Bear Radar

Style Underperformer:
Mid-Cap Growth (-.57%)

Sector Underperformers:
Oil Service (-2.95%), Coal (-2.80%) and Banks (-1.78%)

Stocks Falling on Unusual Volume:
PLCM, MDVN, THRX, CPX, VIP, MBT, TESO, SFY, BRKR, MLHR, ROST, PTEN, CPHD, VLTR, TLK, WGO, LNT, HGT and IHS

Stocks With Unusual Put Option Activity:
1) CY 2) ATVI 3) VIP 4) BX 5) CAM

Bull Radar

Style Outperformer:
Small-Cap Value (+.29%)

Sector Outperformers:
Hospitals (+1.94%), Education (+1.58%) and HMOs (+1.39%)

Stocks Rising on Unusual Volume:
NKE, VRUS, HNT, GSK, GLW, QCOM, SQNM, JCOM, CRK, FNSR, MDTH, SMRT, TEVA, PANL, NWPX, CSKI, CAGC, FMCN, CLNE, RGLD, CTXS, GES, GME and MCO

Stocks With Unusual Call Option Activity:
1) CNO 2) MCO 3) NKE 4) NBR 5) DD

Thursday Watch

Evening Headlines
Bloomberg:

• Build America Bond Extension Passes U.S. House Panel. The House Ways and Means Committee voted 25-15 along party lines to approve a three-year extension of the Build America Bonds program, the fastest-growing part of the $2.8 trillion U.S. municipal debt market. The measure will be sent to the full House for consideration as early as next week. The federally subsidized Build America program, created last year as part of the government’s economic stimulus, is set to expire Dec. 31. President Barack Obama’s fiscal 2011 budget proposed extending and expanding the program while reducing the subsidy to 28 percent. The program has drawn opposition from Senate Republicans. Iowa’s Charles Grassley, the senior member of his party on the tax-writing Finance Committee, criticized Build America for steering “huge underwriting fees” to investment banks. U.S. Senate Minority Whip Jon Kyl, the second-ranking Republican in the chamber, faulted the program for providing higher subsidies to states with lower credit ratings, encouraging them to take on more debt.
• GE(GE) Tells Obama 'Sell Hard' in Indonesia With China in Pursuit. General Electric Co. Chief Executive Jeffrey Immelt wants Barack Obama to “sell hard” in Indonesia as he extols U.S. expertise in industries such as clean energy. He’ll have to work fast -- Premier Wen Jiabao will make China’s sales pitch in Jakarta next month. President Obama’s trip to his childhood home, already delayed once and currently scheduled for March 23-25, is key to a pledge to boost U.S. exports and “lead the global economy” in providing alternatives to fossil fuels.
• 'Sinister' German Spy Plan Aimed at Hedge Funds, Analysts Say. Germany’s suggestion that it may order spies to track speculators targeting currencies is “sinister and silly,” according to analysts, who said hedge funds in London and New York would be the targets. Germany’s Finance Minister Wolfgang Schaeuble told the Bundestag on March 16 that the country may have to consider ordering “intelligence agencies to set up surveillance of who is getting together with whom for which kinds of speculative processes, and where” to protect the euro. Schaeuble said that “speculation is increasingly targeting currencies and countries.” His comments followed a report in Spain’s El Pais newspaper last month that the secret service was investigating “attacks” on the country by unnamed investors. Politicians are concerned about the collusion of hedge funds in making bets on currencies and trading in so-called naked credit-default swaps, where they buy protection without owning the underlying debt, according to Jacob Schmidt, founder of Schmidt Research Partners Ltd., a London-based hedge fund advisory firm. Intelligence agencies could use techniques honed in the fight against money laundering and terrorist funding if they wanted, said Vanessa Rossi, a senior research fellow in the international economics program at London’s Chatham House. “Within continental Europe there are those that do think that financial speculators are sort of terrorists,” said Rossi. “In their lexicon it is economic terrorism, so they may view this as more serious than the U.S. or U.K.”
• Obama Overstates Loan Modifications, Republicans Say. The Obama administration is inflating the success of programs that prevent foreclosures by skewing data on loan modifications and revising the goals, according to House Republicans. Reports on the Home Affordable Modification Program are “glossing over disappointing results” by counting temporary changes toward the goal of permanent relief for as many as 4 million borrowers, said a letter sent yesterday to Treasury Secretary Timothy F. Geithner by Republican representatives Darrell Issa and Jim Jordan. Lynn Turner, the former Securities and Exchange Commission chief accountant, said Treasury’s approach “seems to have taken a page out of the accounting manuals at Enron and Lehman,” referring to accounting disputes that accompanied two of history’s biggest financial collapses. “It has become the culture of Washington and Wall Street, and they reinforce one another.” Turner, now a managing director at forensic accounting firm LECG LLC, is a Democrat who served under former President Bill Clinton. “Rather than acknowledge the program’s failure, Treasury is trying to confuse the American people by counting HAMP’s higher number of temporary modifications -- fewer than one-third of which are successfully converting to permanent ones -- toward the goal,” the letter reads.
