Stocks Finish Mixed as Gains in Tech, Alt Energy and Steel Shares Offset Losses in Financial, REIT and Insurance Stocks

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Stocks Mostly Higher into Final Hour on Less Economic Pessimism, Bargain-Hunting, Short-Covering, Diminishing Credit Market Angst

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Retail longs and Medical longs. I haven’t traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is 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 1.3% and is very high at 36.65. The ISE Sentiment Index is below average at 114.0 and the total put/call is slightly below average at .74. Finally, the NYSE Arms has been running high most of the day, hitting 1.54 at its intraday peak, and is currently 1.27. The Euro Financial Sector Credit Default Swap Index is falling 2.71% today to 154.66 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 3.08% to 185.23 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is rising 1.1% to 97 basis points. The TED spread is now down 366 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is falling 1.95% to 63.0 basis points. The Libor-OIS spread is falling .95% to 90 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up 9 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 .13%, which is down 1 basis point today. Nikkei futures indicate an +230 open in Japan and DAX futures indicate an +20 open in Germany tomorrow. Many market-leading stocks are soaring much more than the major averages today. I continue to see many significant technical breakouts in a number of different sectors. As well, the MS Cyclical Index is jumping 6.1% today. Considering the 1.2% decline in the Bank Index, today’s broad market gains are more impressive. One of my longs, (AAPL), reports after the close. The put/call open interest ratio for the stock is .94, which is at the high-end of its 2-year range. Moreover, AAPL’s short interest ratio is .85, which is at the highest level since last September. I plan to add to my long position in the stock on any meaningful weakness from current levels ahead of new product announcements, likely p/e multiple expansion and improving consumer spending this fall. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less credit market angst, diminishing economic fear, investment manager performance anxiety and bargain-hunting.

Today's Headlines

Bloomberg:

- U.S. home prices fell 6.5 percent in February from a year earlier, the second-smallest drop in six months, a sign that low mortgage rates may be bolstering demand. The FHFA’s monthly house price index is down 9.5 percent from its peak in April 2007. Prices in February gained 0.7 percent from the previous month. The inventory of properties on the market fell to a 9.7 month supply in February at the current sales pace, down from April’s high of 11.3 months, and sales rose 5.1 percent from a month earlier, the realtors group said.

- Mortgage applications in the U.S. rose last week as lower borrowing costs encouraged more homeowners to refinance loans. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan increased 5.3 percent to 1,172.2 in the week ended April 17, from 1,113.2 the week before. “The increase in refinancing is a huge positive,” said Tom Porcelli, a senior economist at Castlestone Management Ltd. in New York. “It’ll reduce mortgage payments and ultimately give consumers the ammunition to save more or spend a little more.”

- Blackstone Group LP(BX), Carlyle Group and billionaire Wilbur Ross are preparing a bid for BankUnited Financial Corp., a Florida bank that has been designated “critically undercapitalized” by federal regulators, according to people familiar with the offer.

- President Barack Obama said his administration is taking steps to begin leasing tracts off U.S. shores for electricity generation projects using wind and ocean currents. The president said the initiative will open the way to “major investments” in projects on the Continental Shelf and that interest already is high in putting wind-power turbines off the coasts of New Jersey and Delaware. He also said he will continue pursuing a “market-based cap” for emissions of carbon dioxide, a gas linked to climate change.

- New Mexico Governor Bill Richardson’s campaigns and political action committees received at least $102,300 from brokers hired by money managers seeking to handle $11.7 billion of state trust funds, campaign finance records show. In addition to the those donations, Richardson, a Democrat who ran for President in 2008, received at least $95,000 from the state trusts’ outside money managers, including $20,000 from former Quadrangle Group LLC founder Steven Rattner and $50,381 from Leo Hindery, founder of InterMedia Advisors LLC, according to New Mexico and federal campaign finance records. Rattner, who directs the Obama administration’s auto industry task force, and Hindery have donated $3.8 million to state and federal Democratic candidates and political action committees over time.

- John Irving, an oil trader accused of unlawfully transporting crude oil into the U.S., pleaded guilty in the latest conviction related to the United Nations oil-for-food scandal, according to court records. Irving, a U.K. citizen, was accused in 2005 of helping Texas oilman David Chalmers in a plot to pay millions of dollars in kickbacks to the regime of then-Iraqi President Saddam Hussein, in return for oil.

