Monday Watch

Weekend Headlines
Bloomberg:

- US Dollar Wins Heads-or-Tails Toss on Growth or Weakening Economy. Former Federal Reserve Chairman Alan Greenspan said five years ago that predicting currencies is no better than tossing a coin. A growing number of traders are betting that heads or tails, the dollar wins. Investors bullish on the U.S. economy say the dollar will strengthen as America recovers first from the global economic recession. Those who expect the longest contraction since the early 1980s to continue say the currency should appreciate as the haven from turmoil in world markets. Foreign investors bought a net $22 billion of U.S. financial assets in February, the Treasury Department said April 15. The dollar is “the best-looking horse in the glue factory” among major currencies, said Robert Blake, head of strategy for North America in Boston at State Street Global Markets LLC, which has $11.3 trillion in assets under custody. Strategists increased their forecasts for the dollar this year against all those currencies, data compiled by Bloomberg show. Since January, the analysts have boosted their year-end dollar forecast 2.2 percent to $1.32 per euro from $1.35, and 5.2 percent to 101 yen from 96 in February, the median of more than 40 estimates compiled by Bloomberg show.

- Wherever you look, Federal Reserve Chairman Ben S. Bernanke’s efforts to repair global credit markets are showing signs of working. The Libor-OIS premium that indicates banks’ reluctance to lend to each other fell to 0.87 percentage point on April 24, the lowest level since before Lehman Brothers Holdings Inc. collapsed in September, according to data compiled by Bloomberg. Companies have raised a record $468 billion in U.S. bond sales this year. Prices of the most senior portions of mortgage bonds backed by prime U.S. jumbo loans have climbed 24 percent in the past five weeks, according to London-based Barclays Capital. Investor confidence in financial markets is returning after the U.S. government and the Fed agreed to spend, lend or commit $12.8 trillion to end the longest recession since the Great Depression. Finance chiefs from the Group of Seven predicted in Washington on April 24 that the world economy will start to rebound later this year. “Every place where the Fed has acted aggressively, we’ve seen a meaningful improvement,” said Laurence Meyer, a Fed governor from 1996 to 2002 and now vice chairman of consulting firm Macroeconomic Advisers LLC in St. Louis.

- Finance chiefs from the Group of Seven predicted a “weak” economic recovery will start to take hold in coming months as evidence mounts that the worst of the recession is over. “Economic activity should begin to recover later this year amid a continued weak outlook, and downside risks persist,” the G-7 finance ministers and central bankers said in a statement yesterday after talks in Washington. “Recent data suggest that the pace of decline in our economies has slowed, and some signs of stabilization are emerging.” While more upbeat than when they met in February, the officials are wary of declaring an end to the deepest slump since World War II so long as toxic assets continue to impede bank lending. They pledged to “take whatever actions are necessary to accelerate the return to trend growth” without announcing any new steps. “We’ve been in a deep financial crisis, and you don’t bounce out of this like a normal recession,” Harvard University Professor Kenneth Rogoff said in an interview with Bloomberg Television in Washington. “There will be a period of slow growth.”

- President Barack Obama fully backs Federal Reserve Chairman Ben S. Bernanke, who has come under scrutiny for his role helping engineer Bank of America Corp.’s purchase of Merrill Lynch & Co., a top White House aide said. “The president has 100 percent confidence” in the U.S. Fed chief, White House Chief of Staff Rahm Emanuel said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.

- Chrysler LLC, racing against an April 30 deadline to cut labor costs or face bankruptcy, reached a tentative contract agreement with its biggest U.S. union and won ratification of a new accord with Canadian workers.

- U.S. Secretary of State Hillary Clinton voiced her support for Iraq’s government during an unannounced visit to Baghdad today, days after the deadliest spate of attacks in the country in the past year. “We are committed to Iraq, we want to see a stable, sovereign, self-reliant Iraq,” Clinton told an audience including 120 invited Iraqi civilians at the U.S. embassy. Her arrival in the city followed two days of bombings that killed more than 150 people. The latest bomb attacks were the last gasp of an insurgency that has been severely weakened since 2007, Clinton told reporters. She said the attacks were a “tragic” sign the “rejectionists fear that Iraq is going in the right direction.”

- Vertex Pharmaceuticals Inc.’s(VRTX) experimental hepatitis C drug telaprevir wiped out signs of the infection in half of patients with hard-to-treat forms of the disease in a yearlong study. The Prove 3 trial, presented at the European Association for the Study of the Liver in Copenhagen, found adding the drug to Roche Holding AG’s Pegasys and Copegus improved response to therapy. The study also showed Copegus is essential. Researchers left it out of one arm of the trial in an effort to reduce side effects, and netted lower patient response as well.

