Bull Radar

Style Outperformer:
Mid-Cap Value (+.67%)

Sector Outperformers:
Banks (+1.19%), Software (+1.03%) and Energy (+1.02%)

Stocks Rising on Unusual Volume:
SMCI, AA, LNC, PFG, TIE, SAP, RDA/A, VRUS, ICLR, TMK, AGP, PLCM, MDCO, ABII, SMTS, JAZZ, RUE, RBCN, LAMR, AGNC, AMSC, KALU, JACK, AGII, VLTR, ASMI, ADBE, MICC, CPSI, WNI and HIG

Stocks With Unusual Call Option Activity:
1) GPS 2) SNV 3) ERIC 4) MTG 5) LNC

Wednesday Watch

Evening Headlines
Bloomberg:

• GMAC Said to Hire Citigroup(C), Goldman Sachs(GS) for TARP Repayment. GMAC Inc., the lender controlled by the U.S., has hired Citigroup Inc., which also counts the government as its biggest owner, to explore options for repaying bailout funds, according to a person briefed on the matter. Goldman Sachs Group Inc. will also help the lender examine repayment strategies and both banks will assist GMAC in reviewing options for its money-losing mortgage unit. The Detroit-based company, which benefited from $17.3 billion of taxpayer funds, is considering “strategic alternatives” -- Wall Street parlance for a unit’s sale or shutdown -- at mortgage lender Residential Capital LLC. The oversight panel said in a report earlier this month that GMAC may not be able to fully repay its TARP debt and the rescue may cost taxpayers $6.3 billion. GMAC is 56.3 percent owned by the government, while taxpayers own 27 percent of Citigroup.
  
• Obama to Appear on Fox News in Final Health-Care Push. President Barack Obama will be interviewed tomorrow on the Fox News Channel, his second appearance on the cable network since administration officials last year singled out Fox for being critical of his policies. Obama is in a final drive for congressional passage of health-care legislation and has been undertaking a public campaign to make his case. “Obviously they have a pretty big audience share and I think it’s safe to say that a lot of members that are undecided” and their constituents watch the Fox channel, White House press secretary Robert Gibbs said. “It’s certainly worth a shot” to try to sway some votes. News Corp.’s Fox News Channel this year has averaged more than twice the daily audience of its competitors, Time Warner Inc.’s CNN and General Electric Co.’s MSNBC, according to The Nielsen Company. Tomorrow’s interview is set for broadcast at 6 p.m. Washington time, according to the network’s Web site.
  
• Honda Recalls 412,000 Vehicles for 'Soft' Brake Feel.
  
• Massey Energy(MEE) to Buy Cumberland for $960 Million. Massey Energy Co. agreed to buy Cumberland Resources Corp. for $960 million in cash and stock to expand its coal holdings in southwestern Virginia and eastern Kentucky.
• Markit Said to Plan Index on Asian Government Swaps. Markit Group Ltd., the London-based provider of bond and derivatives indexes, plans to create a benchmark for credit-default swaps on Asia-Pacific governments, according to six traders familiar with the matter.
• China in 'Greatest Bubble in History,' Rickards Says. China is in the midst of “the greatest bubble in history,” said James Rickards, former general counsel of hedge fund Long-Term Capital Management LP. The Chinese central bank’s balance sheet resembles that of a hedge fund buying dollars and short-selling the yuan, said Rickards, now the senior managing director for market intelligence at McLean, Virginia-based consulting firm Omnis Inc. “As I see it, it is the greatest bubble in history with the most massive misallocation of wealth,” Rickards said at the Asset Allocation Summit Asia 2010 organized by Terrapinn Pte in Hong Kong yesterday. China “is a bubble waiting to burst.” Rickards joins hedge fund manager Jim Chanos, Gloom, Boom & Doom publisher Marc Faber and Harvard University professor Kenneth Rogoff in warning of an overheating and potential crash in China’s economy following a rally in stocks and property prices. Leveraged speculation in the stock market, wasteful allocation of resources by state-owned enterprises, off-balance- sheet debt through regional governments and the country’s human rights record are concerns, said Rickards, who worked for LTCM between 1994 and 1999. “Take Russia and China together, neither of them is really deserving any investment” except for short-term speculation, Rickards said. India and Brazil are two of the “real economies” among the developing countries, he said.

Wall Street Journal:

