Bear Radar

Style Underperformer:
Small-Cap Growth (-.83%)

Sector Underperformers:
Gold (-3.37%), Hospitals (-2.37%) and Semis (-2.06%)

Stocks Falling on Unusual Volume:
CMC, CHU, IAG, STD, TKC, STO, BK, MDTH, GENZ, NICE, SONC, DRWI, NTES, ENDP, ACGY, SOHU, LFUS, XLNX, NETC, EZCH, LPNT, RICK, ASIA, ESE, JBL and RBN

Stocks With Unusual Put Option Activity:
1) SYMC 2) ADBE 3) SINA 4) MBI 5) YHOO

Bull Radar

Style Outperformer:
Large-Cap Value (-.24%)

Sector Outperformers:
REITs (+.46%), Banks (+.35%) and Homebuilders (+.28%)

Stocks Rising on Unusual Volume:
RDN, LVS, CLF, CTEL, BAC, ADBE, PLCM, BRKR, CAGC, TGI and LEN

Stocks With Unusual Call Option Activity:
1) RDN 2) GENZ 3) CPN 4) MTG 5) S

Wednesday Watch

Evening Headlines
Bloomberg:

• Euro Falls to 3-Week Low Against Dollar on Greece Uncertainty. The euro fell to a three-week low against the dollar after French and German leaders said any aid package for Greece would require help from the International Monetary Fund, damping demand for the common currency. “It looks like the eurozone can’t resolve the Greek crisis by themselves so they are going to the IMF for help,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. “This casts some doubt over the strength of the European Union. The bias is to sell the euro.” “Given strong opposition for any aid among German citizens, key EU members are unlikely to extend support for Greece,” said Hirokata Kusaba, a senior economist in Tokyo at Mizuho Research Institute Ltd., a unit of Japan’s second- largest banking group. “The euro will continue to weaken.”
  