- The United Arab Emirates economy, the second largest in the Arab world, may expand 1.6% next year after contracting in 2009, according to Citigroup Inc. The UAE economy may shrink .2%$ this year, David Lubin, a London-based economist at Citigroup, wrote. The bank forecast in January the UAE would grow 2.7% this year.

- OPEC and 13 Asian countries urged greater oversight of oil and other commodity markets to prevent a surge in prices after the global economy recovers from the worst recession since World War II. Participants in a ministerial energy roundtable in Tokyo sought limits on positions in over-the-counter trades and said “excessive” oil-price movements are “undesirable,” according to a statement released after today’s meeting. They also called for “continuous” investments to boost energy supplies. The U.S. House Agriculture Committee in February approved legislation that would place limits on positions a trader can hold in commodity markets as the government seeks more control over derivatives. At present, such limits on speculative positions exist only for agricultural products. The bill would also enhance the U.S. Commodity Futures Trading Commission’s oversight of credit-default swaps.

- The European Central Bank is considering several options including a floor for its benchmark interest rate to fight the recession, said Nout Wellink, a member of its governing council. “That’s one of the possibilities,” Wellink, who is also head of the Dutch central bank, said in an interview late yesterday in Washington. “When you have reached a certain level then you can influence reactions of economic agents by saying we will keep it at that level for a certain period.” The ECB’s 22 council members appear split over how to counter the worst economic slump since World War II, at a time when the bank’s main rate is already at a record low of 1.25 percent. Germany’s Axel Weber has said the bank shouldn’t cut the rate below 1 percent. Others, including Athanasios Orphanides of Greece, want to keep open the option of deeper rate reductions and have argued in favor of asset purchases.

- Demetris Efstathiou, a hedge-fund trader and a Londoner for two decades, listened last week to Chancellor of the Exchequer Alistair Darling outline a plan to raise taxes on high earners. Then he decided to leave Britain. “There is no reason for me to stay here anymore,” said Efstathiou, a 38-year-old Cypriot who moved to London in 1990. “This tax increase is the last straw. This government is no longer interested in the City.”

- Honda Motor Co., the only company selling hydrogen-powered cars to U.S. drivers, may also develop plug-in models as U.S. policy shifts to favor battery-powered autos. Honda, which began leasing hydrogen fuel cell FCX Clarity sedans in Los Angeles last year, still sees hydrogen as the best long-term alternative to gasoline as a fuel that can cut carbon exhaust tied to global warming, President Takeo Fukui said in an interview. Still, the company will respond to a push by the Obama administration for carmakers to sell plug-ins, he said.

- Almost 20% of Asia-Pacific hedge funds closed in the 15 months to March with the rate to accelerate because of rising operational costs and poor performance, according to London-based AsiaHedge magazine.

- Asian institutions and wealthy individuals investments in hedge funds is expected to have declined by 40% over the 18 months to mid-2009, said an official of Bank of New York Mellon Corp., the world’s biggest custody bank. Asian investments in hedge funds will decline to $206 billion by mid-this year from $344 billion in December 2007, Andrew Gordon, the bank’s Hong Kong-based executive vp of financial markets and treasury services, said.

- The Markit iTraxx Japan index fell 5 basis points to 335 at 10 am in Tokyo, Barclays Plc prices show. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 5 basis points to 300 as of 9 am in Hong Kong, according to ICAP Plc prices.

Wall Street Journal:

- Memory chips appear to have hit the bottom of their business cycle, an important signal for the broader semiconductor industry, which has been suffering through its worst slump to date. Memory chips account for just 14% of the $260 billion global semiconductor industry. But they are a leading indicator of industry performance because of their commodity-like status as widely used products that are hard to differentiate. The memory downturn that began in early 2007 foreshadowed last year's broader industry troubles, which became worse after the financial-industry crisis led to a global downturn. The two biggest makers of memory chips, Samsung Electronics Co. and Hynix Corp., both of South Korea, on Friday announced smaller chip-related losses for the first quarter than they experienced a year earlier. "Looking at the first-quarter situation, I have to believe the memory market hit the bottom," said Nam Hyung Kim, a memory-chip market analyst at iSuppli Corp. in El Segundo, Calif. "From now, it's the recovery stage. But the problem is the manufacturers have a long way to recover."

- Federal officials are pushing several of the country's largest banks to bolster capital reserves, people familiar with the matter said, as regulators try to repair bank balance sheets and the public image of the U.S. banking sector. The identities of the banks, among the 19 institutions that were subjected to federal "stress tests," couldn't be learned. Analysts believe they likely include regional banks with large exposures to commercial real estate in the Midwest and Southeast. Three people familiar with the matter said at least three banks are in this position. Government officials believe most banks in need can improve their capital footing without taking money from the government bailout fund.

