Bear Radar

Style Underperformer:

• Mid-Cap Value (+.04%)

Sector Underperformers:

• REITs (-1.98%), Steel (-1.31%) and Gold (-.67%)

Stocks Falling on Unusual Volume:

• MAC, TITN, TRIT and PPD
  

Stocks With Unusual Put Option Activity:

• 1) STEC 2) CMA 3) EXC 4) GYMB 5) CMCSA
  

Bull Radar

Style Outperformer:

• Small-Cap Growth (+.49%)

Sector Outperformers:

• Disk Drives (+2.30%), Oil Tankers (+1.97%) and Computer Hardware (+1.09%)

Stocks Rising on Unusual Volume:

• STEC, SAIA, UPS, FSLR, PNFP, HBC, BAC, SWC, HXM, CS, VTNC, BGFV, JBHT, LSTR, PNFP, NTRI, EXXI, KMGB, VRUS, SAIA, ACOR, INTC, ODFL, CYOU, AMSC, GLBC, CSIQ, FAST, LCAPA, ME, KNL, SHS, SCX, RSC, SGY, YUM and GMT
  

Stocks With Unusual Call Option Activity:

• 1) STEC 2) CHRW 3) HOV 4) JCI 5) FAST
  

Thursday Watch

Evening Headlines
Bloomberg:

• Homebuilder Bonds Recover From Subprime Losses: Credit Markets. U.S. homebuilder bonds have recovered to levels last seen before credit markets seized up as investors gain confidence that the economic recovery is strong enough to prevent borrowers from defaulting. Yields fell to within 6.21 percentage points of Treasuries as of yesterday, the narrowest since August 2007 when rising subprime-mortgage defaults sparked $1.8 trillion in losses and writedowns at the world’s biggest financial institutions, according to Bank of America Merrill Lynch’s U.S. High-Yield, Homebuilders/Real Estate index. Hovnanian Enterprises Inc. debt surged 11 percent to a more than two-year high since New Jersey’s largest homebuilder posted its first profit since 2006 on March 2. “There is no question that the worst is over for homebuilders,” said Christopher Towle, who helps oversee $47 billion in fixed-income assets, including Hovnanian debt, as a partner at Lord Abbett & Co. in Jersey City, New Jersey. “The numbers show it.”
  
