Stocks Sharply Lower into Final Hour on Profit Taking, Higher Energy Prices, Rising Long-Term Rates,

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Financial longs, Technology longs, Retail longs and Medical longs. I took profits in a few longs and added (IWM)/(QQQQ) hedges this morning, thus leaving the Portfolio 75% net long. The tone of the market is very negative as the advance/decline line is substantially lower, most sectors are declining and volume is heavy. Investor anxiety is above average. Today’s overall market action is bearish. The VIX is rising 6.22% and is very high at 34.47. The ISE Sentiment Index is slightly below average at 131.0 and the total put/call is slightly below average at .78. Finally, the NYSE Arms has been running above average most of the day, hitting 1.32 at its intraday peak, and is currently 1.12. The Euro Financial Sector Credit Default Swap Index is plunging another 11.32% today to 122.35 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 dropping 6.83% to 141.38 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is falling another 2.46% to 78 basis points. The TED spread is now down 385 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is dropping another 2.70% to 45.0 basis points. The Libor-OIS spread is falling 2.67% to 75 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up 13 basis point to 1.60%, which is down 104 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 .18%, which is unch. today. For the second day in a row the broad market has mostly ignored positive news. I think most of today’s weakness is related to profit-taking and the rise in the 10-year yield. The US sovereign debt credit default swap is plunging another 24.4% today, which makes the rise in yields less of a concern, in my opinion. Most of the sell-off in bonds is likely related to safe-haven selling after more positive economic data. While yields may rise a bit further into a new higher trading range, I seriously doubt we are about to embark upon a period of soaring interest rates. The AAII % Bulls rose to 44.09%, while the % Bears fell to 33.33% this week, which is a negative. For the second month in a row, equity long/short hedge funds massively underperformed the S&P 500, which rose 9.7% in April versus their -.5% decline. As well, market neutral fell -.85% during the month. Many of these funds were having great relative performance years before the recent rally, which is likely leading to renewed performance anxiety. It appears many are still short or very underexposed to US stocks. Thus, while the major averages are extended short-term and will likely see more weakness, I suspect many funds will use this weakness to cover and add US stock exposure, which should keep any near-term pullback relatively mild in nature. Nikkei futures indicate a -135 open in Japan and DAX futures indicate a -2 open in Germany tomorrow. I expect US stocks to trade mixed-to-lower into the close from current levels on profit-taking, more shorting, higher energy prices and higher long-term interest rates.

Today's Headlines

Bloomberg:

- The cost of protecting corporate bonds from default fell to the lowest since the collapse of Lehman Brothers Holdings Inc. on speculation banks will resume lending after withstanding Federal Reserve stress tests. Credit-default swaps on the benchmark CDX North America Investment-Grade Index dropped 8.5 basis points to 135.5, the lowest since Aug. 18, according to Phoenix Partners Group prices at 8:15 a.m. in New York. The Markit iTraxx Europe index of 125 companies with investment-grade ratings fell 12 basis points to 118.5, the lowest since Oct. 1 and below the closing level the day Lehman filed for bankruptcy protection, JPMorgan Chase & Co. prices show. Contracts on Morgan Stanley fell 20 to 265, Citigroup Inc. was 85 lower at 375 and General Electric Co.’s finance arm dropped 100 basis points to 450, Phoenix prices show. Bank of America Corp. declined 21 basis points to 207, JPMorgan fell 7 to 125 and Goldman Sachs Group Inc. slid 15 to 187, according to CMA DataVision. The thaw in credit markets drove the rate at which banks lend to each other to record lows, with the London interbank offered rate for three-month loans in dollars dropping to 0.96 percent. Libor reached an all-time high of 5.73 percent Sept. 7. The Libor-OIS spread, which increases as banks become more reluctant to lend, was at 75 basis points, the lowest level since Aug. 4. The difference between what banks and the Treasury pay to borrow for three months, the so-called TED spread, narrowed to 77 basis points, the least since May 28 last year. It widened to 464 basis points on Oct. 10. Credit-default swaps on the Markit iTraxx Financial index of 25 European banks and insurers declined 16 basis points to 120 and the subordinated index dropped 37 to 208. Both are the lowest since February.