- Facebook Inc. is expected to announce significant plans to open up core parts of its site -- namely the information that appears in the stream of updates on users' homepages and profiles -- to third-party developers so that they can build new services on top of it, people familiar with the matter say.

- Labor leaders and U.S. officials seeking a way to pay for Chrysler LLC's and General Motors Corp.'s(GM) benefit programs for retirees might find an important source of aid in an obscure federal subsidy covering certain retiree health-care costs. Under the provision, known as the health-coverage tax credit, the federal government can pay health-insurance premium costs for early retirees -- those between 55 and 65 years old -- if their former employer runs into financial problems and can't pay promised benefits.

- Global health officials mobilized Sunday to combat a deadly strain of flu, as new cases were reported in locales stretching from New Zealand to Ohio. The Obama administration declared a public-health emergency with 20 cases confirmed in the U.S., including eight in New York, and said that there are likely to be more illnesses.

- The Obama administration and senior national-security officials are reviewing whether to release additional Central Intelligence Agency memos on interrogation methods, White House spokesman Robert Gibbs said. Former Vice President Dick Cheney has requested that the administration declassify additional CIA memos that he said would show the tactics worked. Mr. Gibbs said on NBC's "Meet the Press" on Sunday that the review process would take about three weeks.

- Best Buy Co.(BBY) is rapidly expanding its private-label electronics business in a gamble to gain a key competitive advantage over rivals such as Wal-Mart Stores Inc. and Amazon.com Inc.

- A push by Brazil, Russia, India and China to have the International Monetary Fund issue its first bonds has become part of a strategy by developing nations to gain a bigger say at the IMF.

MarketWatch.com:

- The U.S. economy likely contracted sharply again in the first three months of 2009, but the details of the report on gross domestic product should indicate that the economy is beginning to heal. After falling at a 6.3% annualized pace in the fourth quarter, a 5.1% decline for first-quarter GDP was the median forecast of economists surveyed by MarketWatch.

CNBC.com:
- One of the 19 financial institutions that received a government stress test would require additional capital, based on the initial findings, according to an industry source.

IBD:
- In today's economy, it's hard to find a company that tops Wall Street's views in a single quarter, much less than for more than a year running. Synnex Corp. (SNX) is one of those exceptions. The company has sailed past analysts' forecasts for six straight quarters. And earnings have grown at double digits over the same time frame.

- When your stock price rises fivefold in less than a month — including a one-day climb of more than 200% — you tend to draw some attention. That's what's happening at Dendreon (DNDN), a developer of anti-cancer drugs.

NY Times:

- Home Builders, Preparing for a Thaw. Investors in home-builder shares may be wondering whether the housing market is near its nadir or — finally — on the way to recovery. Industry analysts are at least open to the latter possibility, with some pointing to this month’s announcement by Pulte Homes that it would acquire the Centex Corporation for $1.3 billion in stock, creating the nation’s largest home builder. “I can’t imagine them making a move like this if they thought things are going to continue to deteriorate,” said Paul Puryear of Raymond James & Associates. “There’s not a lot of speculative building happening,” said Megan McGrath, an analyst at Barclays Capital. “Most builders are only starting construction for a home on which they have an order.” Shifting demographics also augur well for builders. “This is a market that is increasingly dominated by first-time buyers,” said Nishu Sood, a real estate analyst at Deutsche Bank Securities.

- Taliban Use Secrecy, Speed to Gain Control in Pakistan.

- Member and Overseer of the Finance Club. During five years as head of the New York Fed, Treasury Secretary Timothy F. Geithner forged unusually close relationships with Wall Street executives.

- When the U.S. Congress cracked down on Internet betting in 2006, the big, publicly traded European companies that had dominated the business closed up shop in the United States. Growth in the booming industry shifted away from these companies, once the darlings of the stock market, to private operators in offshore locations like Antigua and the Isle of Man. But now, executives of some of the European companies whisper excitedly that they may soon get a second chance in the United States. Meanwhile, a number of European countries that have long maintained barriers are moving, under pressure from regulators, to legalize, and tax, online gambling.

- More than ever, America’s atheists are linking up and speaking out — even here in South Carolina, home to Bob Jones University, blue laws and a legislature that last year unanimously approved a Christian license plate embossed with a cross, a stained glass window and the words “I Believe” (a move blocked by a judge and now headed for trial). They are connecting on the Internet, holding meet-ups in bars, advertising on billboards and buses, volunteering at food pantries and picking up roadside trash, earning atheist groups recognition on adopt-a-highway signs. They liken their strategy to that of the gay-rights movement, which lifted off when closeted members of a scorned minority decided to go public.

