Bull Radar

Style Outperformer:
Large-cap Value (+1.10%)

Sector Outperformers:
Steel (+2.84%), Oil Service (+2.66%) and Energy (+2.25%)

Stocks Rising on Unusual Volume:
SSRI, AU, SHG, IOC, PCZ, LIHR, RTP, KMX, FGP, SAFM, MAPP, DMND, RYAAY, PAAS, FUJI, ESRX, MICC, GOLD, ATI, TSL and NJ

Stocks With Unusual Call Option Activity:
1) S 2) VMC 3) MRVL 4) TIF 5) MCO

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Thursday Watch

Late-Night Headlines
Bloomberg:

- Arthur Samberg, founder of Pequot Capital Management Inc., plans to liquidate his main hedge funds because a federal insider-trading investigation has “cast a cloud over the firm.” “With the situation increasingly untenable for the firm and for me, I have concluded that Pequot can no longer stay in business as an investment adviser,” Samberg wrote today in a letter to clients. Pequot, started in 1986, managed $3.47 billion as of May 15, according to a regulatory filing, down from $4.3 billion in November. Pequot’s assets peaked at about $15 billion in 2001, making it the world’s largest hedge-fund manager at the time. The firm said in April 2001 that No. 2 executive Daniel Benton was leaving to start his own hedge fund, taking about half of Pequot’s assets. Benton ran Andor Capital Management LLC until deciding in August 2008 to shut.

- Exxon Mobil Corp.(XOM), the world’s largest refiner, said the transition away from oil-derived fuels is probably 100 years away. Petroleum-based fuels including gasoline and diesel, as well as hydrocarbons such as coal and natural gas, will remain the dominant sources of energy for factories, offices, homes and cars for decades because there are no viable alternatives, Chief Executive Officer Rex Tillerson told reporters today after Exxon Mobil’s annual shareholders meeting in Dallas. In the U.S., which burns a quarter of global oil supplies, consumers probably face higher fuel prices if lawmakers impose greenhouse-gas rules that inflate fuel-production costs, Tillerson said. A plan introduced by Democrats this month would allocate a limited number of emission credits to refiners and electricity producers, with the aim of curbing greenhouse gases. “The oil-gas-refining side of the business received a very, very small amount of the allocations, which means that sector will bear more of the costs more immediately,” Tillerson said. “If we’re going to place a price on carbon, let’s do that in the most efficient way. A carbon tax is more efficient than a tax that’s applied by way of a cap-and-trade mechanism.” Tillerson, 57, said lawmakers are hurrying to restrict greenhouse gases when many scientific questions surrounding the global warming issue remain unresolved.

- Steven Rattner, head of the U.S. Treasury Department’s automotive team, has a net worth of at least $188 million and held shares in an investment fund run by the majority owner of Chrysler LLC, according to his financial- disclosure statement. Rattner, co-founder of Quadrangle Group LLC, also sold guarantees of as much as $15 million on a credit-default swaps index tied to the secured debt of 100 companies, including General Motors Corp.’s senior secured loans, the filing shows. He reported holdings of between $500,000 and $1 million in Cerberus Institutional Partners LP Series 2. The fund is managed by Cerberus Capital Management LP, the parent of Auburn Hills, Michigan-based Chrysler. Cerberus Institutional Partners has invested in two auto-parts and equipment companies and a car-rental company, all privately owned. Rattner has since sold all those holdings, according to an official at the Treasury. He was “required to comply with financial conflict-of- interest rules, including divestitures where needed, and he has done so fully,” said Jenni Engebretsen, a Treasury spokeswoman, who responded on Rattner’s behalf. The filing is for the period between Jan. 1, 2008, and Feb. 20, 2009. Rattner, 56, has directed the Treasury’s auto team since February. Chrysler, which filed for bankruptcy protection on April 30, received $4 billion from the government in January. The company, the third-largest U.S. automaker, will get $500 million more from the Treasury’s Troubled Asset Relief Program, TARP’s special inspector general said in a report. Rattner owned at least $105 million in various Quadrangle investments. He also reported holdings of between $500,000 and $1 million in Goldman Sachs Group Inc. stock, and less than $1,001 apiece in Bear Stearns Cos., Citigroup Inc., and Lehman Brothers Holdings Inc. Rattner sold $3 million to $15 million in credit-default swaps to a unit of Goldman Sachs Group Inc. on the equally weighted index known as the Markit LCDX Series 10, according to the filing. The index includes the senior secured loans of 100 companies including GM and Ford, according to the filing. An investor that sold such protection on the index would have to pay as much as $150,000 in the event of a company bankruptcy, less the value of the underlying loans. Rattner and his wife, Maureen White, raised between $100,000 and $250,000 for Barack Obama’s presidential campaign.