• Nearly Half in Poll Oppose Health-Care Plan, but Core Democrats Want Action. The pending health-care overhaul remains unpopular with a broad swath of the public, but core Democrats the party needs to show up and vote in November are strong backers, a new Wall Street Journal/NBC News poll finds. The survey found that opinions have solidified around the health-care legislation, with 48% calling it a "bad idea" and 36% viewing it as a "good idea" when presented with a choice between those two. At the same time, Democratic voters strongly favor the legislation being pushed by President Barack Obama, particularly constituencies such as blacks, Latinos and self-described liberals. Those groups mobilized in 2008 to help elect Mr. Obama, but are far less enthusiastic than core Republicans about voting in this year's midterm elections. The survey found a 21-point enthusiasm gap between the parties, with 67% of Republicans saying they are very interested in the November elections, compared with 46% of Democrats. "I don't think it's about winning the middle. It's really about alienating the base," Mr. Hart said of Democratic lawmakers' calculations about the upcoming health-care vote. Where the health-care debate has been a drag for Mr. Obama's numbers, it also has been an anchor for Congress, which now has an anemic 17% approval rating. Half of Americans, if they had the choice, would vote to replace every member of Congress, including their own representative, the survey found. More broadly, the survey showed continued gloominess among all voters about the country's direction, with nearly six in 10 saying it is on the wrong track. Adding to Democrats' election-year concerns: Voters are souring on the party's ability to deal with the country's economic troubles. As an issue, handling of the economy has favored the Democrats in the past four election cycles. But now, by a 10-point margin, registered voters with the highest interest in the November elections said they believe the GOP is better at dealing with the economy. Some of Mr. Obama's highest ratings relate to his work on foreign policy, an area that had been a weakness when he was a presidential candidate. Clear majorities said they approve of Mr. Obama's handling of the war in Afghanistan and the situation in Iraq. In both cases, 53% of respondents said they approved of his work. The high numbers reflect the support by many Republicans and independents for the president's decision to boost troop levels in Afghanistan. On another foreign-policy matter confronting the White House, a 51%-38% majority in the survey supported initiating military action to destroy Iran's ability to make nuclear weapons if Tehran continues its nuclear program and is close to developing a weapon. Thirty-nine percent said they strongly supported military action.
• Business Sours on China. Foreign Executives Say Beijing Creates Fresh Barriers; Broadsides, Patent Rules. China's relationship with foreign companies is starting to sour, as tougher government policies and intensifying domestic competition combine to make one of the world's most important markets less friendly to multinationals. Interviews with executives, lawyers, and consultants with long experience in China point to developments they say are making it much harder for many foreign companies to succeed. They say the changes suggest Beijing is reassessing China's long-standing emphasis on opening its economy to foreign business—epitomized by the changes it made to join the World Trade Organization in 2001—and tilting toward promoting dominant state companies.
• Simon(SPG) Readies New Bid For (GGP). Mall giant Simon Property Group Inc. is readying a sweetened takeover bid for bankrupt rival General Growth Properties Inc. that would top an offer on the table from several General Growth investors. Simon sent a letter Monday night to General Growth's lawyers saying it expects to deliver its improved proposal late this week or early next. Simon didn't outline details of its offer, which are still in flux.
• At Long Last, Customized Frappuccino. Hoping to boost summer sales, Starbucks Corp.(SBUX) will begin allowing customers to design their own frappuccinos, the blended ice drink whose U.S. sales make up about 10% of the coffee giant's revenue.
• Senator Kohl Probes Price Differences In Drugs In US, Abroad. Sen. Herb Kohl (D., Wisc.) is pressing pharmaceutical companies such as GlaxoSmithKline PLC (GSK, GSK.LN), Eli Lilly & Co. (LLY) and Pfizer Inc. (PFE) to explain why their drugs often cost four times more in the U.S. than in other countries. Letters from the Special Committee on Aging, which Kohl chairs, ask the chief executives of six pharmaceutical companies with the most-widely prescribed medicines why products such as heartburn pill Nexium, cholesterol drug Lipitor and depression treatment Cymbalta cost for U.S. patients so much.

BusinessWeek.com:

• Feldstein Sees Greece Euro-Exit Pressures as Deficit Plan Fails. Harvard University Professor Martin Feldstein, who warned almost two decades ago that the euro would prove an “economic liability,” said Greece’s austerity plan will fail and the country may quit the single currency to fix its fiscal crisis. “The idea that Greece can go from a 12 percent deficit now to a 3 percent deficit two years from now seems fantasy,” Feldstein, an adviser to U.S. presidents since Ronald Reagan, said in a March 13 interview in Geneva. “The alternatives are to default in some way or to leave, or both.” Billionaire George Soros said last month that the euro “may not survive,” and credit default swaps indicate a 22 percent chance Greece will default within five years, up from 16 percent a year ago.
• Ebullio Commodity Hedge Fund Says January Loss Was 70% Not 1.1%. Ebullio Capital Management LLP said its commodity hedge fund fell almost 70 percent in January, not the 1.1 percent decline originally reported to investors, letters to investors show. The 1.1 percent drop was announced in the January notice and changed to 69.65 percent in the February report, the documents show. The fund, based in Southend-on-Sea, England, fell another 86 percent last month, taking its plunge in the first two months to 96 percent. The biggest losses were in copper, nickel and tin, according to the February letter. The LMEX index of six industrial metals fell 8.2 percent in January, the steepest drop since the end of 2008, before rebounding 6 percent last month. Commodity hedge funds returned on average almost 1 percent last month and lost 2.2 percent during the first two months of this year, according to Chicago- based Hedge Fund Research Inc.
• Record Cash Stockpiles Point to Fatter Dividends. A recovering economy means U.S. companies can afford to increase their payouts to shareholders—and that's boosting the appeal of dividend-paying stock.

NYPost:

• Hedge Fund Investors Don't Forgive: Deutsche Bank. Deutsche Bank’s newest survey of the hedge fund industry says the money is rolling in again -- but not to funds that treated their investors shabbily during the hardship years of 2008 and 2009. According to the survey, $100 billion to $222 billion could flow into hedge funds this year. That would push sagging hedge fund assets back to former highs at $1.72 trillion, the report says. Not all funds will get a piece of the action, however. Investors plan to shun those that locked up their money, froze assets or added so-called sidepockets, where bad assets go to die a slow death. According to the report, 80 percent of investors will refuse to invest in funds that participated in “freezing or suspending of assets and increasing side pockets by managers.” Freezing of assets was voted as “the most damaging action to a fund’s reputation,” according to 38 percent of the respondents – a crime worse than bad performance, which only took 20 percent of the votes.

Business Insider:

• Healthcare Right Now: Dems Still 16 Votes Short. Democrats remain 16 votes short of the overall majority needed to pass health care reform, at 190 Yes and 206 No, according to David Dayen's Whip Count. There is still time to get the floaters on board, however, it remains extremely close.

YouTube Biz Blog:

• Opening Up YouTube to New Display Advertisers. Today, we're announcing another new feature in Display Ad Builder that lets advertisers use simple templates to create InVideo overlays and companion ads on YouTube. An InVideo ad is an animated overlay that appears at the bottom part of a video that a user is watching. It’s been one of the most effective ad formats on YouTube. With people watching over 1 billion videos a day on the site, overlays are one of the easiest ways to get your ad directly in front of a huge audience. But building overlays has always been difficult for small advertisers, who often don’t have access to the resources needed to create these animated ads. That’s where Display Ad Builder in AdWords comes in. Now, any advertiser can use Display Ad Builder to turn their image ads into overlays and run a campaign on YouTube in minutes.