Washington Post:
- Security Before Politics. Since leaving my post as CIA director almost three years ago, I have remained largely silent on the public stage. I am speaking out now because I feel our government has crossed the red line between properly protecting our national security and trying to gain partisan political advantage. We can't have a secret intelligence service if we keep giving away all the secrets. Americans have to decide now. A disturbing epidemic of amnesia seems to be plaguing my former colleagues on Capitol Hill. After the Sept. 11, 2001, attacks, members of the committees charged with overseeing our nation's intelligence services had no higher priority than stopping al-Qaeda. In the fall of 2002, while I was chairman of the House intelligence committee, senior members of Congress were briefed on the CIA's "High Value Terrorist Program," including the development of "enhanced interrogation techniques" and what those techniques were. This was not a one-time briefing but an ongoing subject with lots of back and forth between those members and the briefers. Today, I am slack-jawed to read that members claim to have not understood that the techniques on which they were briefed were to actually be employed; or that specific techniques such as "waterboarding" were never mentioned. It must be hard for most Americans of common sense to imagine how a member of Congress can forget being told about the interrogations of Sept. 11 mastermind Khalid Sheik Mohammed. In that case, though, perhaps it is not amnesia but political expedience.

Forbes.com:

- Fund firms rolled out hundreds of computer-driven portfolios in recent years to cash in on the popularity of quantitative hedge funds. Results are disappointing. At year-end 2007 the quant funds had $78 billion under management, delivering $725 million a year in fees to the vendors. Fund investors dutifully piled in on the misguided premise that these funds would yield positive returns even when the market fell, says Louis Stanasolovich, chief executive of Legend Financial Advisors, a fee-only wealth management firm. With their models telling them to drive off cliffs, many quant funds crashed last year. Collective performance of the group, weighted by December 2007 assets: -37%. That includes only the funds that survived until the end of 2008. It would have been worse if fund vendors had not folded 27 funds, most of them stinkers, last year. Legend Financial's Stanasolovich expects the quant fund unwind to continue.

CNNMoney.com:

- The wind industry has been getting a lot of love of late from the Obama administration.

Business Week:
- GM(GM): Some Bondholders Want Bankruptcy. While many bondholders would be wiped out, others would be richly rewarded through credit default swaps.

Chicago Tribune:

- Chicago area real estate agents are making space in their cars for clients again and they get almost bubbly when they talk about the uptick in activity. "I'm so thankful," said Mark Zipperer, a Re/Max Edge agent in Chicago, as he ticked off his busy schedule of appointments last week. "It's like after a drought, it's raining. Not only did I have a lot of people sitting in my car [last weekend] but one of my oldest listings sold." In the past few weeks, agents say an undeniable scent of sales is in the air, and data released Thursday gave credibility to their talk. March sales of previously owned single-family homes and condominiums in Illinois posted their second consecutive month-over-month gain, and for the first time since June, the statewide median price for a home rose from the prior month.

Politico:

- John Podesta, the head of a left-leaning think tank who ran the Obama transition team, is calling for the impeachment of Jay Bybee, a federal judge and former Bush administration official who wrote one of the “torture memos” made public last week. In a letter to House Judiciary Committee Chair John Conyers (D-Mich.), Podesta says that since he has "issued opinions that violate the Constitution and concealed relevant aspects of his legal views and professional conduct from the Senate, Bybee has neither the legal nor moral authority to sit in judgment of others." Podesta becomes one of the most prominent Democrats to push for Bybee’s impeachment. The former Clinton chief of staff runs the influential Center for American Progress, and is close to the Obama administration. Obama has left open the door to prosecutions of the authors of the memos that authorized harsh interrogation techniques, even as the president has tried to tamp down calls for a congressional commission to investigate the matter.

The Dallas Morning News:

- The last, frantic days of Perot family hedge fund.

USA Today:

- Verizon (VZ) and Apple (AAPL) are discussing the possible development of an iPhone for Verizon, with the goal of introducing it next year, people familiar with the situation say. It would mark the first time Apple has produced a version of the iPhone for a CDMA wireless network, which is different from AT&T's GSM technology. Vodafone, co-owner of Verizon Wireless, already sells the iPhone in Europe. The New York-based telecom entered into "high-level" discussions with Apple management a few months ago, when CEO Steve Jobs was overseeing day-to-day business, these sources say. They declined to be named because they aren't authorized to speak publicly.