• AK Steel(AKS) Sees $31 Million Charge From New Health Law. AK Steel Holding Corp., the third largest U.S. steelmaker by sales, said it will record a non-cash charge of about $31 million resulting from the health-care overhaul signed into law by President Barack Obama. The charge, to be recorded in the first quarter of 2010, is due to a reduction in the value of the company’s deferred tax asset because of a change to the treatment of Medicare Part D reimbursements under the new law, West Chester, Ohio-based AK Steel said in a statement today. The almost $1 trillion overhaul signed today, called the Patient Protection and Affordable Care Act, was opposed by some U.S. businesses that said the measure would raise their costs. Caterpillar Inc., the world’s largest maker of construction equipment, last week said taxes and “new-coverage mandates” would raise its health-care costs by 20 percent, or more than $100 million in the first year. AK Steel and other companies that had been receiving a federal subsidy for offering retiree drug benefits are going to have that payment taxed under the new law, Alan McCoy, a spokesman for AK Steel, said in an interview today. In the past, the businesses received the money from the government tax-free because they were saving Medicare money and covering the part of prescription drug costs that the federal insurance plan for the elderly wasn’t. Erin DiPietro, a spokeswoman for Pittsburgh-based U.S. Steel(X), said information was not immediately available on how the new health law would affect the company financially.
• Wall Street Despised in Poll Showing Majority Want Regulation. Americans are leery about creating a new federal agency to make consumer-protection rules for mortgages and credit cards and would prefer to enhance the existing powers of banking regulators. Most people interviewed in the Bloomberg National Poll say they don’t like Wall Street, banks or insurance companies and favor letting the government punish bankers who helped cause the worst financial crisis since the Great Depression. Almost seven out of 10 people surveyed support using current bank regulators for consumer protection, backing positions held by the financial industry and Republicans over President Barack Obama’s proposal to establish an independent agency. “People are generally satisfied with the way consumer protection has worked with banks,” said Ernie Patrikis, a partner specializing in banking supervision at the White & Case LLP law firm in New York. “Most Americans could care less about redoing the financial regulatory structure.” 57 percent of Americans have a mostly unfavorable or very unfavorable view of Wall Street, versus fewer than one-quarter who have a favorable opinion. Banks are viewed badly by 54 percent of poll respondents, and 60 percent have a negative opinion of insurance companies. The poll also shows most Americans don’t like the nation’s top corporate bosses. Almost two-thirds say they have an unfavorable opinion of business executives, a rating that rivals the public’s disdain for Congress, which was viewed with disfavor by 67 percent of respondents. Fifty-six percent of those polled say they would support government action to limit compensation of those who helped cause the financial crisis, or to ban those people from working in the banking industry. As Democrats and Republicans seek to tap populist ire, the poll shows there may be political advantage in taking on big financial institutions such as Charlotte, North Carolina-based Bank of America Corp., and New York’s Goldman Sachs Group Inc. The majority of poll participants -- 56 percent -- say big financial companies are more interested in enriching themselves at the expense of ordinary people, while 40 percent say such firms play a vital role in enabling the economy to grow. More than 40 percent of Americans say the government has gone too far in measures to fix the financial industry; 37 percent say it hasn’t done enough. Almost six out of 10 people say Wall Street hasn’t gone far enough on its own to protect against future emergencies. “Anything the government gets their fingers in, they mess it up,” said poll participant Norman White, 60, a community college electronics instructor who lives in Colfax, Louisiana. “I don’t have a very high opinion of the government running anything.”
• White House Inflates Success of Loan Program, Watchdog Says. The Obama administration is inflating the success of its main foreclosure prevention program, which may end up doing more harm than good by “spreading out the foreclosure crisis” over several years, according to federal investigators. “A year into the program, although more than a million trial modifications have been initiated, the number of permanent modifications thus far, 168,708, has been, even according to Treasury, ‘disappointing,’” according to a report by a government watchdog obtained by Bloomberg News. “The program will not be a long-term success if large amounts of borrowers simply re-default and end up facing foreclosure anyway.” While Treasury officials still publicly proclaim the Home Affordable Modification Program, or HAMP, will help 3 million to 4 million borrowers, internally they project that about half that number will receive permanent alterations to their loan terms, the Special Inspector General for the Troubled Asset Relief Program wrote in the report. The findings are scheduled to be released at a hearing before the U.S. House Committee on Oversight and Government Reform March 25. The report echoes criticisms in a March 16 letter to Treasury Secretary Timothy Geithner from Republican committee members Darrell Issa of California and Jim Jordan of Ohio. They said the administration was “glossing over disappointing results” by counting temporary changes toward the goal of permanent relief.
• Investors are withdrawing from money-market funds at the fastest pace in at least two decades, reducing holding that peaked at $3.9 trillion in January 2009. "The draining of cash from money-market funds shows people are becoming more comfortable taking risk, so equities are going up and bonds are also being well supported and the yield curve is flattening," said Christian Carrillo, a senior interest-rate strategist in Tokyo at Societe Generale SA. "Such behavior can give some comfort to the Fed that it's okay to reduce the size of its balance sheet, which is a pre-requisite for rate hikes."
  