• PC Shipments Jump 27% in First Quarter, Gartner Says. The growth topped Gartner’s projection of 22 percent, the Stamford, Connecticut-based research firm said today. IDC, based in Framingham, Massachusetts, also released PC estimates, pegging worldwide growth at 24 percent. “For most of last year, people were writing obituaries for desktops and we saw that desktops did well, helped by all-in-one designs and touch-screen displays,” said Jay Chou, an analyst with IDC. Intel’s report suggests the PC market should see “pretty good results going forward,” he said. Hewlett-Packard Co. remains the market leader, accounting for about a fifth of shipments. Even so, its growth was dwarfed by Taiwan’s Acer Inc., which passed Dell Inc. to take the No. 2 spot last year. Hewlett-Packard’s shipments climbed 20 percent last quarter, while Acer’s rose 43 percent, IDC said. In the U.S., PC shipments totaled 17.4 million units, up 20 percent from a year earlier, Gartner said. Apple Inc., was ranked No. 5, after Hewlett-Packard, Dell, Acer and Toshiba Corp. Apple’s shipments rose 34 percent, with consumers attracted to its brand by the “hype” over its iPad tablet computer, Gartner said.
• Lennar(LEN) Shares, Options Rise on Buyout Speculation. Lennar Corp. advanced the most since Feb. 11 in New York and trading of bullish options was five times the average on speculation the third-biggest U.S. homebuilder may be acquired in a leveraged buyout. More than 31,000 call options to buy shares changed hands, compared with an average of 5,460 in the past 20 days. The most- active contracts were April $18 calls, which jumped fivefold to 50 cents. April $19 calls rose to 15 cents from 1 cent, the biggest gain. “Lennar surged today on chatter that an LBO deal was in the works,” said Jamie Lissette, founder of the Hammerstone Group, a Westport, Connecticut-based operator of online discussion forums for institutional investors.
• Munster Says He Raised Apple(AAPL) Price Target to $299: Video. Gene Munster, an analyst at Piper Jaffray & Co., talks with Bloomberg's Carol Massar about the outlook for sales of Apple Inc.'s iPad and the company's shares.
• China Plans Policies to Curb Home Price Gains, Securities Says. China plans to accelerate the introduction of policies aimed at curbing property price gains, the Shanghai Securities News reported today, citing an unidentified industry official. One policy may be trials of a property tax in cities with high home prices, the Shanghai-based newspaper reported. Such a property tax would target luxury property and buyers of more than one home, according to the report. China may also tighten mortgage requirments for purchases of more than one home, the newspaper reported. That tightening may include increased down payment requirements and higher interest rates, according to the report. The government may also adjust land auction procedures and more tightly enforce value-added taxes imposed on land, the newspaper reported. Policies may also be introduced to prevent buyers from purchasing more than one home in cities where they do not have residence permits, according to the report.
• Euro Will Drop to $1.19 by Next Year on Greece Crisis, BNP Says. The euro will drop by the middle of next year to $1.19, a level last seen in March 2006, as government debt forces the European Central Bank to keep benchmark rates at record lows, according to BNP Paribas SA. “A program of severe fiscal consolidation is required, which will result in significant deflationary pressure,” currency strategists at BNP Paribas wrote in a note to clients today. “The ECB is still a long way from hiking interest rates, with a rise in the refinancing rate from the current 1 percent unlikely until the second half of 2011.” Germany’s parliament will probably be given a vote on any financial aid for Greece, the Finance Ministry said today, risking a showdown with lawmakers. Greek Prime Minister George Papandreou may be forced to activate the emergency-aid package within two weeks, Fitch Ratings Director Christopher Pryce said. “We expect any euro recovery to remain limited,” the BNP analysts wrote. “Many uncertainties regarding the aid package for Greece remain, which is likely to keep international investors cautious about committing funds to European asset markets.”
• 'Iron Man' Bets Loom as CFTC Staff Film Futures. The Commodity Futures Trading Commission staff, bucking Hollywood opposition, is recommending approval of a market for box-office contracts on films such as “Iron Man 2,” two people with knowledge of the situation said. The staff recommends the CFTC on April 16 approve Media Derivatives Inc.’s request to create a market for professional traders, the first of two applications, said the people, who asked not to be identified because the information isn’t public. The Motion Picture Association of America, representing the studios, says plans by Media Derivatives and Cantor Fitzgerald LP to open markets based on movie-ticket forecasts will lead to manipulation and hurt the industry.
• Iran Could Get Bomb Uranium, Block Oil, Pentagon Says. Iran could generate the enriched uranium needed for a nuclear weapon in one year and already has built defenses capable of shutting a major Persian Gulf oil- transit route in a confrontation, Pentagon officials said today.
• Goldman(GS) Sees 'Expensive' China Index Futures. China’s stock-index futures will begin trading tomorrow at the “expensive side of fair value” as volumes will be limited, Goldman Sachs Group Inc. said. “Under close monitoring by authorities, we expect a gradual increase in liquidity, but even then we do not expect a significant direct impact on the stock market,” Christopher Eoyang and Jason Lui, analysts at Goldman Sachs, wrote in a report today.
• China Economy Grows 11.9%, Pressuring Wen on Yuan Peg. China’s economic growth accelerated to the fastest pace in almost three years in the first quarter, adding pressure on Premier Wen Jiabao to sever the yuan’s peg to the dollar and raise interest rates. Gross domestic product rose 11.9 percent from a year earlier, the statistics bureau said at a briefing in Beijing today. That was more than the median 11.7 percent estimate in a Bloomberg News survey of 24 economists. “More needs to be done to curb increasingly harmful bubbles” in China, Stephen Green, head of China research at Standard Chartered Bank Plc in Shanghai, said before today’s data. “Inflationary pressures are building.”
• Hedge Funds May Be Hunted by Peers as SEC Poaches From Industry. Hedge fund managers may soon face a new regulatory nemesis: Their peers. Bruce Karpati and Robert Kaplan, co-chiefs of a Securities and Exchange Commission task force targeting hedge funds, buyout firms and mutual funds, are seeking five fund managers, chief operating officers or people with “direct exposure to trading and operations” at investment firms. The SEC placed its help- wanted ad last month.
• BofA(BAC) May Post Profit After 'Fabulous Month' for Merrill Lynch. “The value of the Merrill Lynch platform is one of commodities and international capability,” analyst Charles Peabody of Portales Partners LLC, said in an April 13 Bloomberg TV interview. “March was a fabulous month” for the bank’s capital markets business, raising investors’ expectations, he said.

Wall Street Journal:

• Flicker of Hope in Subprime Failings. For investors looking for a bottom in the troubled housing market, one nascent but significant sign emerged last month: Subprime-mortgage delinquencies dropped for the first time in almost four years. The share of subprime loans that were at least 60 days past due or in foreclosure fell to 46.3% in March from 46.9% a month earlier, according to Fitch Ratings, which studied the value of loans packaged into securities. The decline is effectively a rounding error and pales in comparison to the steady increase in delinquencies from their low of 6.2% in 2006. But subprime borrowers were the first to buckle under the weight of their debt—triggering what quickly became a global financial crisis—and an improvement in the sector could be seen as a notable marker in the recovery. The decline comes amid other signs credit conditions are improving. On Tuesday, J.P. Morgan Chase & Co. reported net income jumped as delinquencies declined and the provision for credit losses fell. Across the economy, the portion of consumer loans that were at least 60 days past due fell to 3.59% on a seasonally adjusted basis at the end of March, from 3.73% at the end of December, according to Equifax Inc. and Moody's Economy.com. It was the second consecutive decline in delinquencies for mortgages, home-equity loans, credit cards and other types of consumer debt. "Credit quality is improving pretty dramatically across the board," says Mark Zandi, chief economist of Moody's Economy.com.
• Evidence Mounts of Strong Recovery.
  