HartfordBusiness.com:

- State lawmakers have largely backed off efforts to tighten oversight over the hedge fund industry, which has come under intense scrutiny as a result of the financial crisis. By a 15-1 vote, members of the banks committee recently passed a bill that would require investment advisers to Connecticut hedge funds to disclose potential conflicts of interest that could impair their “duties and responsibilities.” That requirement is much less intrusive than the committee’s original proposals, which would have required hedge funds to conduct an annual independent financial audit, disclose fees and significant changes in management and management strategy, and provide detailed portfolio information to in-state pension funds. “It’s an evolving process,” said state Sen. Bob Duff (D-Norwalk), chairman of the banks committee. “We have a lot of hedge funds in the state and we want them to continue to grow here.”

Seeking Alpha:

- The Treasury's plan to breathe new liquidity into this market is called the Public-Private Partnership Investment Program, or PPPIP. While the Treasury was developing the PPPIP program, which was unveiled in March, ETF companies began working on an alternative. Over the past two months, two plans have emerged: One from Invesco (IVZ) PowerShares and the other from Murray Stahl (CEO of Horizon Asset Management) and Robert Holderith (CEO of Emerging Global Advisors).

Reuters:

- The sense of "unremitting freefall" in the U.S. economy has ended and the picture is no longer completely negative, but rather mixed, President Barack Obama's economic adviser Lawrence Summers said on Sunday. Speaking on the "Fox News Sunday" program, Summers also said the "vast majority" of U.S. banks are well capitalized and expressed hope that the auto negotiations between Chrysler and Italian carmaker Fiat SpA would work out. "Six or eight weeks ago, there were no positive statistics to be found anywhere. The economy felt like it was falling vertically. Today, the picture is much more mixed," Summers said.

- Qualcomm Inc(QCOM) agreed to pay Broadcom Corp $891 million over four years as part of an overall settlement on Sunday that ends all litigation between the two companies. Qualcomm will pay Broadcom $200 million of that amount in the quarter ending June 30, the companies said.

- Somali pirates seized a 31,000-ton German grain carrier in the Gulf of Aden on Saturday, a Kenyan maritime official said. Pirates also released the Greek vessel, MV Saldanha, after they were paid $1.9 million in ransom, a pirate source said.

Financial Times:

- Luke Johnson, the pizza entrepreneur turned media executive, has launched a stinging attack on the European Commission’s plan to regulate hedge funds and private equity. He called it a “knee-jerk reaction” that will severely restrict investment in Europe. His comments are part of a frantic fightback by the private equity industry designed to water down the law. The Commission is holding a key meeting on Monday to discuss the draft directive before its publication on Wednesday. Mr Johnson’s letter, sent on Monday to Mr Barroso and Martin Schulz, leader of the Party of European Socialists, says how “astounded” he is at the plan to regulate private equity and hedge funds with the same rules.

- Bloomberg is planning a sustained investment in its technology and news operations, arguing that it can gain market share even as sweeping changes in financial markets pose the biggest threat to sales of its data terminals in its 27-year history. Peter Grauer, chairman of the company controlled by New York mayor Michael Bloomberg, told the Financial Times that it had seen a fall of just over 2.5 per cent in terminal numbers since they peaked in November, implying about 7,500 net cancellations from a subscriber base of about 300,000. The private company rarely discloses sales details, but figures displayed on screens around its New York offices show that net monthly installations of terminals are running about 13 per cent behind last year’s rate and Mr Grauer said he expected further falls. Any downturn in its markets takes time to filter through, as customers typically sign two-year subscriptions for terminals, with separate contracts for individual machines.

Telegraph:

- Unless this capital is forthcoming, a clutch of countries will prove unable to roll over their debts at a bearable cost. Those that cannot print money to tide them through, either because they no longer have a national currency (Ireland, Club Med), or because they borrowed abroad (East Europe), run the biggest risk of default. Traders already whisper that some governments are buying their own debt through proxies at bond auctions to keep up illusions – not to be confused with transparent buying by central banks under quantitative easing. This cannot continue for long. Commerzbank said every European bond auction is turning into an "event risk". Britain too finds itself some way down the AAA pecking order as it tries to sell £220bn of Gilts this year to irascible investors, astonished by 5pc deficits into the middle of the next decade. US hedge fund Hayman Advisers is betting on the biggest wave of state bankruptcies and restructurings since 1934. The worst profiles are almost all in Europe – the epicentre of leverage, and denial. As the IMF said last week, Europe's banks have written down 17pc of their losses – American banks have swallowed half. A disturbing number of states look like Iceland once you dig into the entrails, and most are in Europe where liabilities average 4.2 times GDP, compared with 2pc for the US. "There could be a cluster of defaults over the next three years, possibly sooner," he said. Who knows what revolution may come from this crisis if it ever reaches defaults. My hunch is that it would expose Europe's deep fatigue – brutally so – reducing the Old World to a backwater. Whether US hegemony remains intact is an open question. I would bet on US-China condominium for a quarter century, or just G2 for short.