• Greece Keeps IMF Option Alive as Merkel Urges Caution on EU Aid. Greek Prime Minister George Papandreou kept alive the possibility of requesting International Monetary Fund aid as German Chancellor Angela Merkel cautioned against “hasty” decisions on European Union assistance for the country. As long as “Greece is still borrowing at an unreasonably high interest rate, over 6 percent,” the country will keep “all options open” while preferring an EU solution, Papandreou said at a press conference in Brussels today with European Commission President Jose Barroso. European finance ministers this week approved a framework for emergency aid to Greece, while leaving the final go-ahead to government leaders who meet next on March 25-26 in Brussels.
• Cancun Climate Talks Get Dim Prognosis Nine Months Before Start. Government negotiators are already writing off chances for a global treaty to fight climate change, nine months before the annual talks begin in Cancun, Mexico. Kunihiko Shimada, principal international negotiator at the Japanese Ministry of the Environment, said yesterday a deal this year is “almost impossible.” Jos Delbeke, who spearheads European Union climate policy at the European Commission, ruled out a “comprehensive legal agreement” in 2010. Their remarks call into question whether efforts to curb greenhouse-gas emissions are progressing after failing in Copenhagen in December. President Barack Obama’s energy proposal is bogged down in the U.S. Congress. Without a U.S. commitment, China and India, two of the fastest-growing polluters, may be reluctant to limit greenhouse gases blamed for global warming. “The expectations for a legally binding treaty are diminishing,” Abyd Karmali, global head of carbon markets at Bank of America Merrill Lynch, said in an interview at the Bloomberg New Energy Finance conference in London. “We’re going to be negotiating on climate for the next 50 years,” said Liebreich, founder of New Energy Finance, which Bloomberg LP purchased in December.
• China's Home Prices Unlikely to Plunge, Hong Kong Builders Say. China’s property prices won’t plunge this year, two of Hong Kong’s biggest developers with operations on the mainland said yesterday, as the World Bank joined economists and hedge fund managers warning of a bubble. “China’s home prices won’t drop too much, as the government can’t allow prices to plunge because the real estate market is an important pillar of the economy,” said Henry Cheng, managing director of New World Development Co. and son of its billionaire founder Cheng Yu-tung. Property prices in China rose 10.7 percent in February, the steepest gain in almost two years, even after banks raised mortgage rates. The surge -- along with a stock market rally, quickening economic growth and inflation -- led the World Bank to say China should raise interest rates to help contain the risk of a bubble, and sparked warnings of a potential crash from hedge fund manager Jim Chanos, Gloom, Boom & Doom publisher Marc Faber and Harvard University professor Kenneth Rogoff. China is in the midst of “the greatest bubble in history,” James Rickards, former general counsel of hedge fund Long-Term Capital Management LP, said this week, warning it “is a bubble waiting to burst.”
• BRICs Rally Slows Amid Highest Equity Valuations Since 1995. The combination of record mutual fund inflows and the fastest economic growth are failing to lift shares in the largest developing nations with valuations at the highest level versus advanced countries since at least 1995. Emerging-market stock funds lured $86.6 billion in the year through January, the most in 14 years of data, according to Cambridge, Massachusetts-based researcher EPFR Global. MSCI’s developing nation index slid 2.2 percent from this year’s peak on Jan. 11 and pared an 80 percent rally in the previous 12 months that sent its price-to-book ratio to a record 17 percent over the MSCI World Index, data compiled by Bloomberg show. The MSCI emerging index’s 1.9 percent gain this year trails a 3 percent rise in the MSCI World and 4.5 percent climb in the Standard & Poor’s 500 Index. Brazil’s Bovespa has risen 2.6 percent, while the Micex in Russia is up 4.8 percent. India’s Bombay Stock Exchange Sensitive Index has advanced 0.1 percent and China’s Shanghai Composite Index is down 6.9 percent.