- As many as 30 million Chinese migrant workers may have returned to their farms because city jobs have become scarce amid the country’s economic slowdown, a researcher said, raising a government estimate by 50 percent. The higher estimate underscores the challenge facing Chinese Premier Wen Jiabao as he tries to keep the world’s most- populous nation expanding at 8 percent a year to prevent unemployment from leading to social unrest. About 225 million people, or 28 percent of China’s rural population, are migrant workers who’ve left their farms in search of work in cities and towns, the National Bureau of Statistics said in March.

- Oil may drop toward $42 a barrel after prices formed a “double top” pattern, technical analysts at Barclays Capital said. “Our downside bias remains,” Barclay’s analysts said. “Bounces should be seen as an opportunity to go short. Bigger picture, the double-top targets a move toward $42.”

- Dubai house prices may slump as much as 70 percent from their peak late last year as demand drops and banks fail to resume mortgage lending, prompting mergers, UBS AG said. “We are still in relatively early stages of the property down-cycle in United Arab Emirates,” Saud Masud, a Dubai-based analyst at the Swiss bank, wrote in a report to clients dated yesterday. “We believe risk-reward profiles are not yet compelling for investors to consider market re-entry, hence continued price declines are expected.” Economic growth in Dubai, the second-biggest of seven states that make up the U.A.E., slumped after the worst financial crisis since the 1930s hurt its property, financial- services and tourism industries. The economy may contract 2 percent to 4 percent this year, Standard & Poor’s Ratings Services said in a report last month.

- AT&T Inc.(T), the biggest U.S. phone company, posted first-quarter profit that exceeded analysts’ projections after trimming payrolls and encouraging customers to spend more on services such as text messaging. The stock rose as much as 4.6 percent after AT&T said net income was 53 cents a share, beating the 48-cent average of estimates compiled by Bloomberg.

- Wells Fargo & Co.(WFC), the bank that wrote the most U.S. home loans in the first quarter, hired about 5,000 people to handle the increased workload, according to Chief Financial Officer Howard Atkins. The bank added people across the country in the past couple of months to process record mortgage applications, Atkins said in an interview today.

- Ford Motor Co.(F) rose as much as 14 percent in New York trading after Goldman, Sachs & Co. advised buying the shares, citing likely bankruptcy filings for General Motors Corp. and Chrysler LLC. Ford will gain U.S. market share from GM and Chrysler, and the stock may climb 58 percent to $6 within 6 months, Patrick Archambault, a New York-based analyst, wrote in a research report.

Wall Street Journal:

- U.S. Treasury Secretary Timothy Geithner struck an upbeat tone on the global economy in a speech Wednesday, saying he is already starting to see "some signs of stabilization of declines in output and trade." While the world economy is going through "the most severe crisis in generations," actions taken by the Group of 20 leading nations during a recent London summit should make way for a sustainable recovery, Mr. Geithner said. He added that financial markets are starting to modestly improve and that the rate of decline in global growth and trade "has shown some signs of easing."

- For international shopping-center magnate Chaim Katzman, retail-property stocks have fallen enough that the time is ripe to buy, even if his targets aren't keen on selling. Mr. Katzman, the 59-year-old chairman of Gazit-Globe Ltd., of Israel, jumped back into the deal fray last month when his company's U.S. unit, Equity One Inc., made an unsolicited advance on smaller Ramco-Gershenson Properties Trust. Ramco, of Farmington Hills, Mich., owns 89 U.S. shopping centers. Equity One, a real-estate investment trust in Miami, owns 146.

- The acting chief financial officer of Freddie Mac (FRE), David Kellermann, was found dead at his home early Wednesday, according to Fairfax County police. There were "no signs of foul play," said Officer Shelley Broderick of the Fairfax County Police Department. She said police found Kellermann's body after responding to a call made at 4:48 a.m. Kellermann's wife told local police he committed suicide, Washington, D.C., television station WUSA reported, citing sheriff's deputies in Fairfax County, Va.

- It comes as no surprise that Apple Inc.(AAPL) is focusing its new iPhone advertisements on small businesses next. Since the Apple App Store opened 10 months ago for the iPhone and the iPod Touch, it is now approaching its 1 billionth download, which should come as early as tomorrow. Consumer demand caused about 110 million “apps” to be downloaded each month; these apps, from the frivolous to the practical, are free or can be bought for 99 cents or $1.99. But the new iPhone 3G ads running now on television’s prime-time hours show a small-business bent. Users, the narration says, can use the iPhone to process credit-card transactions using Inner Fence’s Credit Card Terminal application; print a shipping label for a package using the Print & Share app; and check on the status of a delivery with FedEx Mobile app. The move follows a number of key changes Apple has done to the iPhone’s functionality as it seeks to tap into the business market. They’ve already made business users happy with push e-mail, calendar and contacts capabilities and compatibility with Microsoft Exchange.