- Tony Blair believes England’s new 50 per cent top rate of income tax introduced by Gordon Brown is a "terrible mistake." One of Mr Blair's closest allies said: "The 50p tax move is a disaster. Blair would have cut taxes, not increased them." The hostile public reaction to the Budget, which signaled a return to the politics of class warfare, has intensified speculation that Mr Brown could face a leadership challenge. "The mood in the party is dire. There's no leadership or strategy. Most of the evidence indicates the 50p tax isn't going to raise much money – it's likely to do slightly more damage than benefit. Brown's been an absolutely dreadful leader."

Die Presse:

- OAO VimpelCom CEO Boris Nemsic said the company’s growth is slowing as Russia is hurt by the global financial crisis, citing an interview. “What we will be lacking is growth,” Nemsic said. Previous “two-digit” growth rates in some regions of Russia will now be reduced, he said.

Globe and Mail:

- Can science save the oil sands? Falling oil prices and bad PR have hammered the oil sands. Out of all that bad news may rise a new era in innovation.

Frankfurter Allgemeine:

- Bundesbank President Axel Weber said the German economy, Europe’s largest, is unlikely to return to growth before the second half of 2010, citing an interview. “The economy will go downhill for quite a while” and “positive growth rates aren’t likely before the second half of next year,” Weber, who also sits on the European Central Bank’s Governing Council, was quoted as saying.

Handelsblatt:

- Deutsche Bank AG probably met its target of a 25% pretax return on equity, a measure of profitability, in the first quarter, citing people in the banking industry.

NHK:
- The Bank of Japan may say the country’s economy will probably contract by as much as 4% during this fiscal year. The central bank, which now forecasts the economy to shrink 2%, will revise the outlook on April 30 at a policy meeting.

Xinhua:

- Guangdong province’s first-quarter exports fell 18.4%.

South China Morning Post:

- Las Vegas Sands Corp. may sell the Sands Macau for $1.3 billion. The casino operator is considering the move after finding scant interest among possible buyers for luxury shopping malls attacked to its Venetian and Four Seasons reports in Macau.

Haaretz.com:

- Israel will not attack Iran even if the international sanctions against Tehran fail to convince President Mahmoud Ahmadinejad to give up his country's nuclear program, Foreign Minister Avigdor Lieberman told the Austrian daily Kleine Zeitung.In an interview published this weekend, Lieberman was asked whether Israel planned to strike Iran as a last resort. "We are not talking about a military attack. Israel cannot resolve militarily the entire world's problem. I propose that the United States, as the largest power in the world, take responsibility for resolving the Iranian question," Lieberman told the paper.

Sarmayeh:

- Iran discovered a new oil layer in the south, boosting reserves at an existing crude field to an estimated 4.5 billion barrels, citing Oil Minister Gholamhossein Nozari. Iran announced earlier this month the discovery of seven new oilfields with “high” reserves, saying details will be given within a month.

Weekend Recommendations
Barron's:
- Made positive comments on (GE), (SLB), (MO), (AMZN), (SU), (GIS) and (AAPL).

- Made negative comments on (GOOG) and (NFLX).

Citigroup:

- Upgraded (NFLX) to Buy, target $52.

- Reiterated Buy on (STI), target $22.

- Reiterated Buy on (BEAT), target $29.

- Downgraded (BNI) and (CP) to Sell.

- Reiterated Buy on (TOL), target $23.

Night Trading
Asian indices are -2.0% to +.25% on avg.
S&P 500 futures -1.88%.
NASDAQ 100 futures -1.51%.

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/Estimate
- (GLW)/.05

- (OMC)/.44

- (SII)/.57

- (ENR)/1.09

- (HUM)/1.14

- (WHR)/-.18

- (QCOM)/.40

- (VZ)/.59

- (PCL)/.94

- (HMA)/.12

- (EW)/.68

- (SLG)/1.54

- (ELX)/.04

Upcoming Splits

- None of note

Economic Releases

- None of note

Other Potential Market Movers
- The Dallas Fed Manf. Activity report, (BA) shareholders meeting, (AXP) shareholders meeting, (TOL) shareholders meeting, (HON) shareholders meeting and the (MFE) shareholders meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and airline shares in the region. I expect US stocks to open lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the week.

Weekly Outlook

Click here for Wall St. Week Ahead by Reuters.

Click here for stocks in focus for Monday by MarketWatch.