• CFTC Needs to Expand Metal Rules, Commissioner Says. The U.S. Commodity Futures Trading Commission needs “professional-grade” regulations for metal markets including gold and silver, according to Commissioner Bart Chilton. “We need to have rational free markets and need to control and ensure that there’s no excess speculation and no excess concentration in markets,” Chilton said today on a conference call with investors that was monitored by reporters. “We need to have professional-grade regulatory tools” for metal-futures trading, he said. The agency, which oversees $5 trillion in daily trading, will hold a public meeting on March 25 to consider limits on trading positions in metals as part of a plan to prevent anyone or any firm from gaining too much control of a commodity market. The commission “drastically” needs the limits to keep speculators from “contorting” markets, Chilton said.
• AIG(AIG) Increases Compensation for Most Top Managers. American International Group Inc., the bailed-out insurer, was allowed by U.S. paymaster Kenneth Feinberg to increase 2010 compensation for most top executives in a group that had their pay slashed last year.
• NFL Owners Change Overtime Rule During Playoffs.
• Corzine Returns to Wall Street as CEO of MF Global(MF). Former New Jersey Governor Jon Corzine, who ran Goldman Sachs Group Inc. from 1994 to 1999, has accepted offers to lead the futures and options broker MF Global Holdings Ltd. and become an operating partner of buyout firm J.C. Flowers & Co. Corzine, 63, becomes chairman and chief executive officer immediately, MF Global said in a statement today. He takes over from Bernard W. Dan, 50, who is leaving for personal reasons and will stay until May 16 to aid in Corzine’s transition, the New York-based company said. MF Global shares gained as much as 13 percent in after-market trading.
• Netanyahu Says Housing Rift Could Delay Talks by Year. U.S. acceptance of Palestinian demands that Israel halt construction in east Jerusalem could put Middle East peace talks on hold for a year, Israeli Prime Minister Benjamin Netanyahu said. “For 42 years we have been building in the Jewish neighborhoods of Jerusalem. No one argued about it,” Netanyahu said at a meeting today with U.S. House Speaker Nancy Pelosi, according to his spokesman, Nir Hefez. “This was never raised as a point of contention between us and the U.S.,” Netanyahu said. “The Palestinians are now raising a new demand. If this demand is adopted we are liable to lose another year.”
• Adobe(ADBE) Sales Forecast Signals Likely Software Upgrade. Adobe Systems Inc., the world’s biggest maker of graphic-design programs, forecast sales that beat analysts’ estimates, a sign the company is poised to release an upgrade of its most profitable software. The shares gained.
• Nintendo Shares Gain on Plan for Glasses-Free 3-D DS.

Wall Street Journal:

• Schumer Threatens Retaliation in EU Hedge-Fund Dispute. A U.S. senator threatened retaliation if European Union proposals curbing access of American fund managers to the European market become law. In a sign that a European effort to increase regulation of hedge funds and other alternative-investment vehicles could escalate into a broader trans-Atlantic dispute, Sen. Charles Schumer (D., N.Y.) described the European proposals as "protectionist rules that discriminate against U.S. firms and activities." In a letter to Treasury Secretary Timothy Geithner, Mr. Schumer said he stands ready to call on Congress to pass legislation that would prohibit funds not based in the U.S. from marketing and raising money in the U.S. It also would require funds operating in the U.S. to use custodian banks based in the U.S.

BusinessWeek.com:

• The 50 Most Powerful People in U.S. Real Estate.

Business Insider:

• Look How Fast China's Workforce Is Going To Turn Grey.

zerohedge:

• GMO's Edward Chancellor Discusses China's Red Flags - A Must Read For A Fresh Perspective On China's Bubble.
• Battle For The Budget. Recently the Congressional Budget Office published its scoring of President Obama's budget for the next 10 years. It shows a budget deficit of $9.8 trillion. That is just shy of $4 trillion worse than the CBO's baseline budget, a budget that includes only the laws as currently enacted, with no estimates of any new programs lawmakers may add that worsen future projections.
  

Rasmussen Reports:

• Republican candidates now hold an eight-point lead over Democrats in the latest edition of the Generic Congressional Ballot. A new Rasmussen Reports national telephone survey finds that 43% would vote for their district’s Republican congressional candidate while 35% would opt for his or her Democratic opponent.

Politico:

• Health Bill May Exempt Top Hill Staffers. The health care reform bill signed into law by President Barack Obama Tuesday requires members of Congress and their office staffs to buy insurance through the state-run exchanges it creates – but it may exempt staffers who work for congressional committees or for party leaders in the House and Senate. Staffers and members on both sides of the aisle call it an “inequity” and an “outrage” – a loophole that exempts the staffers most involved in writing and passing the bill from one of its key requirements.