- Type 1 diabetes cases in young children will double by 2020, and countries should prepare for the deluge, researchers said. The number children under 15 with Type 1 diabetes will rise to about 160,000 across Europe in 2020 from 94,000 in 2005, according to a study in the U.K. journal The Lancet. Lead researcher Chris Patterson from the Queen’s University in Belfast expects the cases in children younger than 5 to double. The gain is so rapid that it can’t be explained by genetic links alone, the researchers said.

- The AFL-CIO, the largest U.S. union organization, used “creative accounting” to disguise “a crippling cash-flow situation,” according to a report by a union leader. Tom Buffenbarger, president of the International Association of Machinists and Aerospace Workers, said the labor federation masked its financial difficulties heading into last year’s presidential election campaign. Net assets of the 11 million-member AFL-CIO declined to a negative $2.3 million as of June 30, 2008, from a $66 million surplus on July 1, 2000. “A new leadership -- leaders chosen by our members, leaders held accountable by our members -- is needed,” wrote Buffenbarger, who is a member of the AFL-CIO’s finance committee and the president of one of the nation’s largest unions.

- OPEC is likely to leave production quotas unchanged at today’s meeting in Vienna in a bet that demand will recover, pushing prices as high as $75 a barrel by year’s end, ministers said.

Wall Street Journal:

- President Barack Obama wants to make a million houses a year more energy efficient as part of his goal to create thousands of "green" jobs and reduce U.S. carbon emissions. But the administration's push to expand an obscure antipoverty program into a centerpiece of that initiative is stirring debate over the best way to use a flash flood of federal stimulus dollars.

- Expedia.com(EXPE) said Wednesday it will stop charging fees when customers book airline tickets over the Internet, upping the ante in the competition among online travel agencies.

- A government program designed to rid banks of bad loans, part of a broader effort once viewed as central to tackling the financial crisis, is stalling and may soon be put on hold, according to people familiar with the matter. The Legacy Loans Program, being crafted by the Federal Deposit Insurance Corp., is part of the $1 trillion Public Private Investment Program the Obama administration announced in March as a way to encourage banks to sell securities and loans weighing on their balance sheets to willing investors. But prospective buyers and sellers have expressed reticence to the FDIC about participating for fear the program's rules will change in a political atmosphere hostile to Wall Street. In addition, some banks that might have sold troubled loans into the program earlier in the year have become less eager as they regained a sense of stability.

- Amid tighter budgets, more people are trying to save money by cutting their cable cords. In response, cable companies are beginning to experiment with new Internet services. In what's shaping up as the home-entertainment equivalent of severing a landline phone service, more people are joining the ranks of "cord cutters" by forgoing cable subscriptions that can run $60 or more a month. Instead, they're turning to free over-the-air high-definition television channels and video-game consoles, such as Playstation 3 and XBox 360. They're also watching Internet-connected TV sets, paying a basic high-speed Internet fee of about $45, as well as set-top boxes from companies like Netflix Inc. Some are also using media browsers that they can download free and run on PCs, providing access to TV shows, movies and other content directly from the Web. The number of cable cutters remains too small to threaten the pay-television industry. Still, large cable companies such as Comcast Corp. and Time Warner Cable Inc. are noticing that people are spending more time online.

- Marking a new front for Pakistan's Islamist insurgency, the Taliban and its militant allies are moving into the heartland -- targeting the nation's undertrained and poorly equipped police. In Punjab province, home to more than 50% of Pakistan's 175 million people and its major industries, insurgents have struck the police during four major attacks and a handful of smaller ones since February. An assault Wednesday was the deadliest. Suspected Islamic militants decimated a police emergency center and the office of Pakistan's military intelligence agency in the eastern city of Lahore. They killed at least 21 people, including nine police officers, and wounded hundreds more.