Wall Street Journal:

• Roche CEO Touts Pipeline, Remains Open To More Deals. Roche Holding AG Chief Executive Severin Schwan said the integration of its $46.8 billion takeover of Genentech Inc.(DNA) is "by and large completed," expressed his confidence in the Swiss drug giant's pipeline, and said he remains open to yet more deal-making.
• Finra's Susan Merrill to Exit as Enforcement Chief. The executive hired by Wall Street to enforce its rules is stepping down after nearly three years in which the organization's disciplinary actions and fines against the brokerage industry have declined, the group said. Susan Merrill, the head of enforcement at the Financial Industry Regulatory Authority, Wall Street's self-regulatory body, hasn't set a departure date and hasn't indicated whether she had another job lined up, people familiar with the matter said.
• If You Liked Fannie and Freddie...You'll love Chris Dodd's latest reform proposal. It would make many more companies too big to fail and lead to far greater financial consolidation. Think ObamaCare for the financial system. That's one way to understand Sen. Chris Dodd's bill to reform financial regulation. If passed in its current form, the bill would give the government control over the financial system in roughly the same way, and to the same extent, that ObamaCare would take over the nation's health care. There isn't a public option, exactly, but the private firms involved would be so heavily regulated that they would be effectively controlled by the government. The threat comes primarily from the new powers granted to the Federal Reserve and a new regulatory grouping called the Financial Stability Oversight Council (FSOC). Although the Fed failed to anticipate the financial crisis, missed the significance of the developing housing bubble, and did not prevent our largest banks from taking excessive risks, it is rewarded in the bill with authority to control the rest of the financial system.

CNBC:

• 10 Reasons to Keep Your Money in the Market.
• FDIC to Review Private Equity Rules on Monday: Sources. U.S. regulators are set to hold a meeting on Monday with private equity executives and advisors as they review rules put in place last year to govern private investment in failed banks, sources familiar with the matter said.
  

Fox News:

• Fox News Exclusive: President Obama. Part 1: The President sits down with FNC's Bret Baier to discuss the health care reform bill. (video)
  
• More Americans Disapprove of Obama's Performance Than Approve, Polls Finds. For the first time since President Obama took office, more Americans are unhappy with the job he's doing than are happy with it, according to the latest Gallup poll. In the poll, 47 percent of Americans disapprove of Obama's job performance compared to 46 percent who approve. Obama's job approval rating fell to 46 percent last week, an all-time low for the president. The deteriorating approval rating comes as the president struggles to push his increasingly unpopular health care plan across the finish line with a controversial maneuver that would avoid a GOP filibuster by allowing Congress to pass and adjust the Senate's bill with a simple majority. The plunging rating threatens to weaken the president's influence beyond the health care debate to pass a largely ambitious agenda that includes immigration overhaul, climate change legislation and education reform. It could also put distance between Obama and Democratic lawmakers up for re-election in November who see no benefit in having an increasingly unpopular president stump for them. Obama's campaigning efforts have already failed to help notch victories in gubernatorial races in Virginia and New Jersey and the Senate contest in Massachusetts in replace Ted Kennedy.

IBD:

• Company's Software And Hardware Speed Up System Networks. That's where Blue Coat Systems (BCSI) comes in. The Sunnyvale, Calif., company sells application delivery network infrastructure. That's a fancy way of saying the software and systems that connect far-flung people and offices within an organization.