- Amazon.com (AMZN) has said little about the economics of its Kindle business, but a new study suggests that the profit margins on the e-reader device are likely generous - and leave room for future price cuts. On Wednesday, technology research firm iSuppli released a "teardown" analysis on the Kindle 2 that estimates the manufacturing cost for the device at about $185. That is slightly more than half of the $359 that Amazon (AMZN) charges for the product, though the teardown estimate doesn't include the costs of any software or royalties on the product.

- A 20% slide in Norfolk Southern Corp.'s (NSC) first-quarter freight volume may well accelerate in the second quarter, but the railroad's top executive is voicing optimism nonetheless that the trend is near a bottom.

- General Motors Corp.(GM) Chief Financial Officer Ray Young said the company doesn't plan on making a $1 billion debt payment due June 1 and is relying on either a successful debt-for-equity exchange or court protection to dramatically lower its outstanding debt.

CNBC:

- Talk about getting on board. Transit systems across the country are using newly awarded stimulus funds to order hybrid buses.

Dow Jones:

- Toyota Motor may consider speeding up its plan to sell gasoline-electric hybrid versions of all its models by 2020, citing Managing Officer Koei Saga. Consumer interest in fuel-efficient cars is increasing, Saga said. The Toyota City, Japan-based automaker also plans to offer a hybrid version of the RAV4 sport-utility vehicle in China “as soon as possible,” citing Saga. Toyota has said it plans to sell 1 million hybrids a year and offer hybrids in all it models early in 2010s.

NY Post:

- As The New York Times Co.(NYT) tries to bask in the glory of having bagged five Pulitzers, the company is facing a cash crunch that could put it on the path toward insolvency. According to its first-quarter earnings report, the Times said it had cash and cash equivalents totaling $294 million. However, $260 million of that is earmarked to pay off debt that matures in March 2010, effectively leaving the company with $34 million. That's a particularly precarious position to be in, given the Gray Lady posted a wider-than-expected, first-quarter loss of $74.5 million amid worsening advertising declines, and is scrambling to raise cash as it labors under a $1.3 billion debt load.

Miami Herald:

- In a full-barreled appeal to the House Policy Council, the oil and gas industry persuaded lawmakers to vote, 17-6, along party lines Tuesday for a bill that opens state waters to exploration and taps into new revenues for the state's ailing budget. The council approved an amendment by Rep. Dean Cannon, R-Orlando, that would lift Florida's ban on oil drilling in state waters and replace it with a plan to allow the governor and Florida Cabinet to seek bidders for exploration and drilling in the Gulf of Mexico between three and 10 miles offshore. New revenues would come from a $1 million non-refundable application fee for every bidder and, according to an industry-hired economist, from as much as $1.6 billion in royalties and taxes if the wells produce oil. ''We're giving the governor and Cabinet that chance to have that dialogue with no obligation whatsoever,'' Cannon said. ``But we are taking away the shackles that currently prohibit Florida from not only pursuing energy independence but economic development and security and environmental protection.''

Alpha:

- It seemed a match made in heaven — hedge funds and family offices, naturally discreet partners with a strong mutual attraction. The former sought long-term commitment; the latter pined for uncorrelated returns. But even the most outwardly perfect of couples can suffer a rough patch, and that’s what seems to have happened over the past several months as family offices — big and small, single and multiple, old and new — have questioned just how solid their relationship with hedge funds is after the way some managers have performed, and behaved, in recent months.

Politico:

- Environmental groups are storming the airwaves this week, taking out significant ad buys in key states to push climate change legislation and increased investment in renewable energy, even as the issues face a tough fight in the Senate. The advertising campaigns dovetail with Earth Day, celebrated on Wednesday, and a major climate change push by Democrats this week. The administration and environmental groups argue that a cap-and-trade system would not only slow global warming but also reduce dependence on foreign oil and create new green jobs. But the recession may be hurting their chances for getting a bill through Congress this year. A Gallup survey taken last month showed support for prioritizing environmental protection over economic growth at its lowest point in the 25-year history of the poll. Only 42 percent of Americans chose the environment, while 51 percent said economic concerns were more important. Opponents — who include Republicans and some business groups — argue that cutting carbon emissions would impose huge new regulatory costs on business and increase energy prices, particularly for low-income consumers. Rust Belt Democrats also fear that a cap-and-trade system could push some fossil-fuel intensive industries overseas, taking with them valuable manufacturing jobs. They’re seeking to include provisions in the bill that would offset costs for trade-sensitive industries like paper and steel.