NY Times:

- Chinese legal authorities have threatened to delay or deny the renewal of legal licenses for 18 top civil rights lawyers, escalating use of a tactic they have used to put pressure on attorneys they consider troublesome, two human-rights advocacy groups have charged.

- Worried about heavy reliance on imported oil, Chinese officials have drafted automotive fuel economy standards that are even more stringent than those outlined by President Obama last week, Chinese experts with a detailed knowledge of the plans said on Wednesday. The new plan would require automakers in China to improve fuel economy by an additional 18 percent by 2015, said An Feng, a leading architect of China’s existing fuel economy regulations who is now the president of the Innovation Center for Energy and Transportation, a nonprofit group in Beijing. Cars with small fuel-sipping engines are now subject to a 1 percent tax, while sports cars and sport utility vehicles with the largest engines are subject to a 40 percent tax. The average new car, minivan or sport utility vehicle in China already gets the equivalent of 35.8 miles a gallon this year based on the American measurement system of corporate averages and will be required to get 42.2 miles a gallon in 2015, Mr. An said. The details of China’s new fuel economy standards may favor domestic automakers at the expense of multinationals, several auto industry officials said.

IBD:

- Last month, Defense Secretary Robert Gates proposed some serious changes to the Pentagon's spending priorities. Out with big-ticket aircraft like the F-22. In with stealthy new options like unmanned aerial vehicles. Either way, aircraft parts supplier TransDigm (TDG) has it covered.

Business Week:
- Good News on the Mortgage Mess. Mortgage bond prices have rebounded and refinancing is reducing problem securities. Now improved disclosure is identifying the worst loans.

- GPS doesn't just keep us from getting lost. From practical business applications to social-networking fun, it's transforming our lives.

CNNMoney:

- Here’s a pie chart that should warm Steve Jobs’ heart. That big blue slice covering 59% of the pie represents Apple’s (AAPL) share of the U.S. smartphone traffic in April as measured by AdMob, the world’s largest purveyor of ads on mobile apps and websites. By the same measure, Apple also had the lion’s share — 43% — of the mobile Web traffic worldwide.

Forbes:

- China’s Debt Bomb.

South Florida.com:

- Bargain hunters are having their way with South Florida's depressed housing market. Big price declines are driving sales as buyers scoop up a bevy of bank-owned properties. Broward County's median price for existing homes in April was $191,300, down 36 percent from $298,100 a year ago, the Florida Association of Realtors said Wednesday. Sales countywide jumped 33 percent, to 690 from 518. Meanwhile, few areas in the state boast cheaper condominiums than Broward. The median price for existing condos tumbled 47 percent to $79,900. Condo sales shot up 39 percent.

Washington Post:

- The government would retain significant control over the restructured General Motors under an Obama administration plan that would allow U.S. officials to directly name or influence the appointments of the vast majority of a new 13-member board that would oversee the company, sources familiar with the discussions said. The plan calls for federal officials to directly appoint five or six members to the board after GM emerges from its expected bankruptcy, the sources said. Another six would roll over from GM's existing board, but even these directors would reflect the government's influence since GM is reconstituting its board under government direction. The United Auto Workers' health-care trust would name one director to the company board, the sources said, adding that Canada is likely to appoint a board seat as well.

Reuters:

- News Corp(NWS/A) hopes to sell Google Inc access to a greater swathe of its media properties, its executives said, as an advertising deal between the two companies comes up for renewal. Senior executives at News Corp and its MySpace online service said at the All Things Digital conference on Wednesday that the company was working with Google to try and make their existing advertising deal better for both parties.

- U.S. Treasury Secretary Timothy Geithner has a chance next week to persuade anxious Chinese authorities their investments in huge and growing volumes of U.S. debt securities are safe and sound. His visit to Beijing must deal with tough economic realities: the United States is issuing new debt in record volumes as it seeks to finance an array of programs to right its economy, while China is growing nervous about whether its U.S. "nest egg" is secure.