PEHub:

• Better Late Than Never: Avista Closes Second Fund. Avista Capital Partners yesterday closed its second fund with $1.8 billion in commitments, after more than 15 months in market, peHUB has learned. Following a first close on around $1 billion in August 2008, Avista basically sat on the sidelines while the financial world – and PE fundraising environment – collapsed around it. After gaining a fundraising extension in August 2009, the firm decided to tap the market again with a lowered target of around $2 billion (it had originally sought between $2.5 billion and $3 billion).

The New England Journal of Medicine:

• Physician Survey: Health Reforms Potential Impact on Physician Supply and Quality of Medical Care. Key Findings - Physician Support of Health Reform in General: 62.7% of physicians feel that health reform is needed but should be implemented in a more targeted, gradual way, as opposed to the sweeping overhaul that is in legislation. 28.7% of physicians are in favor of a public option. Health Reform and Primary Care Physicians: 46.3% of primary care physicians (family medicine and internal medicine) feel that the passing of health reform will either force them out of medicine or make them want to leave medicine.
  

Politico:

• 'Slaughter Solution' Could Face Legal Challenges. The so-called “Slaughter solution” for enacting health care reform without a conventional House vote on an identically worded Senate bill would be vulnerable to credible constitutional challenge, experts say. No lawyer interviewed by POLITICO thought the constitutionality of the “deem and pass” approach being considered by House Democrats was an open-and-shut case either way. But most agreed that it could raise constitutional issues sufficiently credible that the Supreme Court might get interested, as it has in the past. “If I were advising somebody," on whether deem and pass would run into constitutional trouble, "I would say to them, ‘Don’t do it,’” said Alan Morrison, a professor at the George Washington University Law School who has litigated similar issues before the Supreme Court on behalf of the watchdog organization Public Citizen. “What does ‘deem’ mean? In class I always say it means ‘let's pretend.’ 'Deems' means it's not true.” Any challenge likely would be based on two Supreme Court rulings, one in 1983 and the other in 1998, in which the court held that there is only one way to enact a law under the Constitution: it must be passed by both houses of Congress and signed by the president.
  
• House Dems Under Pressure to Deliver. Aides to conservative Democratic lawmakers describe intense pressure tactics, including one who said his office has received calls from donors. Those calls are taken as a thinly veiled threat to withhold future financial support if the member doesn’t vote as the donor wishes. “We’re having donors, even donors outside of our district, that are being called and asked to urge support” for the bill, said a senior aide to one conservative Democrat, who indicated the tactics could backfire on the health care bill. “If you want to play Chicago-style politics, and that’s what this is, then we will come out firmly against it.” The aide also targeted the Democratic National Committee, where Vice Chairwoman Donna Brazile used her Twitter account to encourage primary challenges to Democrats who vote against the bill. “If a handful of Democrats decide to defeat this bill, they deserve to get a primary challenge to defend the status quo and insurance industry,” Brazile tweeted.
• Bill Clinton Rallies Dems on Climate Bill.

Real Clear Politics:

• Health Care Deception Gets Uglier & Uglier. The finale of the health-care debate couldn't be more fitting. House Democrats are considering passing an exotic parliamentary rule relieving them of the burden of voting for the underlying bill, which will be "deemed" passed. So a bill sold under blatantly false pretenses and passed in the Senate on the strength of indefensible deals would become law in a final flourish of deceptive high-handedness.

Chicago Tribune:

• Illinois Unemployment Hits 12.2% in January. Illinois' January unemployment rate of 12.2 percent outpaced the national jobless level of 10.6 percent, as the country's economic woes pressured the state's job market last year. Eleven of the state's 12 metro areas lost jobs in January compared to the same month a year ago, according to preliminary figures released Tuesday by the Illinois Department of Employment Security. The Chicago area, which includes Naperville and Joliet, lost nearly 150,000 jobs, resulting in an unemployment rate of 11.6 percent, up from 8.4 percent a year ago. The rates and job totals are not seasonally adjusted. At 19.7 percent, Rockford led the state with the highest jobless rate. The city lost 8,600 jobs, a reduction of 5.9 percent from the same month a year ago. Peoria lost 6.5 percent of its jobs, the largest percentage decrease in the state.

International Business Times:

• BlackRock(BLK), Blackstone(BX) Eye Rescap: Sources. GMAC's Residential Capital unit is attracting early buyer interest from companies including BlackRock Inc and Blackstone Group, but a deal for the troubled mortgage lender is going to be difficult to pull off, sources familiar with the matter said.

USA Today:

• Dodd's 2nd Shot at Financial Reform Still Leaves Loopholes. Dodd's new plan on Monday faced an immediate barrage of criticism. The American Bankers Association said it imposed too much regulation; consumer groups said it imposed too little. "It's a far distance from what we had hoped for," says John Taylor, president of the National Community Reinvestment Coalition. Political observers expressed doubts that the plan would become law, considering that Dodd, D-Conn., would need to win over Republican votes to get the 60 required to break a filibuster and ensure passage in the Senate. Brian Gardner, who follows regulatory issues for investment firm Keefe, Bruyette & Woods, gives it a 40% chance of passage. "It's going to be tough," he says.

Reuters:

• EU Hedge Fund Rules Stalled, UK Digs in Heels. European Union plans to crack down on hedge funds hung in the balance on Tuesday when talks stalled after Britain dug in its heels to head off new rules that could damage its financial centre.
• Rue21(RUE) Q4 Profit Tops Street. Youth apparel retailer rue21 Inc (RUE) posted a better-than-expected adjusted fourth-quarter profit, helped by better same-store sales and lower interest expense, and forecast a first-quarter profit above market expectations. Rue21 expects a profit of between 16 cents and 18 cents a share in the first quarter. Analysts were looking for a profit of 15 cents a share, according to Thomson Reuters I/B/E/S. The company forecast 2010 earnings of between $1.08 and $1.13 a share. Analysts were expecting full-year earnings of $1.04. On a conference call with analysts, the retailer forecast a 100 basis point improvement in gross margins for 2010 and a 30 to 50 basis points rise in operating margins for the period. Revenue rose 30 percent to $155.4 million. "We believe we will have a strong spring break season and continue with our momentum to gain market share during the course of the entire year," Chief Executive Bob Fisch said on the call.
• Intel(INTC), Chip Shares Jump on Talk of Strong Q1.
  