• Former NY Governor Spitzer Calls NY Fed An 'Absolute Sinkhole'. Former New York governor Eliot Spitzer on Wednesday called the Federal Reserve Bank of New York an "absolute sinkhole" of failed financial oversight over the last decade. "The New York Fed has failed utterly, and something has to be done" to fix the bank that has served as the Fed's primary interface with Wall Street, he said at an event held in New York by the Levy Economics Institute of Bard College. "Not a single person" at the bank understood what was happening on Wall Street, he charged. Timothy Geithner was president of the New York Fed before becoming Treasury Secretary in the Obama administration. Spitzer criticized the makeup of the bank's board of directors as completely unrepresentative of the public's interest despite being required to be, saying that leadership body was captive to the interest of finance.
• Europe's VAT Lessons. Rates start low and increase, while income tax rates stay high. As Americans rush to complete their annual tax returns today, there is still some consolation in knowing that it could be worse: Like Europeans, we could pay both income taxes and a value-added tax, or VAT. And maybe we soon will. Paul Volcker, Nancy Pelosi, John Podesta and other allies of the Obama Administration have already floated the idea of an American VAT, so we thought you might like to know how it has worked in Europe.

CNBC:

• Why Intel(INTC) Will Soar to $46. Intel could and should double, Cramer said Wednesday, after last night’s stellar earnings report, which was driven by “the most impressive product cycle I can ever recall.”

IBD:

• Generic-Drug Maker Gets Bigger With Buy of Baby Formula Firm. Like a proud parent, health care supplier Perrigo(PRGO) recently announced that it will soon have a very important new product category to add to its growing brood of store labels: infant formula.

Business Insider:

• 25 Scandalous Examples of Government Port That Will Drive You Crazy.

zerohedge:

• The Great Lehman Derivative Robbery: From A Tipster; Lehman May Have Grounds To Sue Goldman(GS) and Barclays(BCS) For Fraudulent Transfers. Earlier today we posted the unredacted version of the 5th volume of the Lehman Examiner report, which unhid all the specifics of the unwind related to Lehman's options and futures positions. There was a reason why Goldman et al felt sufficiently motivated to make the data hidden in the first place. The reason: the banks participating in the liquidation made a killing on the unwind. Yet another involuntary gift from the Lehman creditor estate to the big banks who had the inside scoop on Lehman's books all along, and certainly in the days just before the bankruptcy was announced. The market continues to be one for the banks, and one for "everyone else." And "everyone else" still can not borrow at the Discount Window. Although we are confident that that may change soon. From an anonymous tipster:

Institutional Investor:

• Crisis Redirects Fund of Hedge Fund Manager Priorities. The 2010 Fund of Funds 50.

TechCrunch:

• Facebook Shares Hit $50 On ScondMarket. Facebook shares just keep going up on SecondMarket, a platform for buying and selling private company stock. Sales are now being closed at $50/share, we’ve heard from a source (and we’ve confirmed that the best asking price is also $50/share). That values Facebook at around $22.5 billion. That’s a 100% increase since January, just a couple of months ago.

Rasmussen Reports:

• Pennsylvania Senate: Toomey 50%, Specter 40%. Republican hopeful Pat Toomey for the first time registers 50% support in his race against incumbent Democrat Arlen Specter in Pennsylvania’s contest for the U.S. Senate. The latest Rasmussen Reports telephone survey of likely voters in the state shows Specter earning 40% of the vote, a level he’s held steady at since the first of the year.

Real Clear Politics:

• GOP Leader: "No More Bailouts". (video) Senate Minority Leader Mitch McConnell on financial regulation reform: "The American people have been telling us for nearly two years that any solution must do one thing — it must put an end to taxpayer funded bailouts for Wall Street banks. This bill not only allows for taxpayer-funded bailouts of Wall Street banks; it institutionalizes them."

Huffington Post:

• Breaking Up Citi(C) and Other Mega-Banks: The Missing Blueprints. An anonymous executive inside one of the big banks recently said that breaking up the "Too Big To Fail" banks is crucial to decreasing systemic risk and shifting resources to the productive sectors of the economy. We agree and just published a report that explores how they should be broken up. We aren't the first to call for breaking up the banks. In fact, the Federal Reserve's longest-serving policymaker, Thomas Hoenig, President of the Federal Reserve Bank of Kansas City, released a paper in December that explains why breaking up the big banks is critical to reducing systemic risk. One of the more candid moments in Congress in recent years came when Senator Dick Durbin (D-IL) told a reporter that banks "own" Congress. And that was before the Citizens United decision. The "Government Sachs"(GS) gold-plated revolving door to Treasury and other parts of the executive branch is well known and didn't begin with Obama. But as Nobel Prize-winning economist and author Joseph Stiglitz has suggested, the ties between Obama and Wall Street mean that his administration's programs "have been designed to help Wall Street rather than create a viable financial system." No wonder former IMF economist Simon Johnson suggested that the financial "coup" reminded him of Russia and other countries ruled by elite oligarchies.