- The Obama administration is weighing a plan that would put the Federal Reserve in charge of monitoring systemic risk and give the Federal Deposit Insurance Corp authority to unwind insolvent bank holding companies, sources familiar with the proposal said on Wednesday. The idea, which is being circulated to U.S. lawmakers as they embark upon an overhaul of financial regulation, could be announced soon after June 8, the two sources said.

- Chrysler is on the verge of a Motor City miracle: a make-over in bankruptcy that will bring in new management under Italy's Fiat SpA and its highly touted small car technology. Rescued from liquidation with $8.6 billion of emergency U.S. government loans and bankruptcy financing, Chrysler has been given a new lease on life. But what's next? The new Chrysler will be up against formidable and entrenched competitors in the small vehicle market like Honda Motor Co. It will also struggle with the aftermath of freezing product development to conserve cash, analysts said. But in what could be its biggest challenge, the No. 3 U.S. automaker has to break free of a reliance on aggressive discounting and a reputation for poor quality.

Financial Times:

- A senior European business representative has accused Beijing of deliberately locking foreign suppliers out of contracts under its Rmb4,000bn ($586bn, €421bn, £365bn) stimulus package. “All the foreigners are out of the race” for a package of 25 wind turbine orders worth more than €5bn, said Joerg Wuttke, president of the European Union Chamber of Commerce in China. “It seems that the central government has decided that this must be awarded to Chinese manufacturers and not foreigners who have invested big in China.” The complaint is a significant contrast to the message Beijing has sought to convey, that it is making a contribution to help salvage the sagging global economy.

- US Treasury yields rose to their highest level in six months ­on Wednesday, raising concern that rising mortgage rates could damp a nascent recovery in the economy. The yield on the benchmark 10-year Treasury note rose 24 basis points to 3.74 per cent, a level last seen in mid-November. The 10-year note has climbed from lows of 2.1 per cent in December. The S&P 500 stock index fell 1.9 per cent. Long-term yields have been rising as investors respond to evidence of “green shoots” in the economy, the increasing US debt burden, the risk of a revival in inflation and a flood of new Treasury issuance. While short-term yields remain stable, longer-term yields have been volatile for several days, raising questions about whether the US Federal Reserve will have to increase its planned purchases to Treasuries.

The Telegraph:

- A list of Europe's biggest 50 hedge funds compiled by New York-based trade publication Alpha Magazine shows that GLG Partners has been hit the hardest, with assets under management falling 52pc from $23.9bn (£14.9bn) in 2008 to $11.5bn this year. The fund, run by former Goldman Sachs stars Noam Gottesman and Manny Roman, has dropped from being the second biggest hedge fund in Europe to eighth position. Other long-established funds were also hit hard. Sloane Robinson, founded by Tory party donor Hugh Robinson, saw assets drop by nearly 40pc last year. The Children's Investment Fund (TCI), the famously aggressive active investor run by the philanthropist Chris Hohn, has lost nearly 28pc of its assets. Lansdowne Partners, which called the collapse of the Northern Rock and generated returns of 13pc this year, saw its assets drop by 37pc to $12bn. RAB Capital slid down the rankings from 21st to 42nd biggest fund, while Toscafund fell from 19th to 39th.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (SPLS), target $24.

- Reiterated Buy on (AEO), target $17.

- Reiterated Buy on (MYGN), target $42.

- Reiterated Buy on (BAC), target $20.

Night Trading
Asian Indices are -1.0% to -.25% on average.
S&P 500 futures -.12%.
NASDAQ 100 futures -.07%.

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Earnings of Note
Company/EPS Estimate
- (BF/B)/.48

- (PERY)/.23

- (BIG)/.40

- (COST)/.53

- (HNZ)/.55

- (NOVL)/.06

- (OVTI)/-.33

- (DELL)/.22

- (JCG)/.11

- (SAFM)/.54

- (GCO)/.05

- (FRED)/.21

Economic Releases

8:30 am EST

- Durable Goods Orders for April are estimated to rise .5% versus a -.8% decline in March.

- Durables Ex Transports for April are estimated to fall -.3% versus a -.7% decline in March.

- Initial Jobless Claims for last week are estimated to fall to 628K versus 631K the prior week.

- Continuing Claims are estimated to rise to 6745K versus 6662K prior.

10:00 am EST

- New Home Sales for April are estimated to rise to 360K versus 356K in March.