Financial Times:

• Global Derivatives Disclosure to Rise. A transatlantic row that flared up in the wake of the Greek debt crisis over the lack of disclosure to regulators of credit market activity has pushed the new body in charge of collecting global trading data to provide more information to financial watchdogs. Regulators from around the globe including the Securities and Exchange Commission will now be able to obtain breakdowns of trading activity in credit default swaps, including the identity of the investors.

Telegraph:

• Deutsche Bank(DB) and Moore Capital Drawn into FSA Swoop on 'Insider Dealing'. Leading banks BNP Paribas, Deutsche Bank and top hedge fund Moore Capital are among those drawn into the investigation which reached its climax on Tuesday when 150 officers from The Financial Services Authority raided 16 addresses in and around London. Six men were arrested in the joint operation with officers from the Serious Organised Crime Agency.understands that Clive Roberts, head of European sales trading at Exane, in which BNP Paribas owns a 50pc stake, has been implicated in the investigation, along with a junior employee in Deutsche Bank's London office. In addition reports claimed that Julian Rifat, an execution trader at Moore Capital, has also been arrested after the officers raided the fund's London office. Moore Capital said that Mr Rifat is now on administrative leave.

The Guardian:

• Google(GOOG) Co-Founder Sergey Brin Urges US to Act Over China Web Censorship. Google co-founder Sergey Brin has called on Washington to take a stand against China's censorship of the internet, urging the US to make the issue a "high priority". Brin, talking to the Guardian about Google's decision yesterday to lift censorship from its Chinese internet search engine, called on government and businesses to act in order to put pressure on Beijing.

China Daily:

• US Likely to Label China 'Currency Manipulator'. The US Treasury Department is highly likely to label China a currency manipulator in a report due out in mid-April, but the move will be "more symbolic than substantive" to win mid-term Congressional elections in the fall, former US trade representative Susan Schwab told China Daily on Tuesday. If that were the case, it will be the first time in 16 years. By declaring China a currency manipulator, the US could slap additional tariffs on imports from the country. Some Chinese experts strongly doubt the US will do so as it will provoke Beijing and jeopardize its most important trade relationship, while others believe that even if China were declared a currency manipulator, Washington will not follow up with punitive measures. "There is a high possibility, definitely (that China will be labeled as a manipulator), but it is very important to remember the decision is largely symbolic and does not force any actions, other than consultations," she said. Schwab said "a significant growing number" of Democrats are increasingly pushing protectionist solutions, which she said was unfortunate."This is a very difficult decision (for the US government) to make. It is under a lot of pressure on the high unemployment rate and the coming election this fall." As the mid-term election campaign looms, the Obama administration could "easily make China a scapegoat by blaming the country for their own problems," Huo said.

China Securities:

• The yuan may strengthen by between 3% and 5% this year against the U.S. dollar, starting in April, citing a forecast by China International Capital Corp. The Chinese currency may strengthen "gradually," instead of through a one-step revaluation, citing the forecast by the Beijing-based investment bank.

Evening Recommendations
Citigroup:

• Reiterated Buy on (ADBE), target $42.
  
• Reiterated Buy on (PLCE), target $50.
• Reiterated Buy on (URBN), target $42.
• Reiterated Buy on (CCL), raised estimates, boosted target to $47.
  

Night Trading

• Asian indices are unch. to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 98.0 - 5.0 basis points.
• S&P 500 futures -.12%
• NASDAQ 100 futures -.10%

Morning Preview Links

Earnings of Note
Company/Estimate

• (LEN)/-.34
• (GIS)/.93
• (PAYX)/.33
• (CMC)/.91
• (RHT)/.16

Economic Releases
8:30 AM EST

• Durable Goods Orders for February are estimated to rise +.6% versus a +3.0% gain in January.
• Durables Ex Transports for February are estimated to rise +.6% versus a -.6% decline in January.

10:00 AM EST

• New Home Sales for February are estimated to rise to 315K versus 309K in January.