NY Times:

• Google(GOOG) and Partners Seek TV Foothold. Google and Intel have teamed with Sony(SNE) to develop a platform called Google TV to bring the Web into the living room through a new generation of televisions and set-top boxes. The move is an effort by Google and Intel to extend their dominance of computing to television, an arena where they have little sway. For Sony, which has struggled to retain a pricing and technological advantage in the competitive TV hardware market, the partnership is an effort to get a leg up on competitors. The partners envision technology that will make it as easy for TV users to navigate Web applications, like the Twitter social network and the Picasa photo site, as it is to change the channel. Some existing televisions and set-top boxes offer access to Web content, but the choice of sites is limited. Google intends to open its TV platform, which is based on its Android operating system for smartphones, to software developers. The company hopes the move will spur the same outpouring of creativity that consumers have seen in applications for cellphones. Google is expected to deliver a toolkit to outside programmers within the next couple of months, and products based on the software could appear as soon as this summer. The three companies have tapped Logitech(LOGI), which specializes in remote controls and computer speakers, for peripheral devices, including a remote with a tiny keyboard.
• Merkel Suggests Evicting Errant Countries From Euro. Chancellor Angela Merkel of Germany, adopting a harsher tone toward Greece than the one expressed by some other European leaders, said Wednesday that Europe needed better rules to police its members, and she tacitly endorsed a proposal to eject wayward countries from the group of countries that use the euro. Speaking before a session of Parliament in Berlin, Mrs. Merkel referred to a proposal made last week by Wolfgang Schäuble, the German finance minister. As she described the proposal, “It would even be possible to exclude a country from the euro zone when over the long term it no longer fulfills the conditions.” “Otherwise, we can’t work together,” Mrs. Merkel said, though she stopped short of explicitly endorsing the idea.
• TheStreet.Com(TSCM) Says It's Being Probed By SEC. Investment news website TheStreet.com Inc said on Wednesday the U.S. Securities and Exchange Commission was investigating the company over the way it recorded revenue at a former subsidiary.

NYPost:

• O's Middle-Class Squeeze. President is wrong to claim health reform only hurts rich. The president has spent the closing days of the health-care debate making his case to the segments of Americans who will benefit under ObamaCare. But lots of other people will be squeezed under the scheme -- and not the rich folks that President Obama singles out in his stump speeches, but families who are decidedly middle class. Health reform will leave many of them newly priced out of a transformed market for health insurance. The hardest hit won't be those earning more than $250,000 a year -- the group that he says needs to "pay their fair share." Rather, it's families whose combined annual income is around $100,000 who could be crushed under this plan. These folks will be too "rich" to qualify for ObamaCare's subsidies, but probably too poor to easily afford the pricey insurance that the president's plan forces them to buy. Many of these $100K families will be obliged to buy a policy costing an average of $14,700 for the mid-level, "silver" health plan, according to the Congressional Budget Office's estimates. After income taxes, they'll be spending almost a quarter of their net income for health insurance. How can these families make out so badly under ObamaCare? The plan does two things to refashion the market for health insurance and inadvertently stacks it against these middle-class earners.

CNNMoney:

• AIG(AIG) Bonusgate: Part II.

Forbes:

• America's Most Inventive Companies. When it comes to patenting technology and making money off of it, these 10 companies are hard to beat.

Rasmussen Reports:

• 27% Say U.S. Heading in Right Direction. Twenty-seven percent (27%) of U.S. voters say the country is heading in the right direction, according to the latest Rasmussen Reports national telephone survey. This marks a slight uptick from the previous two weeks when voter confidence in the country's current course fell to 25%, the lowest level measured since just before President Obama took office in January 2009. A sizable majority (68%) still believe the nation is heading down the wrong track, but that's down three points from last week when 71% felt that way. The latter finding was the highest level of pessimism measured in 14 months.
• Republicans Lead Democrats by 10 in Generic Ballot, Highest Lead Yet. Republican candidates have now stretched their lead over Democrats to 10 points in the Generic Congressional Ballot, their biggest lead ever in nearly three years of weekly tracking.

NYDailyNews.com:

• Ex-Met Lenny Dykstra Claims He Was Hoodwinked into Taking Out $20M in Loans He Couldn't Afford. Lenny Dykstra just keeps striking out. The ex-Met filed a federal lawsuit Wednesday claiming he was hoodwinked into signing up for more than $20 million in loans he couldn't afford to buy a massive estate. It's the latest in a growing string of legal troubles for the outfielder that includes bankruptcy, divorce and other suits.

Reuters:

• Nike(NKE) Q3 Beats Street View, Shares Sprint Higher. Nike Inc. (NKE) posted a return to sales and profit growth on Wednesday and forecast higher expected orders around the world after a year of declines, sending its shares up more than 3 percent.