Financial Times:

• China Asks US Groups to Back Currency Stance. China urged US multinationals to lobby the Obama administration against taking protectionist measures over the renminbi, just as attitudes towards Beijing appear to be hardening in the US Congress. Yao Jian, a spokesman at the Chinese commerce ministry, said some companies had already been lobbying against restrictions on imports to the US. “We hope that US companies in China will express their demands and point of views in the US, in order to promote the development of global trade and jointly oppose trade protectionism,” he said. The comments came as the political heat surrounding China’s currency policy intensified in Washington. Led by Chuck Schumer, the New York Democrat, and Lindsey Graham, the South Carolina Republican, a group of senators said China’s refusal to let its currency appreciate was damaging the US economic recovery and hurting American competitiveness. Some measures could be taken earlier, including forbidding Chinese companies from participating in US government contracts, requesting an International Monetary Fund consultation with China and including currency undervaluation as part of dumping calculations – a move that could result in tariffs on Chinese imports. Mr Schumer and Mr Graham have been leading the charge in Congress against China’s currency policy for years and have periodically presented similar proposals. The current dispute comes at a time when foreign companies in China are becoming increasingly critical of the restrictions being placed on their businesses. Indeed, some executives have warned that Beijing could start to lose the political support it has received in the past from multinationals.The American Chamber of Commerce in China, which has tended to avoid open criticism of Beijing in the past, is scheduled to release a survey on Monday showing deep dissatisfaction among member companies with China’s new “indigenous innovation” regulations, which are seen by many as thinly veiled protectionism.
• China's Property Bubble is Worse Than it Looks. The Chinese official statistics say that the average rise in property prices was 10.7 per cent in February. The increase is accelerating from a year-on-year rise of 9.5 per cent in January. However, the data may significantly underestimate what is going on for prime properties in China. My friends in Shanghai and Beijing say the rate of price increases of typical housing units is above 50 per cent a year and may reach 100 per cent, and that new property developments are spreading fast from first to second-tier suburbs, with less convenient transportation. According to the official statistics, the rate of price increases of newly-built residential buildings (at 90 square metres and below) in Beijing, Shanghai and Shenzhen are 19.3 per cent, 11.6 per cent and 19.6 per cent, respectively. In the same category, the highest property inflation was in Sanya, Hainan Island, at 57.9 per cent. However, the location and quality of the buildings are most likely not controlled for in the official statistics. (Beyond “average prices”, no detailed description is available.) Suppose that the market has more buildings in the second-tier than the first-tier suburbs; then the average price may be lower than the location-controlled index. Official statistics most likely underestimate the size of the housing bubble. What is happening in China now is familiar to any Japanese aged above 45. Japan experienced one of the largest property bubbles in the 1980s. The land price index tripled in five years. (The six-city price index for residential land rose from 39.2 in September 1985 to 105.8 in September 1990. The commercial land price rose from 27.9 to 104.5.) First, the land price rose in central Tokyo, then spread to first-tier suburbs, other large cities, second-tier suburbs and finally to rural land. The recent US housing bubble had a similar process of moving from prime to subprime mortgages. The quality of borrowers progressively worsened. In both Japan and the US, the loan-to-value ratio rose sharply towards the end of the bubble. Is this bubble now being repeated in China?

Telegraph:

• Record Numbers of Chinese Complain About Inflation. A record number of Chinese have complained that inflation is at an "unacceptable" level, as the Communist party warned that its very future depends on tackling rising prices. In its latest quarterly survey, the People's Bank of China (PBOC), the country's central bank, said that 51pc of respondents were unhappy about inflation, the highest proportion since the survey began in 1999. In February, China's consumer prices rose by 2.7pc year-on-year, up from a 1.5pc rise in January. The government has set a 3pc target for inflation this year, but some analysts have said the true inflation rate is already far higher, after an enormous increase in money supply last year.

Yonhap News:

• North Korea has about 1,000 missiles including mid-range and Scud missiles, citing South Korean Defense Minister Kim Tae Young. U.S. and South Korean intelligence agencies had estimated the communist nation owned about 800 missiles as of 2008. North Korea also has as much as 40 kilograms of plutonium and is pursuing a uranium-enrichment program.

Evening Recommendations
Citigroup:

• Reiterated Buy on (SKS), target $10.
  
• Reiterated Buy on (AXP), target $48.
  

Cowen:

• Rated (ESS) Outperform.
• Rated (PPS) Underperform.
• Rated (EQR) Outperform.
• Rated (UDR) Underperform.
  

Night Trading

• Asian indices are +.25% to +1.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 91.0 -2.0 basis points.
• S&P 500 futures +.10%
• NASDAQ 100 futures +.09%

Morning Preview Links

Earnings of Note
Company/Estimate

• (ATU)/.17
• (NKE)/.89
• (IHS)/.62
• (GES)/.81

Economic Releases
8:30 am EST

• The Producer Price Index for February is estimated to fall -.2% versus a +1.4% gain in January.
• The PPI Ex Food & Energy for February is estimated to rise +.1% versus a +.3% gain in January.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,100,000 barrels versus a +1,432,000 barrel gain the prior week. Gasoline supplies are expected to fall by -1,000,000 barrels versus a -2,959,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,300,000 barrels versus a -2,217,000 barrel drawdown the prior week. Finally, Refinery Utilization is estimated unch. versus a -1.14% decline the prior week.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Fisher speaking, weekly MBA mortgage applications report, JPMorgan Gaming/Lodging/Restaurant/Leisure Conference, Jefferies Cleantech Conference, Roth Growth Stock Conference, (DFS) analyst meeting, (DT) Investor Day, (MDU) analyst meeting and the (LSI) Analyst Day could also impact trading today.