Reuters:

• Exclusive: TD Ameritrade(AMTD) Eyeing Deals, Sees Dividend. The head of TD Ameritrade Holding Corp. said it has lots of cash to make a possible acquisition and, eventually, it will "absolutely make sense" for the big online brokerage to offer a dividend.
• TD Ameritrade CEO Says Concerned Reforms May Hurt. U.S. financial reform legislation may not be aimed at the real causes of the financial crisis and may unintentionally hurt mainstream investors, TD Ameritrade Holding Co Chief Executive Fred Tomczyk said on Wednesday. A proposed a tax on Wall Street trading and a debate over whether to require all financial advisers to abide by the same fiduciary standard might be missing their mark, Tomczyk told reporters at a brokerage industry conference. Tomczyk said the proposed tax could unintentionally hurt mainstream investors. "The person who designed it or proposed it is really targeting Wall Street. It's an anti-Wall Street bill. But the reality is the relative impact is more severe on the online brokerage and the average investor," he said. "That tax will be a multiple of what we charge them to trade," Tomczyk explained. "That's not at the root cause of the crisis, so why are you doing it?
• UPS(UPS) Earnings, Outlook Rise; Shares Climb. The world's biggest package delivery firm reported on Wednesday that its adjusted first-quarter earnings were 71 cents per share, compared with an adjusted 52 cents per share a year earlier. Analysts on average were expecting earnings of 57 cents per share, according to Thomson Reuters I/B/E/S. Atlanta-based UPS raised its 2010 outlook to a range of $3.05 to $3.30 per share, up from February's forecast of $2.70 to $3.05 per share. The outlook's midpoint of $3.18 is well above Wall Street's view of $2.95 per share for 2010. Shares of UPS rose 4.2 percent to $68.20 in extended trading from their $65.45 close Wednesday on the New York Stock Exchange. Shares of UPS rival FedEx Corp (FDX) were up 1.9 percent in after-hours trade.
• Yum's(YUM) China Business Rebounds, Shares Rise. Yum Brands Inc, parent of the KFC, Taco Bell and Pizza Hut chains, said a return to growth in China helped it serve up better-than-expected quarterly earnings. Shares in Yum, which reaps more than a third of its profit from China, rose more than 2 percent in extended trade on Wednesday.
• Toyota to Test All SUVs After Lexus Sales Halt.
• JB Hunt(JBHT) Q1 Results Beat Market Expectations. J.B. Hunt Transport Services Inc posted better-than-expected quarterly results on strong performance at its intermodal segment, which moves freight across multiple transportation platforms. Revenue at intermodal, its biggest segment, jumped 20 percent to $469 million in the quarter, while volumes rose 21 percent. Shares of the company were up 2 percent at $37.70 in trading after the bell.
• Toshiba U.S. PC Sales Surge in Q1, Slates Coming. Toshiba Corp's personal computer sales in the United States jumped 50 percent in the first quarter, and the company said it was preparing to roll out tablet-style computing devices later this year to compete with Apple Inc's iPad.

Financial Times:

• Obama Fails to Soften Derivatives Reform Opposition.Barack Obama, president, met Republican leaders to discuss financial regulatory reform on Wednesday but the meeting did nothing to improve the tone of an increasingly bitter debate. Mitch McConnell, the Senate Republican leader, and John Boehner, the top Republican in the House of Representatives, attacked the proposed legislation as they emerged from a White House meeting with the president and Democratic leaders. “If you need to know one thing about this bill, it’s that it would make it official government policy to bail out the biggest Wall Street banks,” said Mr McConnell.

The Age:

• George Soros Issues Stark Economic Warning. Railway porter-turned-billionaire financier George Soros has delivered a stark warning that the financial world is on the wrong track and that we may be hurtling towards an even bigger boom and bust than in the credit crisis. The man who "broke" the Bank of England (and who is still able to earn $US3.3 billion in a year) said the same strategy of borrowing and spending that had got us out of the Asian crisis could shunt us towards another crisis unless tough lessons are learnt. Mr Soros, who worked as a porter to pay for his studies at the London School of Economics after emigrating from Hungary, warned that modern economics had got it wrong and that markets are not inherently stable. “The success in bailing out the system on the previous occasion led to a superbubble, except that in 2008 we used the same methods,” he told a meeting hosted by The Economist in London on Tuesday night. “Unless we learn the lessons, that markets are inherently unstable and that stability needs to the objective of public policy, we are facing a yet larger bubble. “We have added to the leverage by replacing private credit with sovereign credit and increasing national debt by a significant amount."