Financial Times:

• Beijing Warned of Business Damage from Text Crackdown. The warning by the company, which operates the world’s most popular instant messaging service and online games with titles such as Dungeon & Fighter, is an early indication that China’s strict censorship regime could start to damage the country’s internet boom. Over the past 15 months, the Chinese government has stepped up a crackdown on what it calls “harmful content” – a development Google cited as one reason for re-considering its presence in China. The authorities argue that the measures are aimed at pornography and spam, but website closures and text messaging blockages have also hit politically sensitive content. Tencent management said the government’s surprise decision in late November to halt WAP billing – a practice that allows consumers to buy online content and have it charged directly to their mobile phone bills – had also made a dent in the fourth quarter and would do more damage this year. Mr Lau added that attempts by China Mobile, the world’s largest mobile operator, to weed out “bad” content by blocking certain content providers from sending text messages had also produced collateral damage for the industry.

China Securities Journal:

• China has banned banks from providing loans to developers found to be hoarding land or holding back sales of apartments to wait for higher prices.

Evening Recommendations
Citigroup:

• Reiterated Buy on (NKE), boosted estimates, raised target to $80.
  

Night Trading

• Asian indices are unch. to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 90.0 -1.0 basis point.
• S&P 500 futures +.08%
• NASDAQ 100 futures +.03%

Morning Preview Links

Earnings of Note
Company/Estimate

• (FDX)/.73
• (ROST)/1.16
• (PALM)/-.42
• (SPWRA)/.48
• (CTAS)/.30
• (GME)/1.27

Economic Releases
8:30 am EST

• The Consumer Price Index for February is estimated to rise +.1% versus a +.2% gain in January.
• The CPI Ex Food & Energy for February is estimated to rise +.1% versus a -.1% decline in January.
• Initial Jobless Claims for last week are estimated to fall to 455K versus 462K the prior week.
• Continuing Claims are estimated to fall to 4522K versus 4558K prior.
• The Current Account Deficit for 4Q is estimated to widen to -$119.0B versus -$108.0B in 3Q.
  

10:00 am EST

• Philly Fed for March is estimated to rise to 18.0 versus 17.6 in February.
• Leading Indicators for February are estimated to rise +.1% versus a +.3% rise in January.
  

Upcoming Splits

• (NETL) 2-for-1
  

Other Potential Market Movers

• The Fed's Duke speaking, weekly EIA natural gas inventory report, (TQNT) Analyst Day, (GCI) Analyst Meeting, (FST) Analyst Meeting, (TREX) Analyst Meeting and the JPMorgan Gaming/Lodging/Restaurant/Leisure Conference could also impact trading today.

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

Stocks Higher into Final Hour on Less Economic Fear, Diminishing Financial Sector Pessimism, Short-Covering, Technical Buying

Broad Market Tone:

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

Equity Investor Angst:

• VIX 16.75 -5.31%
  
• ISE Sentiment Index 155.0 -3.13%
  
• Total Put/Call .86 +17.81%
  
• NYSE Arms .91 +68.59%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 81.87 bps -2.82%
  
• European Financial Sector CDS Index 72.58 bps +.80%
  
• Western Europe Sovereign Debt CDS Index 67.71 bps +.18%
  
• Emerging Market CDS Index 211.02 bps -3.14%
  
• 2-Year Swap Spread 17.50 bps -1.5 bps
  
• TED Spread 12.0 bps +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .15% unch.
  
• Yield Curve 272.0 bps -2 bps
  
• Copper Days Demand 15.06 days -.35%
• Citi US Economic Surprise Index +37.0 +.4 point
  
• 10-Year TIPS Spread 2.25% unch.
  

Overseas Futures:

• Nikkei Futures: Indicating -16 open in Japan
• DAX Futures: Indicating unch. 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 neutral as the major averages build slightly on recent gains, but are trading near session lows despite strength overseas. On the positive side, (XLF) and (IYR) have outperformed throughout most of the day. Cyclical shares are outperforming. REIT, Restaurant, Bank, Networking, Semi, Software, Paper, Energy and Coal shares are especially strong, rising .75%+. Despite another rise in commodity prices, inflation expectations are stable and long-term rates are slightly lower. On the negative side, Steel, Disk Drive and Airline stocks are under pressure. Market leaders are underperforming again today, which remains a red flag. As well, given the gains overseas and recent technical breakout, today's performance is mildly disappointing. Citi lowered the financial sector to Neutral this afternoon, which is pressuring (XLF) a bit. So far, the weakness has been contained and the bears have been unable once again to gain any meaningful traction. Uncertainty over healthcare reform is also likely weighing on the broad market this afternoon. One of my longs, (RUE), beat estimates and raised guidance after the close yesterday, which is lifting the shares to a new high. I still think the stock has further near-term and intermediate-term upside. I expect US stocks to trade mixed-to-higher into the close from current levels on diminishing economic fear, short-covering and technical buying.