- Chinese steel prices aren’t likely to rally until automakers and builders use up more of their inventories, said John Kovacs, an analyst at London-based metals consultant CRU Ltd. Inventories in Shanghai soared to their highest in at least 2 ½ years in March. Prices in China, the world’s largest user of the metal, for hot rolled coil declined 42% in the past year to $482 a metric ton, according to Metal Bulletin. “Prices won’t rise until the current inventory levels come down,” Kovacs said. “Inventory levels are still fairly high in all major cities in China.”

- Crude oil traded at the highest price in almost six months and copper rose to a three-week peak on speculation that the banking crisis is ending and demand for raw materials will rebound.

- European Central Bank President Jean- Claude Trichet said the ECB unanimously agreed on a 60 billion- euro ($80.5 billion) plan to buy bonds as officials step up their response to the worst recession since World War II. “The Governing Council has decided in principle that the eurosystem will purchase euro-denominated covered bonds issued in the euro area,” Trichet told reporters in Frankfurt. He said the bank’s main interest rate, which it cut by a quarter point to a record low of 1 percent today, is appropriate and that the ECB will extend its unlimited auctions of funds to banks.

- Kohl’s Corp., BJ’s Wholesale Club Inc. and other U.S. retailers said first-quarter preliminary earnings exceeded their forecasts after April sales signaled shoppers are returning to stores. Wal-Mart Stores Inc., the world’s largest retailer, said sales at U.S. stores open at least a year rose 5 percent. The company had forecast as much as 3 percent growth for the quarter. Sales at clothing chain Aeropostale Inc. climbed 20 percent, more than twice the average analyst estimate in a survey by Retail Metrics Inc. Gap Inc. also beat projections. Retail Metrics said comparable-store sales rose 1.5 percent in April, only the second gain since September.

- Three Chicago billionaires who helped fund President Barack Obama’s election campaign are fighting legislation he backs that would make it easier for unions to organize hotels they own. Penny Pritzker, Obama’s campaign finance chairwoman and a director of Global Hyatt Corp., has told the president she is opposed to the measure, known as card check, said a person familiar with the situation. Neil Bluhm, a partner in Walton Street Capital LLC, also opposes the bill, the person said. Lester Crown, chairman of Henry Crown & Co., criticized the proposal in an interview. For the city’s business leaders who nurtured Obama’s White House bid, card check is a gut check on support for their hometown president. Labor, which spent $100 million on Democratic campaigns last year, made it a top priority to enact a bill giving workers bargaining rights based on signing cards instead of winning a secret-ballot election. Voting privately is “an American prerogative and shouldn’t be overturned,” said Crown, 83, whose family holdings include the Ojai Valley Inn & Spa in Ojai, California, and the Little Nell hotel in Aspen, Colorado. “The recommended legislation is absolutely the wrong thing to do.”

- General Electric Co.(GE) plans to spend $6 billion by 2015 on health-care products, financing and partnerships designed to make more efficient, lower-cost treatment available worldwide. Dubbed “Healthymagination,” the effort spans units including water, media and health care, the world’s biggest maker of medical-imaging equipment said. GE will double research on targeted medical products to $3 billion, lend $2 billion via its finance unit, partly to developing regions, and earmark $1 billion for partnerships, information and services.

- Treasury 30-year bonds fell the most in about four months as investors demanded higher-than-forecast yields at today’s auction of $14 billion of the securities with the U.S. slated to sell a record amount of debt this year. “This is a problem,” said Chris Ahrens, head interest- rate strategist at UBS Securities LLC in Stamford, Connecticut, one of 16 primary dealers required to bid in Treasury auctions. “The market required a fairly significant discount to buy the bonds.”