11:00 am EST

- Bloomberg consensus estimates call for a weekly crude oil inventory drawdown of -150,000 barrels versus a -2,105,000 barrel decline the prior week. Gasoline supplies are expected to fall by -1,300,000 barrels versus a -4,337,000 barrel decrease the prior week. Distillate inventories are estimated to rise by +1,000,000 barrels versus a +672,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.4% versus a -1.89% decline the prior week.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Fisher speaking, weekly EIA natural gas inventory report, Barclay’s Capital Wireline/Wireless Conference, Cowen Tech/Media/Telecom Conference, Deutsche Bank Energy/Utilities Conference, (HD) shareholders meeting, (IPG) shareholders meeting, Morgan Stanley Cloud Computing Symposium, (AMZN) shareholders meeting, (JNPR) shareholders meeting, (TGT) shareholders meeting and the (NVLS) mid-quarter update could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by automaker and mining stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Lower into Final Hour on Rising Long-Term Rates, Higher Energy Prices, More Shorting

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Technology longs. I added (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 75% net long. The tone of the market is mildly negative as the advance/decline line is lower, most sectors are declining and volume is about average. Investor anxiety is above average. Today’s overall market action is mildly bearish. The VIX is rising 2.38% and is very high at 31.35. The ISE Sentiment Index is slightly below average at 130.0 and the total put/call is about average at .81. Finally, the NYSE Arms has been running around average most of the day, hitting 1.1 at its intraday peak, and is currently .97. The Euro Financial Sector Credit Default Swap Index is rising .14% today to 119.0 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is falling .38% to 143.27 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is rising 4.49% to 52 basis points. The TED spread is now down 411 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising 9.43% to 43.50 basis points. The Libor-OIS spread is rising 1.76% to 46 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 10 basis points to 1.92%, which is down 72 basis points since July 7th. The 3-month T-Bill is yielding .16%, which is down 1 basis point today. Market-leading stocks are substantially outperforming the broad market again today. The construction, semi, gaming, steel and alternative energy sectors are also gaining on the day. The rise in the 10-year yield is pressuring the broad market this afternoon, with banks and reits seeing the most selling pressure. I expect the 10-year to stabilize soon, but stocks are unlikely to move meaningfully higher until the yield surge subsides. I would expect the Fed to announce plans to increase the size of its quantitative easing program over the coming weeks. Nikkei futures indicate a -48 open in Japan and DAX futures indicate a -33 open in Germany tomorrow. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting, higher energy prices, profit-taking and higher long-term rates.

Today's Headlines

Bloomberg:

- The U.S. government’s Aaa credit rating is stable “even with a significant deterioration” in the nation’s debt, Moody’s Investors Service said, signaling confidence in a rebound from the recession. The U.S. rating is supported by “a diverse and resilient economy, strong government institutions, high per-capita income, and a central position in the global economy,” New York-based Moody’s said in a statement.

- The Standard & Poor’s 500 Index rebounded to close above its average price from the past month yesterday, signaling the steepest rally since the 1930s may resume, according to Schaeffer’s Investment Research. “It shows that the trend line that has held since the March low continues to be a support for the S&P 500,” said Richard Sparks, senior equity options trader at Schaeffer’s in Cincinnati. “The short-term uptrend is still in place.”

- The U.S. recession will probably end in the third quarter, a survey of business economists showed, even as rising joblessness indicates the recovery will be weaker than previously estimated. The world’s largest economy will begin to expand next quarter, according to 74 percent of economists in a National Association for Business Economics survey. Compared with NABE’s February poll, growth will be slower and unemployment will be higher in the second half of this year and through 2010.

- The S&P 500’s Index will rally through the start of November after the latest jump in US consumer confidence, if history is any guide. Between 1974 and 2004 the US Consumer Confidence Index rose at least 20% on seven occasions. Following all but one of those surges, the S&P 500 was higher six months later, according to Bloomberg and Bespoke Investment Group LLC. The sentiment index rose 35% to 54.9 in May, the Conference Board said yesterday.