Evening Recommendations
Citigroup:

• Reiterated Buy on (ESRX), target $122.
• Reiterated Buy on (FL), raised estimates, boosted target to $19.
• Reiterated Buy on (NKE), target $86.
• Reiterated Buy on (IBM), target $150.
  

Night Trading

• Asian indices are unch. to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 87.5 -2 basis points.
• S&P 500 futures -.17%.
  
• NASDAQ 100 futures -.14%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SCHW)/.11
• (PPG)/.63
• (FCS)/.24
• (ISRG)/1.72
• (GOOG)/6.61
• (AMD)/-.04

Economic Releases
8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 440K versus 460K the prior week.
• Continuing Claims are estimated to rise to 4580K versus 4550K prior.
• Empire Manufacturing for April is estimated to rise to 24.0 versus a reading of 22.86 in March.

9:00 am EST

• Net Long-Term TIC Flows for February are estimated to rise to $29.7B versus $19.1B in January.

9:15 am EST

• Industrial Production for March is estimated to rise +.7% versus a +.1% gain in February.
• Capacity Utilization for March is estimated to rise to 73.3% versus 72.7% in February.
  

10:00 am EST

• Philly Fed for April is estimated to rise to 20.0 versus a reading of 18.9 in March.

1:00 pm EST

• The NAHB Housing Market Index for April is estimated to rise to 16.0 versus a reading of 15.0 in March.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Lacker speaking, Fed's Bullard speaking, Fed's Lockhart speaking, White House Advisor Volcker speaking, Fed's Yellen speaking, Credit Card Master Trust data, EIA weekly natural gas inventory report, (LEN) shareholders meeting and the (TXN) shareholders meeting 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 Surging to Session Highs on Volume into Final Hour on Less Economic Fear, Short-Covering, Declining Financial Sector Pessimism

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Heavy
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 15.83 -2.28%
  
• ISE Sentiment Index 179.0 +129.49%
  
• Total Put/Call .56 -22.22%
  
• NYSE Arms .76 -49.30%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 84.22 bps +.43%
  
• European Financial Sector CDS Index 74.43 bps +3.63%
  
• Western Europe Sovereign Debt CDS Index 83.91 bps +3.39%
  
• Emerging Market CDS Index 211.54 bps -1.46%
  
• 2-Year Swap Spread 13.0 bps -1 bp
  
• TED Spread 15.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .15% unch.
  
• Yield Curve 281.0 bps +5 bps
  
• China Import Iron Ore Spot $174.40/Metric Tonne +1.34%
  
• Citi US Economic Surprise Index +37.70 -2.4 points
  
• 10-Year TIPS Spread 2.34% +2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +101 open in Japan
• DAX Futures: Indicating +11 open in Germany

Portfolio:

• Higher: On gains in my Retail, Medical, Financial and Tech long positions
  
• Disclosed Trades: Added to (F) long position and took some profits in another long
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is very bullish as stocks trade near session highs on good volume despite rising sovereign debt angst. On the positive side, Oil Tanker, Oil Service, Computer, Semi, Disk Drive, Networking, Bank, Homebuilding, Road/Rail and Airline stocks are especially strong, rising 2.0%+. Small-cap and Cyclical shares are outperforming. (XLF) has traded very well throughout the day. The Transports are making another 52-week high, rising 2.3%. The 10-year yield is just 3 bps higher on the day despite the rally in equities and positive economic data, which is also a large positive. On the negative side, HMO and Education shares are underperforming, falling 1.0%+. (IYR) is -.4% lower on the day. The Portugal sovereign cds is jumping +14.6% and the Greece sovereign cds is surging 11.3% today, which bares close monitoring. Shanghai copper inventories are hitting another new high, rising +12.98% today. Many bears expected (INTC) shares to sell-off on its earnings announcement, thinking the stock's recent run already reflected very positive results. Instead it is breaking out of its recent trading range to a new 52-week high on heavy volume, which is a large psychological positive for the entire tech sector. Tech stocks, in general, have lagged the broad market mildly this year. I suspect they are now beginning another run of outperformance. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, stable long-term rates, diminishing financial sector pessimism, investment manager performance anxiety and less economic fear.