10:30 AM EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,650,000 barrels versus a +1,012,000 barrel gain the prior week. Gasoline inventories are expected to fall by -1,500,000 barrels versus a -1,710,000 barrel decline the prior week. Distillate supplies are estimated to fall by -985,000 barrels versus a -1,491,000 barrel decline the prior week. Finally, Refinery Utilization is expected unch. versus an -.18% decline the prior week.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Treasury's $42B 5-Year Note Auction, Treasury's Wolin speaking, Fed's Hoenig speaking, Fed's Kohn speaking, weekly MBA mortgage applications report, BB&T Commercial & Industrial Conference, Barclays Healthcare Conference, (COP) analyst meeting and the (SBUX) shareholder meeting could also impact trading today.

BOTTOM LINE: Asian indices are 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 mixed. The Portfolio is 100% net long heading into the day.

Stocks Surging into Final Hour on Short-Covering, Technical Buying, Declining Sovereign Debt Angst

Broad Market Tone:

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

Equity Investor Angst:

• VIX 16.51 -2.25%
  
• ISE Sentiment Index 154.0 +22.22%
  
• Total Put/Call .73 -19.78%
  
• NYSE Arms .82 +14.11%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 87.80 bps -4.01%
  
• European Financial Sector CDS Index 77.33 bps -1.05%
  
• Western Europe Sovereign Debt CDS Index 74.82 bps -1.88%
  
• Emerging Market CDS Index 218.44 bps -1.44%
  
• 2-Year Swap Spread 17.0 bps -2.0 bps
  
• TED Spread 16.0 +1.0 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .12% -2 bps
  
• Yield Curve 270.0 bps +1 bp
  
• Copper Days Demand 15.26 days unch.
  
• Citi US Economic Surprise Index +41.50 +.3 point
  
• 10-Year TIPS Spread 2.21% +1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +25 open in Japan
• DAX Futures: Indicating +21 open in Germany

Portfolio:

• Higher: On strength in my Financial, Biotech 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 break to session highs out of their recent range, despite China bubble/trade concerns, healthcare reform fears, tax hike worries and disappointing economic data. On the positive side, Semi, Computer, Steel and Coal shares are especially strong, rising 2.0%+. Small-cap and cyclical stocks are outperforming. Despite an equity rally, poor US housing data and news that Eurozone countries are close to a Greek aid deal, the euro is trading near session lows, falling .35% against the dollar. Considering these developments, huge speculative shorts in the currency and its oversold state, it trades very poorly. Weekly retail sales rose +3.4% this week, which is the highest since the week of April 10th, 2007. On the negative side, Oil Service, Gold, Internet, Medical, Hospital, HMO, REIT and Education stocks are all down on the day. The market's performance today is very impressive again, considering the news. I suspect some large shorts are capitulating today, which is adding to broad market gains. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, declining sovereign debt angst and technical buying.

Today's Headlines

Bloomberg:

• States Sue to Block Health Care Reform as Illegal. Thirteen states filed a lawsuit challenging the constitutionality of the health-care overhaul signed by U.S. President Barack Obama, said Bill McCollum, Florida’s attorney general. The states claim the legislation, signed today, places a fiscal burden on their cash-strapped budgets with an expansion of state-run Medicaid. The lawsuit seeks to bar enforcement of the healthcare legislation while the case proceeds in federal court in Pensacola, Florida. Also joining Florida in the lawsuit were Alabama, Colorado, Idaho, Louisiana, Michigan, Nebraska, Pennsylvania, South Carolina, South Dakota, Texas, Utah, and Washington. A copy of the complaint was posted on the Florida attorney general’s Web site. “Florida will not permit the constitutional rights of our citizens and the sovereignty of our state to be ignored or disregarded,” McCollum said in a statement.
• Germany, France Back IMF Aid to Greece, Official Says. Germany and France have agreed to back International Monetary Fund aid for Greece, a German Finance Ministry official said, signaling a joint position after weeks of dispute over how to resolve the Greek crisis. Germany and France, the euro region’s two biggest economies, are now pulling together before a two-day EU summit in Brussels beginning March 25, the official said on condition of anonymity.
• U.S. Economy: Sales of Existing Homes Decrease, Supply Climbs. Sales of existing U.S. homes fell in February for a third month, and the number of properties on the market climbed by the most in almost two years, casting a pall over the prospects for a recovery. Purchases dropped 0.6 percent to a 5.02 million annual rate, the lowest level in eight months, figures from the National Association of Realtors showed today in Washington. There were 3.59 million houses for sale, a 312,000 increase from January that marked the biggest gain since April 2008. The median price of a previously owned house decreased 1.8 percent to $165,100 from $168,200 a year ago, today’s report showed. The number of homes on the market jumped 9.5 percent, pushing the time it would take to sell all properties at the current sales pace up to 8.6 months from 7.8 months at the end of January. The increase in supply last month was “unusual” and “discomforting,” Lawrence Yun, the Realtors’ chief economist, said in a news conference. The jump may be caused by more distressed properties coming on the market, particularly condominiums, and by trade-up buyers who are now putting their houses up for sale before purchasing another property, he said. If inventories exceed a 10-months’ supply, it would lead to larger price declines and signal the housing slump was not over, he said.
• Junk Defaults May Swell in 2011 as Debt Matures, Moody's Says. Defaults in Asia may rise next year as speculative-grade companies struggle to refinance maturing U.S. dollar debt, according to Moody’s Investors Service. The dollar bond refunding requirement in 2012 for high- yield companies in Asia is “concentrated among single-B issuers typically characterized as having limited financial flexibility,” Elizabeth Allen, a Moody’s vice president, wrote in a note to clients today. Debt maturing in 2011 and 2012 will be “higher than the historical average, indicating this will be a challenging issue after 2010.”
• Leveraged Buyout Revival Seen in Default Swaps: Credit Markets. Credit-default swaps tied to the bonds of borrowers from Computer Sciences Corp. to Lubrizol Corp. are rising on speculation that leveraged buyouts will accelerate, saddling takeover targets with added debt. “Private-equity shops do have quite a bit of money on the sidelines,” said Mikhail Foux, a New York-based credit strategist at Citigroup Inc.
• Gold May Fall to $1,074, Commerzbank Says: Technical Analysis.
• Gold May Drop to $1,030 as Dollar Favored, GFMS Analytics Says. Gold may decline to $1,030 an ounce in the next few weeks as sovereign debt problems in Europe prompt investors to favor the dollar as an asset of “first resort,” GFMS Analytics Ltd. said.
• Importers Defer Buying as Sugar Drops to 8-Month Low. Sugar buyers in India, the world’s biggest consumer, and other importers will probably defer purchases until prices stabilize after falling to an eight-month low, according to broker Sucden India Pvt. Sugar has tumbled 41 percent from a 29-year high of 30.4 cents per pound on Feb. 1 amid bets that global production will rebound after rain and drought cut output in Brazil and India. Al Khaleej Sugar Co., the world’s largest refiner, hasn’t increased sales as buyers may be waiting for even lower prices, according to General Manager Cyrus Raja. Waning demand may push down prices before cane harvesting next month in Brazil, the biggest producer, and reduce costs for importers from Egypt to Pakistan. Output in the Center South of Brazil, the largest growing area, will climb about 12 percent to 34.7 million tons next season, FCStone Group Inc. said March 15.
• Google(GOOG) Exit Reminds Companies Asia Strategy Is Not Just China. Google Inc.’s retreat from China, where U.S. executives say the business climate is becoming less welcoming, may hasten moves by foreign companies to look beyond the world’s fastest-growing major economy for expansion in Asia. Google rerouted its Chinese Web site and today began directing traffic to Hong Kong, fulfilling a pledge to stop censoring searches as required by China. The move follows an American Chamber of Commerce report released in Beijing yesterday that said some U.S. businesses are losing Chinese sales because of rules to support home-grown technology. While China still “is the biggest game in town,” more recently “I see a lot of U.S. companies looking for alternatives,” Susan Schwab, U.S. Trade Representative between 2006 and 2009, said in an interview in Hong Kong last week.
• Gregg Aims to Use Health-Care Bill to Stir Town-Hall Backlash. Senator Judd Gregg, who will lead Republican efforts to block a bill revising health-care legislation, said he’s aiming to spark an election-year backlash against Democrats that will rival the town-hall meetings that almost sank the measure last year. With the latest legislative fight expected to begin today, Gregg said Republicans will submit a host of amendments to the reconciliation bill, which the House approved on March 21 along with a broad health-care measure and sent to the Senate. Senate Democrats say they hope to finish this week. Gregg has other ideas, saying his goal is to force changes in the reconciliation bill. That would require the House to vote again on the bill, perhaps after a two-week Easter recess beginning March 26, during which Democrats could get an earful from voters, keeping the issue alive during this year’s congressional elections. “It will make last August look like a love fest,” Gregg, 63, said in an interview, referring to the town-hall meetings where constituents protested President Barack Obama’s plans for the biggest U.S. health overhaul in 45 years. “The only issue between now and the next election will be the repeal of it,” said Gregg, of New Hampshire, the top Republican on the Budget Committee. “Every election will turn on it. There will be nothing else.” Senator Ben Nelson, a Nebraska Democrat who voted for the broad health-care bill, gave the Republicans a boost yesterday when he said he couldn’t support the reconciliation measure. He cited student-loan provisions that amount to a “government takeover” of student lending, he said in a statement.
• Euro May Drop to $1.25 as Greece Woes Persist, Nordvig Says. The euro may fall as low as $1.25 by year-end as Greece’s fiscal crisis drives investors from the region, said Nomura Holdings Inc.’s Jens Nordvig. “The continued uncertainty about the resolution is triggering a medium term asset allocation shift away from euros,” Nordvig, a managing director of currency research at Nomura Securities International in New York, said during a Bloomberg Radio interview. “It’s the longer-term players that are changing how they invest in the euro zone.”