- Exxon Mobil Corp.(XOM), the largest U.S. oil company, said shareholders rejected proposals to prohibit its chief executive officer from serving as chairman and to boost spending on renewable fuel sources. A resolution to separate the CEO and chairman’s roles was supported by 29.5 percent of votes cast at the company’s annual meeting today in Dallas, less than the 50 percent required to force directors to reconsider their opposition. Initiatives to develop low-carbon alternatives to gasoline, adopt pollution- reduction goals and allow non-binding shareholder votes on executive pay also failed.

- President Barack Obama’s plans to cap greenhouse-gas emissions and raise taxes on companies may cause factory owners to hold back on investments, delaying economic recovery, the top lobbyist for U.S. manufacturers said today.

- North Korea threatened a military response to South Korean participation in a U.S.-led program to seize weapons of mass destruction, and said it will no longer abide by the 1953 armistice that ended the Korean War. “The Korean People’s Army will not be bound to the Armistice Agreement any longer,” the official Korean Central News Agency said in a statement today. Any attempt to inspect North Korean vessels will be countered with “prompt and strong military strikes.” South Korea’s military said it will “deal sternly with any provocation” from the North.

- China’s provincial authorities may slow the central government’s attempts to consolidate the auto industry and create a giant automaker to rival Toyota Motor Corp. and Volkswagen AG in the world’s fastest growing car market.

- Malaysia’s economy contracted for the first time since 2001 last quarter as exports slumped, pushing the nation toward its first recession in a decade. Southeast Asia’s third-largest economy shrank 6.2 percent in the first quarter from a year earlier, after a 0.1 percent gain in the previous three months, the central bank said in a statement in Kuala Lumpur yesterday. Economists were expecting a 3.9 percent decline.

- OPEC doesn’t need to cut oil production more because there are signs of recovering demand, Saudi Arabian Oil Minister Ali al-Naimi said. OPEC should meet existing cutbacks to boost prices, Angola’s minister said. Asked whether prices will fall this quarter, al-Naimi replied: “Anything can happen. The reason we don’t want to do anything now is that supply and demand is so out of balance. Making another cut now would not help stabilize the market.” U.S. crude oil inventories rose to the highest level in two decades earlier this month, while the International Energy Agency says global demand is falling the most since 1981. OPEC members would like to see industry-held stockpiles in developed nations fall to the equivalent of about 52 to 54 days worth of consumption from about 62 days now, al-Naimi said. “Lagging quota compliance by the non-Gulf Arab states -- hovering around 50 percent - has hamstrung any real discussion of a potential cut to accelerate the drawdown of the glut,” according to a PFC Energy report provided today by analyst David Kirsch, who is in Vienna.

- Treasuries fell for a fourth day amid concern that record U.S. debt sales will overwhelm investor demand as the economy begins to show signs of stability. Government debt declined even as today’s auction of a record-tying $35 billion in five-year notes drew the most demand from a group of investors that includes foreign central banks in three months. The Treasury will sell $26 billion in seven-year notes tomorrow, the third auction this week. “We continue to see more supply,” said Brian Edmond, head of interest rates in New York at Cantor Fitzgerald LP, one of 16 primary dealers that trade with the Federal Reserve. “There are always concerns about auctions when we have one more to go. It’s tricky because it’s the last supply we have until month-end.”

Wall Street Journal:

- Some banks are prodding the government to let them use public money to help buy troubled assets from the banks themselves. Banking trade groups are lobbying the Federal Deposit Insurance Corp. for permission to bid on the same assets that the banks would put up for sale as part of the government's Public Private Investment Program. PPIP was hatched by the Obama administration as a way for banks to sell hard-to-value loans and securities to private investors, who would get financial aid as an enticement to help them unclog bank balance sheets.

- Wall Street burned thousands of investors with so-called structured products that were supposed to provide healthy profits and limit losses. Brokers, hoping investors' memories are short, are pushing these high-fee products again with safety as the big selling point. Overall, investors purchased $5.9 billion of structured products in last year's fourth quarter, down 75% from 2008's first quarter, according to data provider mtn-i. Sales have started to nudge upward, rising 7% compared to the fourth quarter, though they are still way down from a year ago.

- Commercial airlines are beginning to find new bank financing for aircraft, as credit markets have loosened up "even in the past three weeks," Walt Skowronski, president of Boeing Capital Corp., the finance unit of aircraft manufacturer Boeing Co. (BA), said in an interview Tuesday.