- President Obama's Director of National Intelligence, Dennis Blair, told colleagues in an internal memo last week that the aggressive interrogation tactics approved by the Bush administration yielded "high-value information" which helped the U.S. in the war on terror. “High value information came from interrogations in which those methods were used and provided a deeper understanding of the al Qa’ida organization that was attacking this country," Blair wrote in a memo to the intelligence community the same day Obama ordered the release of legal memos detailing the techniques, which included waterboarding, slamming detainees into "flexible" walls, and prolonged sleep deprivation.

Reuters:
- Russia's statistics office will make monthly jobless reports secret, a newspaper reported on Wednesday days after data showed unemployment was soaring fast and experts said it was the biggest threat to social stability. n Monday, Rosstat reported that some 1.8 million Russians lost their jobs in the first three months of 2009, taking the jobless rate to an 8 year-high. According to Reuters calculations, unemployment hit 11.9 percent in March from 8.5 percent in February, assuming previous data was unrevised. Some 500,000 Russians lost jobs in January, some 300,000 in February and the latest data suggested a record 700,000 became unemployed in March. fficials had been saying that the worst of the crisis may be over for Russia, taking heart from higher global oil prices, a stabilization of the rouble and a recovery in domestic stocks. But international financial organizations, such as the World Bank, have said the economic slump could be much deeper than the government's predictions and urged Russia to boost spending to stave off social unrest.

- OPEC is worried about oversupply in the oil market and wants members to comply fully with their output targets, Libya's top oil official said on Wednesday. Oil inventories in industrialized countries are at the highest since 1993, even though OPEC has agreed to cut output by 4.2 million barrels per day from its September 2008 supply. A handful of OPEC members -- Iran, Angola, Nigeria, Venezuela and Ecuador -- were still pumping significantly more than their targets in March, according to a Reuters survey. Oil is trading around $50 a barrel, down almost $100 from a record high reached last July but up from a low of $32.40 in December. The Libyan official indicated OPEC could live with prices around $50. "This is the price the market is giving us. We are not crying and not smiling."

- Rather than wait for decent broadband and Internet access to arrive in their war-battered nation, Iraqis can use an abundance of cellphones to exploit the Web, a group of U.S. technology executives urged on Wednesday. The executives from Google Inc (GOOG), AT&T Inc (T), Twitter and other high tech companies paid a visit to Iraq this week, under the auspices -- and heavy protection -- of the U.S. State Department.

Sueddeutsche Zeitung:

- Germany’s leading economic institutes predict the economy will shrink 6% this year and .5% in 2010, citing new forecasts that the institutes are due to publish tomorrow. Europe’s largest economy will run a budget deficit of 3.7% of GDP this year and 5.5% of GDP next year as the recession saps tax revenue. The OECD forecast on March 31 that Germany’s economy will shrink 5.3% this year and grow .2% in 2010.

Emirates Business 24/7:
- Arabtec Holding PJSC has property development projects worth $1.09 billion on hold and expects the UAE real estate market to remain slow next year, citing Chief Financial Officer Ziad Makhzoumi.

Bear Radar

Style Underperformer:
Large-cap Value (-.12%)

Sector Underperformers:
Insurance (-2.19%), Drugs (-2.10%) and REITs (-1.21%)

Stocks Falling on Unusual Volume:
ATMI, CAN, CVA, GSK, QLGC, VOCS, ICLR, PFWD, PPDI, CSKI, ILMN, GENZ, MOLX, JAH and PXP

Stocks With Unusual Put Option Activity:
1) IR 2) RRC 3) ISIL 4) TEVA 5) JDSU

Bull Radar

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

Sector Outperformers:
Disk Drives (+4.49%), Gaming (+3.60%) and Homebuilders (+3.60%)

Stocks Rising on Unusual Volume:
IR, PNR, BRCM, CAB, WFC, DB, TUP, BTH, REP, PFCB, KNDL, YHOO, SNDK, CYMI, BWLD, MRTN, CAKE, CMTL, CHRW, ANDE, MICC, CPTS, MANH, HBHC, ASTE, WYNN, FWRD, PNFP, GILD, RFG, ELX, DSG, IGN, WAB, WMS and GLP

Stocks With Unusual Call Option Activity:
1) WMB 2) ANR 3) RHT 4) AKAM 5) CAKE

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