Today's Headlines

Bloomberg:

• Default-Prone Companies Drop for Fifth Quarter. Moody’s Investors Service added fewer potentially default-prone companies to its B3 Negative List for the fifth straight quarter after a drop in downgrades. There are 233 firms with a speculative credit grade of B3 and negative outlook or a lower rating, including American Safety Razor Co., SuperMedia Inc. and Harlan Laboratories Inc. among the 14 added this year, according to Moody’s. There were 262 last quarter, with 25 companies added, said the report, scheduled for release today. The B3 list decline coincides with rising upgrades relative to downgrades, according to Moody’s. The default rate, which peaked at 14.5 percent in November, is anticipated to drop to 3.3 percent by the end of the year. “What’s interesting about the list is that at the stronger-end of it, fewer names are coming in and a lot of names that are in aren’t getting downgraded,” David Keisman, senior vice president at Moody’s and an author of the report, said in a telephone interview. “The higher-quality side is really reflecting the turnaround of the economy.”
• SEC Says Lehman Oversight Was 'Flawed' as Report Cites Inaction. Securities and Exchange Commission Chairman Mary Schapiro said her agency’s oversight of Lehman Brothers Holdings Inc. was “terribly flawed,” days after a bankruptcy examiner found the SEC didn’t try to stop the firm’s exaggeration of liquid assets. “It was so terribly flawed in design and execution,” Schapiro testified to a Congressional committee today, referring to SEC examinations aimed at monitoring the soundness of Wall Street’s biggest investment banks. “We were ill-suited because of our enforcement and disclosure mentality.”
• Ford's(F) $65 Billion in Debt Upgraded by Moody's. Moody’s Investors Service upgraded the ratings of Ford Motor Co. and Ford Motor Credit Co. and is reviewing the ratings for further possible upgrade. The upgrade affects about $65 billion in debt. “The upgrade of Ford’s long-term ratings anticipates that the company’s restructured business model will generate significantly improved operating and financial performance,” Moody’s said in a statement.

Wall Street Journal:

• States Hope for a Rich Uncle. Governors Lobby Washington for More Money as Stimulus Aid Runs Out. Strapped states, facing up to $180 billion in budget deficits in the next fiscal year, are going hat in hand to Washington.
• Blackstone(BX) Working On $1Bln Blind Pool To Buy Failed Banks - Sources. Blackstone Group LP (BX) is working with R. Brad Oates, who led the turnaround of Bluebonnet Savings Bank FSB during the savings and loan crisis, to raise a blind pool of capital to acquire failed banks from the Federal Deposit Insurance Corp., said several people familiar with the plan.
• Start-Ups Add Third Dimension to Chips. A perennial race to squeeze more features on flat pieces of silicon is taking a step into the third dimension. Two Silicon Valley start-ups are breaking from conventional designs—which lay out components on chips in two-dimensional patterns—to develop products that are configured by customers after they are manufactured.

BusinessWeek:

• Deutsche Bank(DB), JPMorgan(JPM), UBS(UBS) Are Charged With Fraud. Deutsche Bank AG, JPMorgan Chase & Co., UBS AG and Hypo Real Estate Holding AG’s Depfa Bank Plc unit were charged with fraud linked to the sale of derivatives to the City of Milan. Judge Simone Luerti scheduled the trial of the four firms, 11 bankers and two former city officials for May 6, Prosecutor Alfredo Robledo said after a hearing in Milan today. The banks allegedly misled the city over swaps that adjusted interest payments on 1.7 billion euros ($2.3 billion) of bonds sold in 2005. Prosecutors across Italy are investigating banks as local and national government agencies face potential losses of 2.5 billion euros on derivatives, lawyers say. The Milan probe may also affect cases as far away as the U.S., where securities firms have faced charges for price-fixing and bid-rigging in the sale of derivatives to municipalities, though not for fraud, according to former regulator Christopher “Kit” Taylor.