Wall Street Journal:

- In a turnaround for the industry, two groups representing hedge funds said Thursday at a House Financial Services Subcommittee hearing that they support mandatory registration for investment advisers, including those to private capital.

- President Barack Obama delivered Congress the details of his $3.6 trillion budget Thursday, eliminating or cutting back 121 programs but swamping the $17 billion in savings with new efforts, from a college-completion fund to a new affordable-housing trust fund to 50,000 more cops on the beat. At a time when state and local governments are slashing services remorselessly, the Obama budget for 2010 shows little real sign of belt-tightening.

- The Cranes in Spain Point Mainly to a Strain. Symbols of Spanish Prosperity Now Serve as Giant Reminders of Economic Gloom; Downturn Ends a Building Frenzy.

NY Times:

- Four years after paying $2 billion to extricate itself from a partnership with Fiat, General Motors is seeking a stake in the Italian automaker in exchange for its Latin American and European operations.

- President Obama was noticeably silent last month when the Iowa Supreme Court overturned the state’s ban on same-sex marriage. But now Mr. Obama — who has said he opposes same-sex marriage as a Christian but describes himself as a “fierce advocate of equality” for gay men and lesbians — is under pressure to engage on a variety of gay issues that are coming to the fore amid a dizzying pace of social, political, legal and legislative change.

NY Post:

- The Chinese are about to embark on a shopping trip of epic proportions. Hoping to take advantage of cheap prices on struggling American businesses, a group of 400 executives from state-owned and private Chinese companies will be visiting the US next month on the hunt for distressed assets. China's Ministry of Commerce is behind the tour, and is planning visits to New York, Washington, Chicago and Salt Lake City.

Washington Times:

- President Obama's choice for the government's No. 2 housing job is embroiled in the largest fine in U.S. history for "blatant violations" of open records laws after the Washington State Supreme Court chastised his office for withholding documents detailing taxpayer costs for a new professional football stadium in Seattle. The documents that Ronald Sims' office was found to have kept from the public when he served as King County executive included information about cheaper alternatives to the $430 million Seattle Seahawks stadium, which was built in 2002, according to a Washington Times review of the court records.

THR.com:

- Watching adult-oriented TV shows and movies might prompt kids to start having sex at an earlier age, according to a new study released by Children's Hospital Boston. It suggests that early onset of sexual activity among teens might relate to the amount of adult content they watched as children.

Forbes:

- Want to find one reason why the markets have risen so steeply over the past few months? One overlooked cause is that pensions and endowments are rebalancing their holdings in order to get back in-line with their original asset allocation models. Meaning that mangers have been buying stocks at a feverish pace because they had become so devalued--and these same managers are lightening their alternative holdings in things like hedge funds.

FINalternatives:

- Three of the five hedge fund strategies published by Dow Jones Hedge Fund Indexes posted losses in April. Merger arbitrage moved out of the top spot on a year-to-date basis falling 29 basis points for the month, lowering its 2009 return to 2.34%. Equity long/short fell nearly half a percent and is -1.01% for the year and equity market neutral rounded out the benchmarks with a loss of 85 basis points, increasing its YTD loss to -2.72%.

Reuters:
- Egypt's Suez Canal revenues dropped 22.7 percent to $346.9 million in April, compared to $448.9 million in the same month last year, but were up from $327.9 million in March, a Suez Canal Authority official said on Thursday. Economists have been watching Suez Canal revenues closely to see any effects from piracy off the Somali coast and the recession in major economies, which is expected to reduce the volume of trade between Asia and Europe.

- General Motors Corp(GM) said it burned through $10.2 billion in the first quarter as it relied on a federal bailout to ride out a sharp decline in global sales that overwhelmed its cost-cutting efforts. Revenue dropped by almost half to $22.4 billion as the company cut production by about 900,000 vehicles and worked to run down costly inventories in the United States and Europe. The results showed the extreme pressure on GM with just four weeks remaining for the embattled automaker to win deals to slash debt and operating costs with its major union and bondholders to avoid bankruptcy.