Today's Headlines

Bloomberg:

• Bernanke Sees 'Moderate' Growth Amid 'Restraints'. Federal Reserve Chairman Ben S. Bernanke said the U.S. expansion will remain moderate as the economy contends with weak construction spending and high unemployment.“On balance, the incoming data suggest that growth in private final demand will be sufficient to promote a moderate economic recovery in coming quarters,” Bernanke said in testimony to Congress today. “Significant restraints on the pace of the recovery remain, including weakness in both residential and nonresidential construction and the poor fiscal condition of many state and local governments.” Bernanke, in response to a question, said the Federal Open Market Committee has “stated clearly” its pledge to keep the main interest rate low for an “extended period” contingent on conditions including high unemployment and low inflation. The 56-year-old former Princeton University economist said “further economic expansion will depend on continued growth in private final demand,” now that inventories are better aligned with sales and as fiscal stimulus is set to taper off. “Consumer spending should be aided by a gradual pickup in jobs and earnings, the recovery in household wealth from recent lows, and some improvement in credit availability,” the Fed chairman said in prepared testimony to the Joint Economic Committee of Congress. Even so, “a significant amount of time will be required to restore the 8-1/2 million jobs that were lost during the past two years.” The Fed chairman said the “subdued” rate of increase in consumer prices and said “moderation in inflation has been broadly based.” “A credible plan for fiscal sustainability could yield substantial near-term benefits in terms of lower long-term interest rates and increased consumer and business confidence,” he said. “Addressing the country’s fiscal problems will require difficult choices, but postponing them will only make them more difficult.”
• Retail Sales Climb, Inflation Remains Contained. Americans heartened by an improving job market flocked to shopping malls and auto showrooms in March, raising the odds of a durable economic recovery. Retail sales increased 1.6 percent last month, more than anticipated and the biggest gain in four months, according to figures from the Commerce Department issued today in Washington. Another report showed consumer prices rose 0.1 percent.
• JPMorgan(JPM) Net Rises 55% on Fixed Income, Provision Cut. JPMorgan Chase & Co., the second- biggest U.S. bank by assets, beat analysts’ estimates as first- quarter earnings rose 55 percent on record fixed-income trading revenue and a reduction in provisions for credit losses. Net income climbed to $3.33 billion, or 74 cents a share, from $2.14 billion, or 40 cents, in the same period a year earlier and from $3.28 billion in the fourth quarter, the New York-based bank said today in a statement. The per-share earnings compared with a 64-cent average estimate of 21 analysts surveyed by Bloomberg. “It’s an embarrassment of riches,” said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York and owns JPMorgan shares. “These are results that you expect from maybe Goldman in a very good environment for trading,” Holland said in a Bloomberg Television interview.“There is clear and broad-based improvement in the economic factors in the United States and around the world,” Dimon, 54, told reporters on a conference call. “It appears to be strengthening, not weakening. It is possible that they will strengthen enough to end up with a strong recovery.” JPMorgan rose $1.28, or 2.8 percent, to $47.15 in composite trading on the New York Stock Exchange at 9:33 a.m. Chief Financial Officer Mike Cavanagh said on the call that there is “fundamental real improvement” in consumer mortgage and credit-card delinquencies. That didn’t translate into lower credit costs for the quarter, though he said it “augurs well for future quarters if those trends sustain themselves.”
• Truckers' Credit-Card Swipes Point to Broader Rebound. The amount of diesel fuel bought using credit cards at U.S. truck stops increased in March to the highest level in more than a year, indicating the recovery is broadening beyond manufacturing. The Ceridian-UCLA Pulse of Commerce Index, which measures fuel consumption, rose 1 percent last month to reach the highest level since September 2008, a report yesterday showed. The gauge has increased every month since November with the exception of February, when East Coast blizzards hampered travel. Truck tonnage, which accounts for 68 percent of freight transported in the U.S., increased on a year-over-year basis in February for a third straight month, a separate report from the American Trucking Associations showed. “It appears to be across both retail” and manufacturing, Stotlar said. “We are seeing multiple touch points that are verifying to us that the economy is definitely recovering.”
• Oil Jumps Most in Eight Weeks on Unexpected Drop in U.S. Supply. Oil surged the most in eight weeks after the U.S. government reported an unexpected decline in inventories and gasoline demand jumped the most in five years. Stockpiles lost 2.2 million barrels last week to 354 million, the Energy Department said today. Supplies were forecast to rise 1.3 million barrels, based on the median of 17 analyst estimates in a Bloomberg News survey. Gasoline use rose 1.3 percent in the four weeks ended April 9, the biggest gain since August 2004. Crude oil for May delivery rose $2, or 2.4 percent, to $86.05 a barrel at 12:17 p.m. on the New York Mercantile Exchange, ending a five-day decline. Oil supplies dropped as refinery utilization climbed 1.1 percentage points to 85.6 percent of capacity in the week ended April 9, the Energy Department said. Imports of oil fell 7.1 percent to 8.88 million barrels a day.
• Fed Shouldn't Reveal Crisis Loans, Banks Vow to Tell High Court. The biggest U.S. commercial banks will take their fight against disclosure of Federal Reserve lending in 2008 to the Supreme Court if necessary, the top lawyer for an industry-owned group said. Continued legal appeals will delay or block the first public look at details of the central bank’s $2 trillion in emergency lending during the 2008 financial crisis. The Clearing House Association LLC, a group that includes Bank of America Corp. and JPMorgan Chase & Co., joined the Fed in defense of a lawsuit brought by Bloomberg LP, the parent company of Bloomberg News, seeking release of records related to four Fed lending programs.
• China Metal Quotas Limit U.S. Smart-Bomb Output, Lawmakers Told. The U.S. military depends on China for the metals required to build smart bombs, night-vision goggles and spy radar, according to a report to Congress obtained by Bloomberg News. China controls 97 percent of production of materials known as rare earth oxides, giving it “market power” against the U.S., the Government Accountability Office said in the report. The materials -- found in General Dynamics Corp.’s M1A2 Abrams tank and Aegis SPY-1 radar made by Lockheed Martin Corp. -- are so irreplaceable that suppliers to military equipment makers could be buying from China for years to come, the GAO said. The U.S. needs to rebuild a domestic industry for the metals after mining in the U.S. lapsed and production migrated to Chinese suppliers, according to members of Congress including U.S. Representative Mike Coffman, a Colorado Republican. “The People’s Republic of China is not an ally of the United States,” Coffman, who asked for the GAO report, said in an interview in February. “They feel increasing leverage. This gives them another tool.”
• Apple(AAPL) Postpones iPad's Debut Outside U.S. to Late May. Apple Inc. said demand for its iPad tablet computer is “far higher” than it expected, prompting the company to delay the device’s introduction outside the U.S. by a month. The company shipped more than 500,000 iPads during the first week and expects demand to exceed its supply for the next several weeks, according to a statement today. Apple postponed the device’s international debut until the end of May. “There’s nothing on the market like it, and there won’t be for months,” Wolf said. “People are not going to go out and buy a competing product because there’s no competing product.”
• Intel's(INTC) Forecast Shows Rebound in Technology Spending.
• New York Still Under Consideration for Terror Trial. The Obama administration is still considering New York City as a site for a terror trial for suspects in the Sept. 11 attacks, said Attorney General Eric Holder. “New York is not off the table,” Holder told members of the Senate Judiciary Committee today. The Obama administration is facing criticism from Republican lawmakers who want the case sent to a military commission.