MarketWatch:

• Upgrade Helps Lift BlackRock(BLK) Shares More than 5%. BlackRock Inc. shares rose on Wednesday following a Credit Suisse upgrade on the belief that the private-equity firm will significantly increase its assets under management over the next two years.

CNBC:

• EU Will Crack Down on 'Naked' CDS Selling in June. The European Commission will crack down on "naked" selling and speculation in the market for credit default swaps with proposed controls as soon as June, the EU's financial markets chief said on Wednesday. Speaking to a group of influential parliamentary committee members who will play a key role in passing such proposals into law, he said: "We will be proposing on naked selling and credit default swaps." He said that the draft law would come as soon as June.
• Four Ways to Profit When Market Volume Takes a Plunge.
  

Business Insider:

• Jim Rogers: The Euro Will Be Dead In 20 Years.
• Watch How Medicare Spending Swallows Washington DC. Here's a two-fer that combines our feature on the retirement crisis and the healthcare hullabaloo. It's a chart -- from the Heritage Institute (.pdf) and David Leonhardt -- showing just how big Medicare and Medicaid spending are going to get. Basically, 50% of all program spending will be on these two items.

The Daily Beast:

• America's Debt Gets Scary by Charlie Gasparino. The country’s top-notch credit rating is in danger of being downgraded, Moody’s is warning—and if a ratings agency that completely failed to predict the financial crisis is sounding the alarm, we should all be afraid.

HedgeCo.Net:

• Hedge Fund Manager Survey Finds Sentiment Moving Against Europe, in Favor of U.S. Investors have recovered their bullishness towards equity markets but are shifting their focus away from Europe and into the U.S. and Japan, according to the BofA Merrill Lynch Survey of Fund Managers for March. After weakened sentiment in February, the survey shows that investors have restored their faith in equities with a net 46 percent of asset allocators saying they are overweight the asset class, up from 33 percent the previous month. Cash positions have fallen with respondents at a net neutral cash allocation compared with a net 12 percent underweight in February. Asset allocators have retrenched from Europe, however. A net 21 percent are underweight European equities this month, up sharply from a net 2 percent overweight in January. The change in favor of U.S. equities has been similar. A net 19 percent of asset allocators are overweight U.S. equities this month, up from just 1 percent in January. Japan is also regaining popularity. A net 6 percent of allocators are overweight Japanese equities, the most bullish reading since August 2007, and up from a net 10 percent underweight in January. Global investors believe that the corporate outlook is better away from Europe. A net 40 percent of the panel says the outlook for eurozone corporate profits is the least favorable of all regions. “Investors’ concerns about Greece are easing, but European country risk remains a key constraint to optimism over economic recovery,” said Gary Baker, head of European Equities strategy at BofA Merrill Lynch Research. “Investors are more willing to embrace corporate risk, via equities, than sovereign risk,” said Michael Hartnett, chief Global Equities strategist at BofA Merrill Lynch Research.

Seeking Alpha:

• rue21 Inc.(RUE) Q4 2009 Earnings Call Transcript.

Google Blog:

• Now It's Easy Switch to Google(GOOG) Apps from Microsoft Exchange. Today we're making it a lot easier for customers of Microsoft Exchange to go Google with Apps. Google Apps Migration for Microsoft® Exchange is a new server-side tool that migrates your company's email, calendar and contact data from Microsoft Exchange to Google Apps. With the tool, migrations are:

The Chicago Tribune:

• Health Care Reform in Washington Meets the Chicago Way. Not even three or four pipes full of Hopium could have convinced me that the Congress of the United States would ever start looking like the Chicago City Council. But now, with the Chicago Way White House twisting arms for its federal health care legislation, Democrats in Congress and Chicago aldermen are beginning to share a remarkable resemblance. They're starting to look like fall guys.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-two percent (42%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -18 (see trends).

Politico:

• Dennis Kucinich is a 'Yes' on Health Care. The presidential arm-twisting worked. Rep. Dennis Kucinich (D-Ohio), enjoying a rare moment where his vote could be critical on a landmark issue, said Wednesday morning that he will reluctantly vote for the Democratic health care bill, a significant boost from a liberal critic of the legislation.