- Apple(AAPL) co-founder Steve Wozniak said Steve Jobs sounds “healthy, energetic” a month before the CEO is expected to return to the company. On the sidelines of the All Things D conference, Mr. Wozniak said Mr. Jobs “doesn’t sound like he’s sick,” nor did he seem to be in a health crisis.

CNBC:

- Big U.S. banks are “definitely out of the woods” after last year's credit crisis, but smaller community banks are still facing difficulty, banking analyst Dick Bove told CNBC. “The big banks do not need the FDIC guarantees any longer,” Bove said in a live interview. “The markets have changed dramatically in a positive fashion.”

NY Times:

- President Obama’s campaign to cut health costs by $2 trillion over the next decade, announced with fanfare two weeks ago, may have hit another snag: the nation’s antitrust laws. Antitrust lawyers say doctors, hospitals, insurance companies and drug makers will be running huge legal risks if they get together and agree on a strategy to hold down prices and reduce the growth of health spending. Robert F. Leibenluft, a former official at the Federal Trade Commission, said, “Any agreement among competitors with regard to prices or price increases — even if they set a maximum — would raise legal concerns.”

- LEVI’S is getting in the spirit of the season by dressing its storefront mannequins in white. In Levi’s-owned stores in New York, Los Angeles, Chicago and San Francisco, that means more than just marking the passing of Memorial Day, the traditional date to begin wearing white: in 20 stores, the mannequins’ white Levi’s jeans and shirts are adorned with White Knots, a symbol of solidarity with the same-sex marriage movement.

- Timothy F. Geithner, who before to his confirmation as Treasury secretary unintentionally charged that China was “manipulating” its currency, will make his first trip to that country and meet with its leaders next week amid rising concern about China’s willingness to continue buying United States debt.

MarketWatch:
- JPMorgan’s(JPM) Dimon also told investors later Wednesday morning that he expects his company to generate combined pre-provision net revenue of $80 billion for this year and next. J.P. Morgan Chase had come through the stress tests conducted by the Treasury Department and the Federal Reserve better than its big bank competitors, but its own revenue assumptions exceed the government's by $7.6 billion, according to presentation materials accompanying Dimon's remarks.

- General Motors Corp. said Wednesday its offer to swap about $27 billion in debt for equity has expired without enough takers, leaving the company few options ahead of a June 1 bankruptcy deadline.

- The U.S. dollar gained Wednesday, aided by a report that showed existing home sales rose more than expected last month. The U.S. currency was also up versus the euro after a European Central Bank policy maker indicated that the door remained open to a further cut in official interest rates, pressuring the region's shared currency.

TheStreet.com:

- Who Profits From Derivatives Changes?

Washington Post:

- The United States and Canada would own nearly three-quarters of a restructured General Motors, effectively nationalizing the border-straddling industrial colossus as part of an overhaul plan that would put most of the rest of the company in the hands of a union trust fund. Sources said the plan, a bankruptcy reorganization proposal being drafted by the Obama administration, would require the U.S. government to lend GM about $30 billion on top of the $19.4 billion already invested, giving it the majority stake. Canada is preparing to lend about $9 billion for a smaller interest, the sources said. These figures would total nearly $60 billion, making the GM bailout one of the largest corporate rescues since the current economic crisis began last year and one of the largest reorganizations in history. The sources cautioned that the negotiations are continuing and the totals could change.

LA Times:

- The Pentagon is prepared to leave fighting forces in Iraq for as long as a decade despite an agreement between the United States and Iraq that would bring all American troops home by 2012, the top U.S. Army officer said Tuesday.

The Detroit News:

- Nearly 50,000 jobs could be lost in the auto sector as a result of President Barack Obama's decision to approve fuel efficiency requirements for the nation's cars and trucks, according to government documents and a former presidential adviser. At the same time, the increased fuel rules could cause full-size truck sales to fall significantly without government help, a Wall Street analyst said.

WWDRetail:

- Retailers are keeping cool when it comes to markdown madness. Even this past Memorial Day weekend, the traditional trigger for major spring clearances, stores appeared to take a more measured approach to markdowns than that seen last holiday season and earlier this year. And it may stay that way for the summer. “Promotions through Memorial Day weekend appeared to be ‘deals not steals’ geared at specific categories,” Todd Slater, managing director and specialty retail, apparel and footwear analyst at Lazard Capital Markets, wrote in a research report Tuesday. “Fewer promotions indicate May is on track.”