Wall Street Journal:

• Levi Aims for High-End Halo. In the wake of a recession that caused consumers to question the value of $198 jeans, Levi Strauss & Co. is reintroducing consumers to its $198 jeans. The 157-year-old company is trying to reinvent itself as not just a purveyor of basics but as an edgier brand suitable for the fashion cognoscenti.
• Crony Contracts. Want federal business? Better be a union shop. There's almost a direct correlation these days between the Obama Administration's complaints about "special interests" and its own fealty to such interests. Consider its latest decree that federal contractors must be union shops. The federal rule, which went live yesterday, implements an executive order President Obama signed within weeks of taking office. It encourages federal agencies to require "project labor agreements" for all construction projects larger than $25 million. This means that only contractors that agree to union representation are eligible for work financed by the U.S. taxpayer. Only 15% of the nation's construction workers are unionized, so from now on the other 85% will have to forgo federal work for having exercised their right to not join a union. This is a raw display of political favoritism, and at the expense of an industry experiencing 27% unemployment. "This is nothing but a sop to the White House's big donors," says Brett McMahon, vice president at Miller & Long Concrete Construction, a nonunion contractor.

CNBC:

• Economy Picked Up in Most Regions in March: Beige Book. The economic recovery is spreading to most parts of the country. Merchants are seeing better sales and factories are boosting production, but many companies are still wary of ramping up hiring, the Federal Reserve reported Wednesday.
• Oversized Banks Must Be Dismantled: Fed's Fisher. Global authorities should dismantle banks that are so large their failure could destabilize the international financial system, Dallas Federal Reserve President Richard Fisher said Wednesday. While it's unclear exactly how big is too big, he said, links among the largest banks mean that the foundering of a few can lead to a downward spiral that destroys jobs and companies and creates "enormous social costs". Creating a resolution authority to wind down large financial institutions that do fail could give false comfort to creditors who may see it as government backing, he said. "The point is there are limits to size and to scope beyond which global authorities should muster the courage to draw a very bright, red line," Fisher told a Levy Economics Institute conference in New York, adding that if the U.S. must act alone in order to break up too-big-to-fail banks, it should. "The risk posed by coddling TBTF banks is simply too great."
• And Now It's Time for Retailers to Start Spending. The latest batch of economic reports is providing fresh evidence that consumers are starting to spend again, and the buzz is "a lot better" at an annual retail investors conference in New York, said Dana Telsey, CEO and Chief Research Officer of Telsey Advisory Group, which runs the conference. "The consumer is coming back," Telsey told CNBC. "Every company still maintains a cautious optimism. They are planning cautiously, but they are a bit more on the offense given that now they are increasing their marketing investments, they are doing online, and they are going overseas."

MarketWatch:

• Electronic Health Records Prepare for Their Close-Up. New financial incentives spark doctors, hospitals to ramp up digitization.

NY Times:

• Citi Sells Fund of Funds Unit to SkyBridge. Citigroup agreed on Wednesday to sell a $4.2 billion hedge fund unit, including its fund of funds business, to SkyBridge Capital. Terms weren’t disclosed. Skybridge, an alternative asset manager, expects the acquisition to greatly bolster its assets under management, to $5.6 billion from $1.4 billion.