- The U.S. government on Thursday prepared to draw a line separating weak banks from strong ones in an attempt to put the worst of the financial crisis behind it. The results of "stress tests" of the 19 largest U.S. banks -- due at 5 p.m. EDT (2100 GMT) -- are the culmination of a months-long exercise aimed at reviving the financial system and are expected to show about half the banks need more capital.

The Economic Times:

- Cement prices could fall by up to 10% in the coming months, pushed lower by new supply and slower construction activity during the monsoon season, industry officials said.

Market News International:
- Chinese banks made about $90 billion in new loans in April. It would be the lowest monthly increase in loans since November, the news agency said.

Bear Radar

Style Underperformer:
Small-cap Value (-3.16%)

Sector Underperformers:
Homebuilders (-6.33%), Semis (-6.24%) and REITs (-5.56%)

Stocks Falling on Unusual Volume:
CMA, TSL, BCS, ISIL, WFC, JNPR, WBD, DGIT, EZCH, MELI, NICE, BBBB, WRLD, IPHS, SYMC, CECO, POWL, ENER, SNCR, ALGT, ISLE, TKLC, GMXR, WW, DSX and WG

Stocks With Unusual Put Option Activity:
1) CY 2) HOTT 3) AIG 4) MTW 5) DHI

Bull Radar

Style Outperformer:
Large-cap Value (-.11%)

Sector Outperformers:
HMOs (+7.55%), Medical Equipment (+1.85%) and Biotech (+1.47%)

Stocks Rising on Unusual Volume:
PSSI, CI, NOVN, AET, UL, UN, PRGO, LLY, ABT, MANT, EQ, USM, NVEC, ECLP, DWSN, SXCI, PLCE, ANDE, ENOC, UEIC, TTES, KNDL, ITWO, HRBN, LAMR, LHCG, ZION, NOVN, CTCM, PRSC, CVC, GLP, BKD, HOC, OCN and STE

Stocks With Unusual Call Option Activity:
1) EXPD 2) ALL 3) LAMR 4) CTIC 5) CX

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Thursday Watch

Late-Night Headlines
Bloomberg:

- The Euro may be set for a sudden slide if the European Central Bank announces plans to buy debt at today’s policy meeting, Citigroup says. The US dollar dropped after the Federal Reserve announced March 18 it would start buying Treasuries to hold down consumer borrowing costs. “The present Euro-dollar setup suggests a non-linear reaction,” analysts led by NY-based Tom Fitzpatrick wrote in a note yesterday. “A dovish surprise looks much more likely to illicit a sharp move to the down side while an as expected outcome may have little material effect.”

- The cost to protect against a default by banks including Citigroup Inc., Morgan Stanley, and Goldman Sachs Group Inc. dropped on reports suggesting that the biggest US lenders will have to raise less capital than investors. Contracts on Morgan Stanley dropped 78 basis points to 275 basis points, CMA data show. Swaps on Citigroup plunged 131 basis points to 423, Goldman Sachs fell 37 to 200, Wells Fargo declined 49 to 181, Bank of America fell 48 to 228 and JPMorgan dropped 28 to 128, according to CMA. Credit swaps on the Markit CDX North America Investment Grade Index Series 12 dropped 12 basis points to 144 basis points as of 5pm in NY, according to CMA DataVision. The index, which typically falls as investor confidence improves, has dropped 53 basis points since the end of March.

- The cost of protecting Japanese corporate bonds from default plunged, according to traders of credit-default swaps. The Markit iTraxx Japan index fell 60 basis points to 260 as of 10:18 am in Tokyo, according to Morgan Stanley prices. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 21 basis points to 212.5 as of 9:05 am in Hong Kong, according to ICAP Plc. The Markit iTraxx Australia index was quoted 32.5 basis points lower at 240 as of 11:18 am in Sydney, Citigroup Inc. data show.