Reuters:
- Intel’s(INTC) Stacy Smith, finance chief of the world's biggest chipmaker, said notebooks would be Intel's main growth driver for years to come, propelled by a continuing trend towards mobility. Morales reiterated that inventories, which had been built up by electronics makers and retailers who had underestimated the impact of the recession, were now seen in balance with demand. "From an inventory standpoint, we think it is really optimized for current levels of business," he said. "Supply-chain confidence is much higher."

- The European Union and Iraq expect to clinch a broad trade and political pact by the end of the year that will forge deeper energy ties between the two, sources said after negotiations on Wednesday. The 27-nation bloc wants to wean itself off its dependence on Russian oil and gas, and sees Iraq as a long-term alternative energy supplier.

- The global financial crisis has tarnished the dollar and will prompt reserve managers to diversify, but the U.S. currency will retain its dominant international role, a senior Chinese official said in remarks published on Wednesday.

Financial Times:
- City finance professionals are so worried about the future that nearly 30 per cent are planning to leave London, according to a survey by eFinancialCareers, a jobs website. Many have taken tangible steps towards moving, such as sending their CVs to overseas companies, and in some cases discussing internal transfers with their employers. Their most desirable destinations are Zurich and New York, followed by Singapore, Geneva and Hong Kong. Fifty-seven per cent believe more City redundancies are “probable” or “definite” in the next six months, the online survey of more than 400 London-based financial professionals found. It comes at a sensitive time for the City. The Centre for Economic and Business Research forecast that 29,000 wholesale finance jobs would be lost this year, after 28,000 were shed last year. That would leave 295,000 City finance jobs. Many observers believe employment in the City will recover gradually from next year and hope London can hang on to its position as a leading financial centre if the regulatory response to the crisis is not too heavy-handed. Of those surveyed, 45 per cent thought London’s leading position was under threat, while a third felt it was not. Increased taxes were seen as the main threat, followed by the potential impact of heavier European regulation. “Concerns about the relative competitiveness of the City in the face of impending changes to the regulatory framework coupled to upheavals in the tax system are having an immediate impact on the desirability of London as a location in which to work,” said John Benson, chief executive of eFinancialCareers.

The Guardian:

- IBM(IBM)earmarked $3 billion to finance so-called smart infrastructure projects in Europe and Asia likely to receive government stimulus support.

The move, announced on Wednesday, follows a similar announcement of $2 billion the computer consulting and technology company is making available in the United States as it seeks to win business for which government funds may not immediately be forthcoming.

Globe and Mail:

- A steady 15-year decline in the U.S. death rate from cancer translates to about 650,000 lives over that time, the American Cancer Society said on Wednesday. But cancer will kill 1,500 Americans every day on average – with 1.47 million cases diagnosed and 562,000 deaths in 2009, the group said in its annual report on cancer statistics. Cancer, which causes one in four deaths in the United States, is the No. 2 killer after heart disease.

Vedomosti:

- Moscow apartment prices have slumped by as much as 50% for elite building in rubles terms and by 33% for less expensive housing since autumn, citing research by Russia’s Regional Development Ministry.

Oriental Morning Post:

- China may spend $659 billion on renewable-energy projects over 10 years, 50% more than previously planned, citing an industry official. Wind-power capacity will rise to about 150,000 megawatts by 2020 from 10,000 megawatts in 2008. Solar-power capacity will rise to 20,000 megawatts from 100 megawatts and nuclear-power capacity will jump to 80,000 megawatts from 10,000 megawatts.

Bear Radar

Style Underperformer:
Small-cap Value (-1.38%)

Sector Underperformers:
Education (-4.42%), REITs (-3.59%) and Airlines (-3.47%)

Stocks Falling on Unusual Volume:
IOC, ATI, JRJC, MELI, CTXS, FLO, AZO, MON, HIW, DLB, KTC, BIG and BJ

Stocks With Unusual Put Option Activity:
1) CMCSA 2) CEPH 3) RL 4) KWK 5) MON