There are a number of economic reports of note and many significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. – Dallas Fed Manf. Activity

Tues. – Weekly retail sales reports, S&P/CaseShiller Home Price Index, Consumer Confidence, Richmond Fed Manf. Index

Wed. – Weekly EIA energy inventory report, weekly MBA mortgage applications report, 1Q Advance GDP, 1Q Personal Consumption, 1Q Core PCE, 1Q GDP Price Index, FOMC Rate Decision

Thur. – Personal Income, Personal Spending, PCE Core, 1Q Employment Cost Index, Initial Jobless Claims, Chicago PMI, NAPM-Milwaukee

Fri. – Univ. of Mich. Consumer Confidence, Factory Orders, ISM Manufacturing, ISM Prices Paid, Total Vehicle Sales

Some of the more noteworthy companies that release quarterly earnings this week are:

Mon. – Corning Inc.(GLW), Omnicom Group(OMC), Smith Intl(SII), Energizer(ENR), Humana(HUM), Whirlpool(WHR), Qualcomm(QCOM), Verizon(VZ), SL Green(SLG)

Tues. – FPL Group(FPL), McGraw-Hill(MHP), Jacobs Engineering(JEC), Under Armour(UA), Coventry Health(CVH), Cerner Corp.(CERN), E*Trade(ETFC), Panera Bread(PNRA), US Steel(X), Buffalo Wild Wings(BWLD), AGCO(AG), Office Depot(ODP), Bristol-Myers(BMY), Valero Energy(VLO), Pfizer(PFE), Becton Dickinson(BDX)

Wed. – Time Warner(TWX), Burger King(BKC), Medco(MHS), Baker Hughes(BHI), IAC/Interactive Corp.(IACI), American Tower(AMT), Aetna(AET), Wyeth(WYE), First Solar(FSLR), Starbucks(SBUX), Owens-Illinois(OI), Ryland Group(RYL), Flowserve(FLS), Aflac(AFL), Express Scripts(ESRX), Boston Properties(BXP), CB Richard Ellis(CBG), Visa Inc.(V), Hess Corp.(HES), Jones Apparel(JNY), Akamai(AKAM), General Dynamics(GD), SPX Corp.(SPW)

Thur. – NYSE Euronext(NYX), Apache Corp.(APA), Corinthian Colleges(COCO), Strayer Education(STRA), Starwood Hotels(HOT), International Paper(IP), Expedia(EXPE), Comcast Corp.(CMCSA), Cardinal Health(CAH), Monster Worldwide(MWW), Dow Chemical(DOW), Cigna(CI), Eastman Kodak(EK), Motorola(MOT), Viacom(VIA/B), Kellogg(K), QLogic(QLGC), MetLife(MET), Ingram Micro(IM), Newmont Mining(NEM), Celgene(CELG), Cummins Inc.(CMI), Las Vegas Sands(LVS), McAfee(MFE), Domino’s(CPZ), Wynn Resorts(WYNN), OfficeMax(OMX), General Motors(GM), Colgate-Palmolive(CL), Dominion Resources(D), Exxon Mobil(XOM), Microchip Tech(MCHP), Procter & Gamble(PG), Travelers(TRV)

Fri. – Allergan(AGN), Chevron(CVX), Clorox(CLX), Fortune Brands(FO), Mastercard(MA)

Other events that have market-moving potential this week include:

Mon. – (BA) shareholders meeting, (AXP) shareholders meeting, (TOL) shareholders meeting, (HON) shareholders meeting, (MFE) shareholders meeting

Tue. – (CB) shareholders meeting, Barclays Retail/Restaurant Conference, (X) shareholders meeting, (FO) shareholders meeting

Wed. – Barclays Retail/Restaurant Conference, (MRO) shareholders meeting, (EBAY) shareholders meeting

Thur. – (BDK) shareholders meeting, (AZN) annual meeting, (GLW) shareholders meeting, (SCHW) business update

Fri. – (R) shareholders meeting, (MAR) shareholders meeting, (OXY) shareholders meeting

BOTTOM LINE: I expect US stocks to finish the week modestly higher on less credit market angst, better-than-feared earnings reports, declining economic fear, lower energy prices, short covering and diminishing financial sector pessimism. My trading indicators are giving bullish signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 866.23 -.39%*

Click here for the Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices
S&P 500 866.23 -.39%
DJIA 8,076.29 -.68%
NASDAQ 1,694.29 +1.27%
Russell 2000 478.74 -.13%
Wilshire 5000 8,783.32 -.34%
Russell 1000 Growth 383.87 +.32%
Russell 1000 Value 440.31 -1.08%
Morgan Stanley Consumer 524.21 -1.61%
Morgan Stanley Cyclical 515.34 +7.03%
Morgan Stanley Technology 421.61 +3.44%
Transports 3,137.76 +1.39%
Utilities 326.95 -1.79%
MSCI Emerging Markets 27.83 -.54%