- President Barack Obama has no wish to “undermine” private health-insurance companies through his support of a government-backed alternative, his new Health and Human Services secretary told lawmakers. In her first congressional testimony since being confirmed to the post April 28, Kathleen Sebelius said private companies play a critical role in making sure all Americans have coverage and costs are held down. The administration is “willing to discuss” proposals in Congress to reduce the tax protection for employer-paid health benefits, she said.

- Platinum may decline toward $800 an ounce, reversing this year’s 23% gain, as the metal slumps into a “bear trend,” Standard Chartered Bank forecast, citing trading patterns. “Spot platinum is resuming the bear trend, with trendline support giving way and a slide below $1,002 and $999 to build,” David Barclay, the bank’s commodity strategist, wrote. “A break down towards $800 should follow.”

- Alumina Ltd., partner in the world’s biggest producer of the material used to make aluminum, said demand for the metal may contract further this year and expects more cuts to production. “Global demand for aluminum is expected to contract by a further seven percent in 2009,” CEO John Bevan said today. “We expect curtailments will continue during this year.”

- AU Optronics Corp.(AUO), the world’s third- largest maker of liquid-crystal displays, said its sales to Chinese television makers may rise more than 40 percent this year after a rural-subsidy program spurred demand.

Wall Street Journal:

- The Standard & Poor's 500 Index will probably be 20% to 30% higher by the end of the year, perhaps more, and U.S. financials will likely offer the greatest return over the next two years, Bill Miller, chairman and chief investment officer at Legg Mason Capital Management, said Wednesday.
- Qwest(Q) plans to announce a new wireless Internet offering that lets broadband customers access AT&T(T) hotspots around the country.

- Intel Corp.(INTC) and Novell Inc.(NOVL) are planning to collaborate to encourage hardware companies to adopt the Moblin operating system, Novell executives said.

- Foreign bidders are lining up to pick off parts of General Motors Corp. as the contraction of the U.S. auto industry sets the stage for a global reshuffling.French auto maker Renault SA has opened discussions about possibly supplying cars to be sold through GM's Saturn dealers, if GM lines up an owner for the Saturn network, people familiar with the matter said. Separately, China's Geely Automobile - Holdings Ltd. has submitted a bid to acquire GM's Saab unit, people familiar with the situation said.

- The Securities and Exchange Commission has put credit-derivatives traders on notice: Their once-inscrutable corner of Wall Street is now in regulators' cross hairs. The agency, which on Tuesday filed its first insider-trading case related to credit-default swaps, is pushing into areas where it once tread lightly. At least 50 investigations involving derivatives are under way. Overall, the agency is pursuing 150 cases that involve hedge funds. Under political attack itself, the SEC is branching out from public stock and accounting frauds into the private byways of the credit markets and investment funds.

IBD:

- St. Jude Medical (STJ) keeps meeting its projections despite a daunting economy and unfavorable currency exchange rates.

MarketWatch.com:
- Amazon.com(AMZN) debuted a new, large-screen version of its popular Kindle e-book reader Wednesday in an effort to broaden the appeal of the device to readers of newspapers, magazines and textbooks.

- The annual meeting of the mutual-fund industry's trade group kicked off on a bright note Wednesday, with a pair of notable investment strategists contending that the Standard & Poor's 500 Index will top 1000 by year-end.

- Gold has frustrated both the bulls and the bears over the last couple of weeks, as bullion has remained within a fairly narrow trading range. Tellingly, however, the bulls have not let this frustration get them down. On the contrary, in fact, the editors of gold timing newsletters are more bullish today than they were two weeks ago. And that's a problem, according to contrarian analysts, since the market likes to climb a wall of worry.

CNBC.com:
- Why is oil trading near a 6-month high—breaking into a new range—and rallying above $56 a barrel, when oil supplies are at the highest level we've seen since 1990 and demand is tanking? Oil remains technically strong today, despite rather bearish fundamentals, as traders continue to follow the equities market. Crude's broken into a new range and a settlement above $55 is significant. What's fueling the momentum? Nymex traders tell me they're seeing new money coming in from passive funds that are reallocating assets away from precious metals and into energy holdings. It's this money flow—rather than the fundamental supply/demand data—that's driving oil prices higher.