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

Stocks at Session Highs into Final Hour on Technical Buying, Short-Covering, Lower Long-Term Rates, Less Financial Sector Pessimism

Broad Market Tone:

• Advance/Decline Line: Slightly Higher
  
• Sector Performance: Most Rising
  
• Volume: Around Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.67 -1.83%
  
• ISE Sentiment Index 169.0 +55.05%
  
• Total Put/Call .73 -7.59%
  
• NYSE Arms .53 -49.82%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 84.25 bps -.86%
  
• European Financial Sector CDS Index 73.82 bps +94%
  
• Western Europe Sovereign Debt CDS Index 67.58 bps +.37%
  
• Emerging Market CDS Index 218.96 bps -.71%
  
• 2-Year Swap Spread 19.0 bps -.5 basis point
  
• TED Spread 11.0 bps -1 basis point
  

Economic Gauges:

• 3-Month T-Bill Yield .15% +1 basis point
  
• Yield Curve 274.0 bps -2 bps
  
• Copper Days Demand 15.12 days -.40%
• Citi US Economic Surprise Index +36.60 +.3 point
  
• 10-Year TIPS Spread 2.25% -1 basis point
  

Overseas Futures:

• Nikkei Futures: Indicating +70 open in Japan
• DAX Futures: Indicating +1 open in Germany

Portfolio:

• Higher: On strength in my Financial, Retail and Tech long positions
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as the major averages are trading at session highs and the S&P 500 is breaking above technical resistance. On the positive side, (XLF) and (IYR) have outperformed throughout the day. Education, Gaming, REIT, Semi, Gold and Coal shares are especially strong, rising 2.0%+. Weekly retail sales rose +3.2% this week versus a 3.1% gain the prior week. This is the best showing since April 10th, 2007 and is up from an avg. +1.7% weekly increase during February, which is a large positive. Despite today's commodity surge and slightly more dovish Fed commentary, inflation expectations aren't moving higher and the 10-year yield is falling another 4 bps. On the negative side, Medical and Airline stocks are slightly lower on the day. Breadth is lacking and gauges of investor angst are lower than I would like to see. However, if stocks can sustain today's technical breakout through tomorrow, we could see a more meaningful advance on further short-covering and technical buying. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower long-term rates, diminishing financial sector pessimism and technical buying.

Today's Headlines

Bloomberg:

• Greek Downgrade Threat Lowered by S&P on Deficit Plan. Greece had the threat of a cut to its credit rating reduced by Standard & Poor’s, which cited the country’s efforts to narrow a budget deficit that is more than four times the European Union’s 3 percent limit. S&P affirmed the nation’s BBB+ rating, removing it from “creditwatch negative,” meaning the company is no longer considering an imminent reduction to the grade. Greek bonds rose and the euro extended gains against the dollar. “We view the Greek government’s total package of deficit- reduction measures as appropriate to achieve its 2010 fiscal target, given the deterioration in Greece’s growth prospects,” Marko Mrsnik and Trevor Cullinan, London-based credit analysts at S&P, said today in a statement.
  