Wall Street Journal:

• Ford(F) on Course to Sell Volvo to Geely.
• Start-up Turns Sugar Beets Into Alternative to Gasoline. A biofuels start-up, working with oil giant Royal Dutch Shell PLC, has begun turning sugar beets into a gasoline substitute compatible with existing engines and pipelines. Virent Energy Systems Inc. is expected to say Tuesday that its process of converting plants into liquid fuels is working at a 10,000-gallon-a-year pilot site in Madison, Wisc. "At today's crude-oil and biomass costs, our process is competitive," says Lee Edwards, Virent's chief executive.
• 'Sarah Palin's Alaska' Goes to Discovery. The Discovery Channel is expected to announce a reality television deal with Sarah Palin, in which the former Alaska governor will highlight her home state, Variety reports.

Fox News:

• Greek Bank Reportedly Had $1.3 Bln of CDS. Greece's state-controlled Hellenic Post Bank bought around 950 million euros ($1.28 billion) of credit default swaps on the country's debt in August, according to a report in newspaper Kathimerini. The bank's management sold the CDS in December, when the spread on five-year Greek bonds over the German bund had widened to 2.35 percentage points from 1.35 percentage points, the newspaper said. It added the bank made a profit of around 35 million euros on the transaction, the report said, citing documents seen by the newspaper.

Business Insider:

• Excellent Morgan Stanley Presentation On Emerging Markets, Japan And The Coming Commodity Weakness.
• Here's Why Andy Xie's Latest Claim About Chinese Real Estate Is A Bombshell.
  

zerohedge:

• Moore Capital Busted in Biggest Ever Insider Trading Raid in UK.

AppleInsider:

• One-Third of Apple(AAPL) iPad Buyers Plan to Read Books, Newspapers.