- There will be a “surprising rebound” in the U.S. economy in the second half of 2009, said Larry Kantor, head of research at Barclays Capital. “Most of our clients have missed this rally,” Kantor told CNBC. “[But] there’s plenty of scope for some more, as long as if the economic data goes from mixed—which is what we have right now—to decisively positive.”

NY Times:

- The sprawling investigation into New York’s pension investments hints at a much bigger problem than the handful of indictments so far would suggest. What started as an investigation by the New York attorney general, Andrew M. Cuomo, into the state comptroller’s office — where Mr. Cuomo says favors were being exchanged for contracts to invest pension money — has mushroomed into a broad look at more than 100 firms by attorneys general in at least 30 other states.

- As Stress Tests Are Revealed, Markets Sense a Turning Point.

The WashingtonPost:

- The Department of Homeland Security is dismantling a next-generation biological attack warning system in New York City subways because of technical problems, U.S. officials said. Robert Hooks, a deputy assistant secretary, said the department no longer believes it is necessary to expand the pilot program, as he told Congress in July, because of resource and technology limits. Hooks said a long-planned alternative sensor system, set for initial deployment late next year, also will not be available nationwide until 2012, to allow for more testing.

Business Week:
- Rather than risking jobs by tightening taxes on U.S.-based multinationals, the President should boldly slash corporate rates from 35% to 25%

CNNMoney:

-.Chrysler LLC will not repay U.S. taxpayers more than $7 billion in bailout money it received earlier this year and as part of its bankruptcy filing. This revelation was buried within Chrysler's bankruptcy filings last week and confirmed by the Obama administration Tuesday.

San Francisco Chronicle:

- Computer and home entertainment industry leaders, including Intel Corp., Microsoft Corp., Dell Inc. and Panasonic Corp., said Wednesday that they're forming a new association to create an even faster wireless technology for zipping large files around the home.

Politico:

- As the clock ticks on a self-imposed deadline, Rep. Henry Waxman is facing fire from all sides over his landmark measure to curb carbon emissions. After months of haggling, he still doesn’t have a deal that moderates will support. On Wednesday, he had to back offhis threat from a day earlier to skip a key subcommittee vote after members raised a ruckus. And, to top it all off, the president and others are breathing down his neck to wrap up work on climate change so that Waxman can turn his focus to the blockbuster fight of the summer over health care reform. “Henry has some decisions to make,” said Rep. Mike Doyle (D-Pa.), a key moderate voice in the negotiations. “Everyone has been very clear about where they need to be to get to ‘yes.’ ... The chairman has a very good read of the committee.” This is the first real test for House Democrats since Barack Obama moved into the White House. Failure to move this climate change measure through the chamber would be a body blow to the whole party — even if isn’t going anywhere in the Senate. And negotiations, to this point, have only highlighted the divisions Waxman must try to bridge.

USA Today.com:

- For the first time, the number of U.S. households opting for only cellphones outnumber those that just have traditional landlines in a high-tech shift accelerated by the recession.

Reuters:

- Regulators are ordering some of the largest U.S. banks to find tens of billions of dollars of capital to cushion themselves in the event of a deep economic downturn.About half of the 19 largest U.S. banks are expected to need more capital once the results of government "stress tests" of their ability to weather a deep recession are released Thursday at 5 p.m. EDT.

- News Corp(NWS/A) posted a 47 percent drop in operating income on Wednesday as advertising revenue declined, but Chairman Rupert Murdoch said the worst effects of the recession are behind the media company. "It is increasingly clear that the worst is over," he said, echoing executives at other media conglomerates such as Walt Disney Co and Viacom Inc. "There are emerging signs in some of our businesses that the days of precipitous decline are done," Murdoch said.