• Europe Delays Hedge Fund Rules Amid Trade War Threat. European finance ministers meeting today in Brussels opted to delay plans to discuss hedge fund and private equity regulation that would have risked a trade war by limiting access to the European Union. Transatlantic tensions grew last week when EU financial- services commissioner Michel Barnier vowed to defend the proposals after they were criticized by U.S. Treasury Secretary Timothy F. Geithner. Geithner said in a letter to Barnier the new rules may discriminate against U.S. funds. The plan would force funds based outside the EU to accept the rules if they attract investors from the 27-nation bloc. EU officials meeting today removed the fund proposals from an agenda to be discussed by finance ministers. The aim remains to reach agreement during the first half of the year, an EU official said.
• Obama Aides See 'Extended Period' of Unemployment. U.S. employers won’t hire enough workers this year to lower the jobless rate much below the level of 9.7 percent reached in February, three Obama administration economic officials said today. The proportion of Americans who can’t find work is likely to “remain elevated for an extended period,” Treasury Secretary Timothy F. Geithner, White House budget director Peter Orszag and Christina Romer, chairman of the Council of Economic Advisers, said in a joint statement. The officials said unemployment may even rise “slightly” over the next few months as discouraged workers start job-hunting again. “We do not expect further declines in unemployment this year,” the officials said in testimony prepared for the House Appropriations Committee. They predicted the economy would add about 100,000 jobs a month on average -- not enough to bring the jobless rate down substantially. “They need to work on the message, and right now the message is that there is not a lot to be hopeful about,” Rupkey said. “Warning about a slow jobless recovery can help make it a reality.”
• Markit Group Ltd. plans to create a benchmark for credit-default swaps on Asia-Pacific governments, according to six traders familiar with the matter. The Markit iTraxx SovX Asia Index may track swaps on the debt of China, Malaysia, Thailand, South Korea, Vietnam, the Philippines, Indonesia, Japan, Australia and New Zealand. Curbs on credit swaps linked to sovereign debt are being discusses by European finance ministers after Greek Prime Minister George Papandreou blamed traders for worsening his nation's debt crisis.
• Platinum-Gold Ratio Climbs to Highest Since Lehman Bankruptcy. Platinum’s ratio to gold climbed to the highest level since Lehman Brothers Holdings Inc. filed for bankruptcy in September 2008 as investment demand increased.An ounce of platinum bought 1.4642 ounces of gold late yesterday, the most in 18 months. The ratio averaged 1.24 last year and soared to 2.38 in May 2008, the highest level since 2001, according to Bloomberg calculations. The metal, used mainly in catalytic converters, has climbed 11 percent this year, outperforming gold’s 1.4 percent gain, as the start of the ETFS Platinum Trust on the NYSE Arca stock exchange in January boosted purchases. “Fundamentally, platinum looks better than gold,” said Steven Zhu, head trader at Shanghai Tonglian Futures Co. “When the economy recovers, auto demand recovers. The launch of new exchange traded funds linked to platinum has also greatly increased investment demand.”
• Shipping Market Is Worst Since World War II, James Fisher Says. The world shipping market is mired in its biggest slump since World War II, said James Fisher & Sons Plc, a U.K. hauler of oil products. “This is the worst shipping recession since the war,” Chairman Tim Harris said today in a telephone interview. He spoke after the Barrow-in-Furness, England-based company reported little-changed annual profit. Prospects for a rebound at its shipping unit hinge on the timing of any increase in industrial output in northwest Europe, Harris said. Demand to haul cargoes has plunged because of the global recession, sending charter rates lower and spurring carriers to take vessels out of service. BW Gas Ltd., the world’s biggest shipper of liquefied petroleum gas, said last week it idled four tankers because rates plunged so low that each vessel was losing the company about $25,000 a day. “There’s been an unparalleled collapse in demand,” said Harris, who was previously chairman of Clarkson Plc, the world’s largest shipbroker. Fisher has a fleet of tankers that haul oil products around U.K. waters. Weaker cargo-shipping demand from U.K. oil companies forced Fisher to put more of its fleet to work in the single-voyage, or spot, market, where rates slid as much as 40 percent, the statement shows. The portion of its ships on spot charters rose about 10 percentage points to 30 percent.
• Nobel Winner Sharpe's Firm Advances 41% After IPO. Financial Engines Inc. jumped as much as 41 percent in its first day of trading after the investment adviser co-founded by Nobel laureate William Sharpe became the first U.S. company this year to price an initial public offering above its forecast range. The provider of portfolio-management services to individuals with employer-sponsored retirement plans climbed as high as $16.95 in Nasdaq Stock Market trading in New York after selling 10.6 million shares at $12 each yesterday. The $127 million IPO gave Financial Engines, which offered a 27 percent stake for $9 to $11 a share, a market value of $474 million.
• Dinallo Gets 15% of Campaign Funds From Insurers. Eric Dinallo, the former insurance superintendent running for New York attorney general, has received more than 15 percent of his campaign donations from the industry he regulated until July. Dinallo got at least $290,000 of his $1.78 million in donations from companies, people and trade groups with ties to the industry, according to campaign disclosures through mid- January. Hedge-fund manager David Einhorn, chairman of reinsurer Greenlight Capital Re Ltd., gave the maximum of $55,900. So did Joseph Plumeri, chief executive officer of insurance broker Willis Group Holdings Plc, where Dinallo worked in 2006.
• Iran Rejects 'Carrot, Stick' Strategy on Atomic Issue. Iranian parliament Speaker Ali Larijani said the “carrot and stick” strategy used against Iran by the “great powers” won’t halt its nuclear development. Larijani rejected an international proposal for Iran to export its low-enriched uranium and in return get uranium fuel at the higher concentration needed for a Tehran medical-research reactor. He said the world powers were dictating to Iran, and that negotiations on the issue should allow for alternatives without the threat of expanded United Nations sanctions.
• Zell Sees Stocks Rising as Economy Improves, Housing Recovers. Sam Zell, the billionaire investor who once called himself a grave dancer for profiting from troubled assets, said U.S. stocks are poised to extend the biggest rally since the 1930s as the economy rebounds. “The market is not overbought,” said Zell, 68, founder of Chicago-based Equity Group Investments LLC. It’s “maybe less than or even on par of where it ought to be. If the recovery continues, and there’s less interference in the economy by the government, that bodes well for the market improving.” “I doubt that in the near future it will be in its interest to reduce its cash cushion,” Zell said when asked about boosting the payout to the prior level. The billionaire expects more takeovers in the real-estate industry. The battle for General Growth Properties Inc., owner of more than 200 U.S. malls from Boston to Los Angeles, is turning into the biggest real estate fight since the sale of Zell’s Equity Office Properties. “I wouldn’t be surprised if there’s more M&A activity in the space than has been historically,” Zell said.
• N.J. May Boost Hedge Fund Deals to Guard Against Equity Losses. New Jersey’s $67 billion pension fund may increase its hedge fund investments to protect against losses in the stock market, according to a memo prepared for a meeting later this week of the State Investment Council. The 12th-largest U.S. public pension would boost hedge fund allocations to 6.75 percent of assets, or $4.5 billion based on the current value of the fund, from 4.3 percent, or $2.9 billion, according to the March 12 memo obtained by Bloomberg News, written by Ray Joseph, acting director of the New Jersey Treasury’s Investment Division. Holdings in domestic and international stocks, which now account for 47 percent of the state’s portfolio, would be reduced under the plan.

Wall Street Journal:

• Corning(GLW) Exec Says LCD TV Demand Remains "Robust". The company made the comment in a release issued late Monday after it gave investors a tour of its Gen 10 LCD glass facility in Sakai City, Japan. Corning Display Technologies President Jim Clappin said on the tour that January LCD TV sales in China were up 53 percent, in line with the company’s expectations. In Japan, he added, LCD TV sales were up 79 percent in January and 65 percent in February. Clappin noted that European retail sales were up 12 percent in January. In the U.S., sales for the first two months of the year were about flat with a year ago. Clappin also said panel prices for the first two months remained firm, while panel maker utilization rates remained high. He said Corning continues to “ship everything that we can make.”
• Saudi Arabia Warns On Rising Oil Price. Saudi Arabia said Tuesday that the Organization of Petroleum Exporting Countries won't let global oil markets get too tight, the first indication from the world's biggest crude exporter that it may be getting uneasy with oil prices recently trading over $80 a barrel. "We will never allow it [the oil market] to get to the point where it puts too much pressure on prices," Saudi Arabia Oil Minister Ali Naimi told journalists here ahead of OPEC's production policy meeting Wednesday. He didn't specify exactly what that point would be, but as as OPEC's leading member and the group's moderate voice that keeps OPEC's more hawkish nations in check, Saudi Arabia sits on a mountain of spare production capacity of over four million barrels a day that it could begin to discharge into world markets to quell runaway prices. The kingdom has helped rally other OPEC states in the past year around the notion—which isn't formal OPEC policy—of a preferred price level of between $70 and $80 a barrel. Until recent days, prices have traded safely above that range, leading some economists to question whether higher energy costs might pinch global economic recovery.