Rasmussen Reports:

• 49% Support State Lawsuits Against Health Care Plan. Forty-nine percent (49%) of U.S. voters favor their state suing the federal government to fight the requirement in the new national health care plan that every American must obtain health insurance. A new Rasmussen Reports national telephone survey of likely voters finds that 37% disagree and oppose their state suing to challenge that requirement.

Politico:

• After Health Care, a Climate Bill Push. Disagreement among Senate Democrats is slowing progress on the climate bill – even as supporters push to move forward with a proposal this week. Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) have been working overtime to move a draft of their climate bill forward before the Senate leaves for recess at the end of the week.

Real Clear Politics:

• A Victory for Obama's Agenda of Spreading Dependency by George Will.

Il Messaggero:

• Former European Commission President Romano Prodi said the euro will be damaged if Greece is forced to seek a bailout from the International Monetary Fund instead of the European Union, citing an editorial.

Financial Post:

• U.S. Faces Possible US$52B Tax Hike. Not only is the cost of doing business in the United States set to rise with the passing of Barack Obama's health-care reform bill, but the expense for taxpayers may also be higher than anticipated. With an additional 32 million Americans expected to eventually receive health insurance coverage, much of the price tag will be paid by businesses. The U.S. Chamber of Commerce, which criticized the bill for saddling an already burdened corporate America with additional costs, noted that it will lead to US$52-billion in new taxes on companies as a result of the requirement that more employees be covered by insurance. At the same time, the organization said the legislation creates 16,500 new jobs in the Internal Revenue Service. "The House made a wrong and unfortunate decision that ignores the will of the American people," said Thomas Donohue, the Chamber's chief executive. "It will drive up health-care costs and make coverage less affordable for businesses and families.... It will further expand entitlements and explode the deficit, and raises taxes by a half a trillion dollars at the worst possible time." Construction equipment giant Caterpillar Inc., for example, estimates its insurance costs will rise by US$100-million, or 20%, in the first year alone. "We can ill-afford cost increases that place us at a disadvantage versus our global competitors," Gregory Folley, the company's vice-president and chief human resources officer, said in a recent letter to House leaders. "We are disappointed that efforts at reform have not addressed the cost concerns we've raised throughout the year." Most key provisions of the healthcare reform bill do not take effect until 2014. Meantime, the regulations that govern these changes will need to be drafted. There will also be two election cycles before then, which could affect what is ultimately implemented. Business will not be alone paying, so will taxpayers. "They passed this bill, but it's not done yet," said Andrew Busch, global currency strategist at BMO Capital Markets in Chicago. "There is still quite a bit to change." The reconciliation bill's price tag is lower at US$875-billion over 10 years, but it includes heftier subsidies to lower-income groups at the expense of higher taxes. The potential changes by Senate parliamentarians will depend on what they feel directly affects the budget. If the Senate makes any changes to this "side-car" bill, the House would need to vote on it again before it is sent to the President for signing. Calling the CBO's US$138-billion estimate "false advertising" and the reform terminology a "misnomer," Citigroup Inc. health-care analyst Charles Boorady said the bill will result in an additional US$1-trillion in U.S. health-care spending over the next 10 years. One the biggest assumptions included in the bill is more than US$400-billion in Medicare savings over the next decade. "I don't think Congress has any kind of history with reducing Medicare spending-- ever," Mr. Busch said. "I can't envision that they'll be able to cut spending for Medicare and send it over to another portion of the bill. It just doesn't seem to make any sense."

Bear Radar

Style Underperformer:
Large-Cap Growth (-.04%)

Sector Underperformers:
Hospitals (-1.37%), REITs (-1.04%) and HMOs (-.62%)

Stocks Falling on Unusual Volume:
CBL, NLY, FCFS, LINE, PLCM, SYNA, VSAT, GOOG, INSU, MDSO, BEC and ESE

Stocks With Unusual Put Option Activity:
1) SD 2) APC 3) CCL 4) GGP 5) MDT