- Cisco Systems Inc (CSCO) posted stronger-than-expected quarterly results and Chief Executive John Chambers said his customers were seeing more stability, adding to hopes that business conditions would soon recover. His comments, which came a day after similarly optimistic remarks by U.S. Federal Reserve Board Chairman Ben Bernanke, helped shares of the network equipment maker rise 2.5 percent in after-hours trading on Wednesday as investors looked beyond the double-digit fall in sales in the last quarter. "They are seeing some stabilization, a leveling out, or in other words, they are finally beginning to have something reasonably solid underneath their feet," Chambers said of how Cisco customers are describing their current business. "I think you could make some fairly broadbased conclusion that the environment appears to be stabilizing and doesn't appear to be getting worse," said Morgan, Keegan & Co analyst Simon Leopold, adding that Cisco's report boded well for the overall market. Chambers was particularly upbeat about the company's long-term prospects, reiterating an annual revenue growth target of 12 percent to 17 percent -- one which many analysts say isn't possible for the foreseeable future. "I'm as comfortable or probably more comfortable than ever about that target," he told Reuters in an interview. In the third quarter, Cisco announced it would buy Pure Digital Technologies, the creator of the popular Flip Video mini camcorder, as well as management software maker Tidal Software Inc. Chambers said there was more to come. "We have a very large war chest and tend to use it over time," he said.

The Guardian:

- The Obama administration says it is inching closer to a deal that would send an estimated 100 Yemeni detainees at Guantanamo Bay to Saudi terrorist rehabilitation centers and speed the closing of the Navy prison.

Globe and Mail:
- British oil explorer Heritage Oil Corp. [HOC-T] said on Wednesday it has discovered up to 4.2 billion barrels of oil in the Kurdish area of Iraq, adding to pressure on Baghdad and the autonomous region to unblock a legal impasse stalling oil projects. Toronto-listed Heritage said in a statement following the results of its first drilling on the Miran West field that it could contain 2.3 billion to 4.2 billion barrels of oil-in-place and have recoverable reserves of up to 3 billion barrels. In time, the company hopes to link into Iraq's export pipelines. A field of this size could normally sustain production of hundreds of thousands of barrels a day when fully developed.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (EQ), target $48.

- Reiterated Buy on (MGA), target $45.

- Reiterated Buy on (AMZN), target $100.

- Reiterated Buy on (RIG), target $102.

Night Trading
Asian Indices are +.50% to +1.75% on average.
S&P 500 futures -.36%.
NASDAQ 100 futures -.66%.

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Earnings of Note
Company/EPS Estimate
- (RDC)/.94

- (SLE)/.17

- (RGLD)/.11

- (STE)/.41

- (DTV)/.32

- (ATK)/2.09

- (WEN)/.02

- (CVC)/.14

- (DYN)/-.03

- (GM)/-10.97

- (ALL)/1.25

- (IRF)/-.34

- (VRSN)/.28

- (CBS)/.07

- (AIG)/-.13

- (IPI)/.25

- (RATE)/.33

- (PSA)/1.21

- (NVDA)/-.09

- (MCHP)/.12

- (FTO)/.34

Economic Releases

8:30 am EST

- Preliminary 1Q Non-farm Productivity is estimated to rise .6% versus a .4% decline in 4Q.

- Preliminary 1Q Unit Labor Costs are estimated to rise 2.7% versus a 5.7% gain in 4Q.

- Initial Jobless Claims for last week are estimated to rise to 635K versus 631K the prior week.

- Continuing Claims are estimated to rise to 6350K versus 6271K prior.

- ICSC Chain Store Sales for April are estimated to fall 1.0% versus a 2.1% decline in March.

3:00 pm EST

- Consumer Credit for March is estimated at -$4.0B versus -$7.5B in February.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Evans speaking, Fed’s Bernanke speaking, weekly EIA natural gas inventory report, (POT) shareholders meeting, (VZ) shareholders meeting and the (BTU) shareholders meeting could also impact trading today.

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