BusinessWeek:

• Wal-Mart May Climb to $65 After 'Breakout:' Technical Analysis. Wal-Mart Stores(WMT) may rise about 17% after exceeding its January high on surging volume, according to Janney Montgomery Scott technical analyst Dan Wantrobski.
  

MarketWatch:

• Mid-Caps Break Out, S&P Testing Resistance.

CNBC:

• Fed Renews Pledge To Keep Rates Low for a Long Time. The Federal Reserve held benchmark rates near zero Tuesday and renewed a promise to keep them exceptionally low for an extended period while pointing to increased momentum in the economy's recovery.
• Coming Soon: Economic Growth Without Oil. The world may soon achieve something long dreamed of by governments and policymakers: higher economic growth without using more oil. Rising efficiency, conservation and substitution are steadily reducing the amount of oil needed to fuel an increase in the goods and services produced around the world. Oil demand in the rich, industrialized countries of the West already appears to have peaked and the trend in developing economies is towards an ever-smaller increase in the amount of oil consumed for every extra unit of economic growth. Global oil intensity—oil demand growth divided by economic growth—has fallen by about 2 percent a year over the last decade and the decline is now accelerating, spurred by high oil prices, moves to alternative fuels and measures to curb global warming.

NY Post:

• Icahn Crony Offers Benihana Beefy Buyout. After months of enduring the stock-price equivalent of ground chuck, investors in Japanese steakhouse Benihana are being offered prime rib in the form of a buyout offer from a disciple of billionaire activist investor Carl Icahn. Russell Glass, a former executive with Icahn Associates who's now the founder and head of New York investment firm RDG Capital, has offered to buy the Miami-based chain for $7 a share, a 20 percent premium over the current stock price, The Post has learned.

Business Insider:

• There's Deep Fraud On Wall Street, And Goldman's(GS) Behavior In Greece Is Just The Tip by Senator Ted Kaufmann.
• Europe Is Hiding Pension Debt Off Balance Sheet And Soon Everyone Will Know About It.
  

zerohedge:

• When the Patina Fades... The Rise and Fall of Goldman Sachs(GS)??? I have warned my readers about following myths and legends versus reality and facts several times in the past, particularly as it applies to Goldman Sachs and what I have coined "Name Brand Investing". Very recent developments from Senator Kaufman of Delaware will be putting the spit-shined patina of Wall Street's most powerful bank to the test. Here is a link to the speech that the esteemed Senator from Delaware (yes, the most corporate friendly state in this country). A few excerpts to liven up your morning... Mr. President, last Thursday, the bankruptcy examiner for Lehman Brothers Holdings Inc. released a 2,200 page report about the demise of the firm which included riveting detail on the firm’s accounting practices. That report has put in sharp relief what many of us have expected all along: that fraud and potential criminal conduct were at the heart of the financial crisis.... Only further investigation will determine whether the individuals involved can be indicted and convicted of criminal wrongdoing.

Forbes:

• Apartment REITs Go On The Offensive. Equity Residential(EQR) signals recovery with pace-setting deals. How do some of the smartest real estate outfits begin buying and building again after a major economic collapse? Suddenly. Adding to its recent $475 million purchase of apartment high-rise properties from the troubled Macklowe family, Equity Residential has paid $45 million for an apartment complex rental community a mile from the beach in tony Del Mar, Calif., Forbes has learned.

Advertising Age:

• CBS(CBS) Scores $37M Beyond TV With Help of March Madness. Network Nearer to Holy Grail of Earning Same Revenue Per Viewer Whether It Be Through the Tube or Computer. CBS is turning live, ad-supported sports on the web into a real business, selling out its inventory for March Madness on Demand and bringing in about $37 million in online ad sales, up 20% from the year before. More importantly, it sold as many ads for live web coverage as it does on TV, taking CBS a little closer to the holy grail: earning the same revenue per viewer regardless of platform -- TV, online and, perhaps soon, mobile.

The Bond Buyer:

• Jobs Bill Would Extend BABs for 3 Years. The Build America Bonds program would be extended for three years, but the direct-pay subsidy rate would shrink from the current 35% of interest costs to 33% in 2011, 31% in 2012 and 30% in 2013, under a draft of a second jobs bill unveiled yesterday by House Ways and Means Committee chairman Sander Levin, D-Mich. The bill also would exempt private-activity bonds from the alternative minimum tax for another year, permanently exempt water and sewer exempt-facility PABs from state volume caps, and extend the recovery zone bond programs for another year while modifying the allocation formula to ensure that areas of the country that were previously overlooked can issue some of the bonds. However, the bill would not extend a pair of popular provisions that encouraged banks to purchase more tax-exempt debt, even though several state and local groups sent a letter last week to Levin and other leading lawmakers urging the provisions be made permanent. The committee plans to vote on the bill Wednesday, according to a release issued by Levin.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 25% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-three percent (43%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -18 (see trends).