Sentiment/Internals
NYSE Cumulative A/D Line 26,165 +7.18%
Bloomberg New Highs-Lows Index -84 -12.0%
Bloomberg Crude Oil % Bulls 23.0 +79.92%
CFTC Oil Large Speculative Longs 180,383 -.33%
Total Put/Call .81 +14.08%
OEX Put/Call 1.56 +43.12%
ISE Sentiment 133.0 +4.72%
NYSE Arms 1.05 -26.05%
Volatility(VIX) 36.82 +8.49%
G7 Currency Volatility (VXY) 14.31 -.63%
Smart Money Flow Index 8,097.40 +.90%
AAII % Bulls 31.82 -27.91%
AAII % Bears 38.64 +7.75%

Futures Spot Prices
Crude Oil 51.55 -1.45%
Reformulated Gasoline 144.20 -3.71%
Natural Gas 3.30 -12.24%
Heating Oil 136.83 -4.04%
Gold 914.10 +5.07%
Base Metals 128.54 -5.91%
Copper 205.0 -6.65%
Agriculture 303.94 +1.35%

Economy
10-year US Treasury Yield 2.99% +4 basis points
10-year TIPS Spread 1.50% +22 basis points
TED Spread 98.0 + 1 basis point
N. Amer. Investment Grade Credit Default Swap Index 177.44 -.22%
Emerging Markets Credit Default Swap Index 505.74 +1.88%
Citi US Economic Surprise Index +23.80 -4.03%
Fed Fund Futures imply 76.0% chance of no change, 24.0% chance of 25 basis point cut on 4/29
Iraqi 2028 Govt Bonds 54.50 +2.97%
4-Wk MA of Jobless Claims 646,800 -.6%
Average 30-year Mortgage Rate 4.80% -2 basis points
Weekly Mortgage Applications 1,172,200 +5.30%
Weekly Retail Sales +.50%
Nationwide Gas $2.06/gallon +.01/gallon
US Cooling Demand Next 7 Days 56.0% above normal
ECRI Weekly Leading Economic Index 107.20 unch.
US Dollar Index 84.71 -1.47%
Baltic Dry Index 1,873.0 +11.36%
CRB Index 222.86 -1.32%

Best Performing Style
Mid-cap Growth +.82%

Worst Performing Style
Large-cap Value -1.08%

Leading Sectors
Networking +7.32%
Papers +6.66%
Homebuilders +5.07%
Software +4.80%
Oil Service +4.48%

Lagging Sectors
Drugs -3.28%
Medical Equipment -5.06%
HMOs -5.55%
Education -6.46%
Banks -7.10%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Finish Higher, Boosted by Financial, REIT, Gaming, Homebuilding, Hospital, Technology and Energy Shares

Evening Review
Market Summary
Top 20 Biz Stories
Today’s Movers
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Futures
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Real-Time Stock Bid/Ask
After-hours Stock Quote
After-hours Stock Chart
In Play

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

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail longs, Technology longs, Financial longs and Medical longs. I haven’t 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 high. Today’s overall market action is very bullish. The VIX is falling 1.10% and is very high at 36.78. The ISE Sentiment Index is slightly below average at 131.0 and the total put/call is about average at .84. Finally, the NYSE Arms has been running high most of the day, hitting 1.52 at its intraday peak, and is currently .99. The Euro Financial Sector Credit Default Swap Index is falling .43% today to 152.30 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 3.03% to 177.44 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is falling 1.74% 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 falling 1.59% to 61.75 basis points. The Libor-OIS spread is falling 1.78% to 88 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up 5 basis points to 1.50%, which is down 114 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 .09%, which is unch. today. Market-leading stocks are outperforming the major averages substantially again today. Economically sensitive shares are also big winners. A number of sectors are posting huge gains today. Networking, software, reit, homebuilding, education, gaming, hospital, construction and oil service shares are surging 4%+. One of my longs, (ISRG), is soaring another 11% today on a short squeeze. The latest data show a short interest ratio of 5.2, near a record, and short interest at 8.9 million shares, which is a record high. The stock is extended short-term, but after a consolidation period I expect the shares to trade still higher before year-end. I expect US stocks to build on today’s gains over the next couple of weeks as the final results of the bank stress tests trickle out. Nikkei futures indicate an +243 open in Japan and DAX futures indicate an +10 open in Germany on Monday. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, diminishing economic fear, less financial sector pessimism and falling credit market angst.