Politics Daily:

• Ingrid Martin Channels Joe the Plummer, Debates Obama After Health Speech.

Reuters:

• LSI(LSI) Boosts Outlook on Improved Business Demand. Microchip and software maker LSI Corp (LSI) raised its first-quarter outlook on Wednesday, citing renewed strength in corporate demand, sending its shares up 11 percent.

Financial Times:

• Lagarde Urges Germany to Consider Tax Cuts. Germany should consider cutting taxes to boost domestic demand, France’s finance minister said on Wednesday as she persisted with her view that Germany’s “single motor” economy may be unsustainable for the rest of the eurozone. Despite a backlash from German politicians and media, Christine Lagarde showed no intention of backing away from her comments in the Financial Times when she called on Berlin to boost domestic consumption to help other economies in the bloc regain competitiveness and cut budget deficits. “I think Germany could perhaps use measures, which incidentally are being considered by the governing coalition, to reduce taxes to encourage domestic consumption." “When there is an effort to make in an interdependent economic zone such as the eurozone, everybody must make an effort: those who are in deficit must reduce their deficits, that is the priority, and those that are in surplus must not be single motors [because ...] they can undoubtedly drive growth through other means.”

Financial Times Deutschland:

• Germany is blocking a euro-region decision that would allow Greece to gain aid if needed, citing the group's disagreement over tapping International Monetary Fund help. Germany, Italy, Finland and the Netherlands favor bringing the IMF on board in case Greece needs aid while other member states are opposed. The German government in Berlin said yesterday that no decision on aid for Greece will be taken at a meeting of EU leaders in Brussels on March 25-26, an indication that the issues aren't resolved.

TheNational:

• China's Hunger for Oil Hard for US to Digest. The world’s third-largest energy consumer continues to devour crude, meaning Washington faces a potential problem as it tries to tighten the screws on Iran, Tamsin Carlisle reports. It is no secret that some OPEC nations have been pumping crude above their quotas. What is more mysterious in an oversupplied oil market is where in the world those unsanctioned barrels have ended up. In the case of Iran’s estimated 400,000 barrels per day (bpd) of excess output, the answer could lie, at least partly, in China. The world’s third-biggest energy consumer has been stockpiling crude for the past 18 months in response to a government programme to establish strategic petroleum reserves equal to 90 days of consumption. China’s state-controlled oil companies may be planning to increase their supply of refined fuels to Iran as the traditional western suppliers have yielded to diplomatic pressure from their governments to discontinue business ties with Iran. Chinese enterprises have signed agreements to develop three of Iran’s biggest untapped oilfields. The unwritten side deal is for many barrels of current and future Iranian crude production to flow to Beijing in return for a smaller supply of fuel from Chinese refineries. While its oil exports to the West have shrunk, Iran strengthened its crude flow to China by about a third between 2007 and last year, to 544,000 bpd from 411,000 bpd. China is Tehran’s second-biggest customer for crude after Japan. Iran is Beijing’s second-biggest crude supplier, behind Saudi Arabia. It supplied about 15 per cent of Chinese oil imports last year. Beijing looks to Iran as “a major source of future oil supplies”, and that is not likely to change, said James Placke, a senior associate at IHS Cambridge Energy Research Associates. “They’d have to go through a substantial policy reversal and I’d be surprised if they did that.” That does not bode well for the success of Washington’s plan to toughen sanctions against Tehran by cutting off petrol supplies and urging others to do the same. To work, that strategy would require a UN Security Council resolution, which China would be unlikely to support. India, which supplies the most petrol to Iran, is also unlikely to comply with the US call for tougher sanctions. Like China, Asia’s second-most populous nation is also a significant importer of Iranian crude and is looking at future gas supplies from Iran.
  

Bear Radar

Style Underperformer:
Large-Cap Growth (+.73%)

Sector Underperformers:
Airlines (-.69%), Drugs (-.22%) and Steel (-.19%)

Stocks Falling on Unusual Volume:
VIVO, CTXS, FUQI, NWPX, CSKI, PETS, CAAS, TOO, MTR and WHI

Stocks With Unusual Put Option Activity:
1) FUQI 2) ATHN 3) CX 4) CIT 5) SPWRA