Politico:

• Democrats Begin to Criticize Obama on Israel.
• Broadband Plan Alarms Broadcasters. The Federal Communications Commission’s long-awaited plan for expanding broadband access nationally is raising concerns from the National Association of Broadcasters, whose members could be asked to give up control of some airwaves to make the system work. “We were pleased by initial indications from FCC members that any spectrum reallocation would be voluntary, and were therefore prepared to move forward in a constructive fashion on that basis,” said NAB Executive Vice President Dennis Wharton in a statement.‘However, we are concerned by reports today that suggest many aspects of the plan may in fact not be as voluntary as originally promised,” he added. According to the report and its executive summary, the government should encourage an expansion of broadband by establishing policy that promotes competition, changes the allocation of spectrum, assists expansion into low-income communities and households, and promotes educational and training programs that can enhance the knowledge of new users of the Internet.
• Hoyer: Dems Don't Have the Votes. House Majority Leader Steny Hoyer said Tuesday that Democrats don't yet have the votes to pass a bill this week and that they're still talking with every single member of the caucus. He also told reporters during his half-hour weekly news conference that he hopes to have language for a reconciliation bill finalized later in the day and defended the possible use of the rules to deem the Senate bill passed without forcing members to actually take the uncomfortable vote to support it.

Real Clear Politics:

• Obama Evokes Fear, Calls for Courage. Washington will inflate costs of health care, despite Obama's claims that he will cut costs. Premiums will go up if insurers have to cover more sick people. Costs will go up if the government subsidizes more Americans. Add Congress to the mix, and all sorts of extra goodies -- like a student-loan package -- will drive the price tag even higher. There is no so-called crisis in America to which Congress does not respond without cooking up more pork. And Americans are supposed to trust this bunch to curb costs? Buy me a T-shirt and call me stupid.

Reuters:

• China State Fund Open to Shorting Stocks - Fund Manager. China's $300 billion sovereign wealth fund is looking at directly investing in funds that could benefit from falling equity prices, a top manager at Pyramis Global Advisors said on Monday. China Investment Corp spent last year diversifying its investments into commodities, real estate and other asset classes, though the ability to short stocks means the state-backed investor would employ a strategy traditionally used by hedge funds. "China has opened up its receptivity to looking at and understanding the benefits of long/short types of capabilities," Young Chin, chief investment officer of the institutional focused unit of Fidelity Investments, said in an interview.
• Intel(INTC) Shares Jump on Talk of Strong Q1 Earnings. Intel Corp (INTC) shares jumped 4 percent on Tuesday on speculation that the world's top chip maker is preparing to release a positive estimate of its current-quarter earnings. Analysts said there was talk in market that the company could pre-announce strong results soon. William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York, agreed, saying the unconfirmed rumors were pushing activity both on the exchange and the options market. "There's speculation that Intel will have a positive pre-(announcement)," Auriga analyst Daniel Berenbaum said.
• US Weekly Gasoline Demand Down 1% - Mastercard.
• New Radiation Therapy Shows Promise in Lung Cancer.
  

Financial Times:

• CFTC Chief Questions 'Naked' Short Selling Ban. Gary Gensler, head of the US agency that regulates a large part of the derivatives market, told the European parliament on Tuesday he did not believe that a ban on “naked” short selling of credit default swaps would be effective. One technical hurdle, he added, was distinguishing between speculators and genuine hedging activity. And, even if such issues could be solved, he indicated that he believed speculators were a legitimate part of the overall market. Asked whether he would distinguish the situation of naked short selling of CDS on sovereign debt – which some observers think particularly dangerous because it can give a trader an incentive to see a country default – Mr Gensler indicated that he felt the situation did not merit special treatment. His views are likely to be influential. It is widely recognised that this is an area in which Europe would have difficulty acting alone. If EU lawmakers were to bring in a ban within the region, market traders say business would simply shift across the Atlantic to New York.

France24:

• Google(GOOG) Rolls Back Self-Censorship in China. Google has partially lifted its strict self-censorship in China, with several previously banned keywords – including 'Tiananmen' – now accessible. The surprise move comes as the Internet search giant threatens to leave China. Websites containing the keywords “Tiananmen” and “Free Tibet”, previously censored on Google China, can now be accessed in an apparent partial lift of censorship by Google that threatens to arouse the wrath of the Chinese authorities. The search results displayed for these keywords – checked by FRANCE 24 – are even more surprising given Google’s announcement on Monday that it would continue negotiations with Beijing to stay in the country. Google.cn has not confirmed lifting the censorship.

DigiTimes:

• NAND Flash Controller Designers Concerned About Tight Foundry Capacity. NAND flash controller design houses have seen tight capacity at their foundry partners including United Microelectronics Corporation (UMC) and Semiconductor Manufacturing International Corporation (SMIC), and are concerned growingly tight foundry capacity may disrupt their shipments and affect NAND flash pricing, according to industry sources. Some NAND flash controller suppliers have indicated that their supply may not be able to satisfy customer demand in the second quarter if their foundry partners continue to see tight capacity, the sources said. This supply disruption is likely to impact NAND flash prices for the quarter.

Bear Radar

Style Underperformer:
Large-Cap Growth (+.15%)

Sector Underperformers:
Medical Equipment (-.42%), Software (-.33%) and Airlines (-.32%)

Stocks Falling on Unusual Volume:
STRL, AMSC, CFSG, CAGC, FNSR, WHI, DSW and WG

Stocks With Unusual Put Option Activity:
1) MOT 2) ETFC 3) AMSC 4) ATHN 5) TXT

Bull Radar

Style Outperformer:
Mid-Cap Growth (+.62%)

Sector Outperformers:
Gold (+2.39%), Semis (+2.06%) and Steel (+1.66%)

Stocks Rising on Unusual Volume:
CLF, VLTR, SI, AIXG, MBT, BT, LOGI, ATHN, PETS, VRUS, POWI, SBUX, BOKF, ONXX, CLNE, PRXL, WATG, CVVT, INTC, ABFS, IPHS, ATLS, MCHP, BRKR, ATHR, OFG, IBA, HOG, PVH, NMI, CBI and GE

Stocks With Unusual Call Option Activity:
1) HOG 2) COF 3) MWW 4) SBUX 5) URBN