rivals may agree to an iron ore price cut of about 30% for the year started April 1. The lower cost of iron ore would lead to a decline in prices of steel for sales to carmakers and electronics companies.

Shanghai Securities News:

- China’s power demand fell 3.6% in the first half of April, led by a decline in consumption in southern provinces, citing State Grid Corp. of China. Electricity demand in Guangdong province dropped 8.1% and plunged 12.6% in Guangxi, according to the report. The nation’s coal-fired electricity output dropped 3.6% in the first half of this month, biggest than a March decline.

Nikkei:

- Japan’s government will maintain its assessment of the economy as being in a “severe” state and “worsening rapidly.” The monthly Cabinet Office repot, to be released tomorrow, will maintain the same description of the economy as used in the March and February reports.

Caijing:

- China’s economy won’t reach a bottom this year, citing Wang Xiaoguang, director of the academy of macroeconomic research under the National Development and Reform Commission. Wang said he is currently unable to see a bottom. Exports and real estate will no longer be able to spur economic growth in the further, citing Wang.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (HPQ), target $51. We believe HPQ’s April quarter is tracking ahead of mgmt guidance and consensus, and remain comfortable with our non-GAAP EPS estimate of $.89(consensus $.85, guidance $.84-.86). Revenue upside is being driven by stronger-than-expected consumer PC demand and FX, while EPS upside is being driven by overly conservative guidance, EDS cost synergies and a 5% company-wide salary cut implemented early in the quarter.

- (GILD) Buy – Weekly IMS Rx look ok and we model total HIV at $1,267M vs. consensus $1,247M. Strong revenues(Citi $1,4506M, +$5M vs. consensus $1,501M) driven by US HIV sales could drive upside to non GAAP EPS of $.64(vs. consensus $.63)

Night Trading
Asian Indices are +.50% to +2.0% on average.
S&P 500 futures -.05%.
NASDAQ 100 futures +.11%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Global Commentary
WSJ Intl Markets Performance
Commodity Futures
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?
Upgrades/Downgrades
Rasmussen Business/Economy Polling

Earnings of Note
Company/EPS Estimate
- (BAX)/.81

- (CY)/-.23

- (GPC)/.50

- (HOG)/.52

- (PH)/.45

- (GCI)/.24

- (SHW)/.21

- (LUV)/.00

- (FCS)/-.33

- (PII)/.20

- (JPM)/.32

- (ITW)/.30

- (GOOG)/4.96

- (VRTX)/-.81

- (ISRG)/1.02

- (PPG)/.13

- (BIIB)/1.00

- (VMI)/1.08

- (BGG)/.63

- (TITN)/.21

Economic Releases

8:30 am EST

- Housing Starts for March are estimated to fall to 540K versus 583K in February.

- Building Permits for March are estimated to fall to 559K versus 564K in February.

- Initial Jobless Claims for last week are estimated to rise to 660K versus 654K the prior week.

- Continuing Claims are estimated to rise to 5893K versus 5840K prior.

10:00 am EST

- Philly Fed. For April is estimated to rise to -32.0 versus -35.0 in March.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Lockhart speaking, Fed’s Yellen speaking, weekly EIA natural gas inventory report, (BP) annual meeting, (CRAI) annual meeting, (RF) shareholders meeting, (VLCK) shareholders meeting, (WY) shareholders meeting, (TXN) shareholders meeting and the (PPG) shareholders meeting could also impact trading today.

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