NY Post:

• SEC Storms the 'Castle'. The castle appears to be just the tip of the iceberg. According to sources familiar with the matter, the Securities and Exchange Commission, along with other Wall Street enforcers, are probing whether Lehman Brothers funded investment vehicles for the sole purpose of using them to hold toxic assets and improve its debt-laden balance sheet. The revelation of the particulars of the SEC's probe comes amid reports that Lehman shunted billions to a seemingly independent small company called Hudson Castle in order to pretty up its books. Lehman never disclosed the practice, nor did it mention that Hudson Castle was in part owned by the now-defunct investment bank.

Business Insider:

• How the Shale Gas Revolution is Now Tapping U.S. Oil Reserves More Than Five Times Those of Saudi Arabia.

L.A. Times:

• Going for Broke in L.A.? Unless pension costs can be brought under control, the city may face bankruptcy.

HFMWeek:

• Hedge Fund Allocations Back to 'Pre-Crisis' Level. Pension fund allocations to hedge funds “have returned to pre-crisis levels”, according to Mercer, one of world’s largest investment consultants. The renewed confidence has been won by a series of industry reforms, aimed at creating better levels of oversight. “Most hedge funds have now tightened up their operations, they have multiple prime brokers and there is much less reliance on leverage,” said Howie.

Financial News:

• Chanos Calls for Probe into Banks' Crisis Trades. The hedge fund manager who made his name betting on the collapse of energy giant Enron, has urged regulators to investigate the proprietary trading records of large banks during in 2008. He has argued that they, and not hedge funds, were the biggest contributers to falling share prices on Wall Street during the worst of the crisis. Rather than hedge funds, Chanos said it was banks that were the largest purchasers of credit default swaps in the banking industry in 2008, because they were all inter-related as counterparties.

AppleInsider:

• Strong Interest in Apple(AAPL) iPad Expected to Produce 7 Million First-Year Sales. A new survey of 2,500 consumers found that a large number -- 21 percent -- are interested in purchasing an iPad, which has led one prominent analyst to project 7 million sales of Apple's new device in its first 12 months on the market. The AlphaWise study released Wednesday by Morgan Stanley found that 4.6 percent of respondents indicated "extreme interest" in the iPad. Another 16.4 percent said they are "somewhat interested" in purchasing Apple's multi-touch device. Based on these numbers, analyst Katy Huberty has forecast sales of 6 million units in 2010, and 7 million over the device's first 12 months of availability. She argued in a note to investors that the consensus forecast on Wall Street of 4 million to 5 million units is too conservative.

Politico:

• Pence Pushes Health Care Repeal. On Tuesday, House Majority Leader Steny Hoyer (D-Md.) said he saw the public further embrace the health care overhaul legislation as he visited five states over the recess. House Republican Conference Chairman Mike Pence (Ind.) said Republicans heard something different. “The American people aren’t happy,” Pence said. “They are not happy with all of the big government spending and the borrowing and House Republicans returned for this seven-week stretch firmly on the side of the American people.” Pence, speaking to reporters after a closed-door GOP conference meeting, promised Republicans will push to repeal health-care overhaul legislation immediately. “House Republicans will not rest until we repeal Obama care lock, stock and barrel and replace it with health care reform that will lower the cost of health insurance without growing the size of government,” Pence said.
• Dems: Ignore GOP in Court Choice. Democratic senators are urging President Barack Obama to abandon any hope of winning broad Republican support for his upcoming Supreme Court pick — and to nominate, instead, a dominant liberal voice.

Reuters:

• EXCLUSIVE - China's Top Oil Firms Sell Gasoline to Iran. State-run Chinaoil has sold two gasoline cargoes for April delivery to Iran, industry sources said on Wednesday, stepping into a void left by fuel suppliers halting shipments under threat of U.S. sanctions. Beijing, which has close economic ties with Tehran, has resisted sanctions proposed by Western powers on Iran's energy sector that aim to press the Islamic Republic to curb its nuclear programme. Chinaoil has sold a total of about 600,000 barrels worth around $55 million to the Islamic Republic. The cargoes were Chinaoil's first direct sales to Iran since at least January 2009, according to Reuters data. Chinese firms have previously sold through intermediaries, traders said. "Prior to this there was some third-party trades going on, but this was a direct sell," a trader said. Chinaoil is the trading unit for China's top energy group China National Petroleum Corp (CNPC), which is the parent of U.S. and Hong Kong-listed PetroChina. Another Chinese company, Sinopec Corp, was also poised to resume gasoline sales to Tehran following a hiatus of nearly six years, trade sources said. Sinopec is Asia's largest refiner. Despite tough talk from the United States and the West and a number of suppliers halting shipments, Iran has maintained robust imports of gasoline from the international market, also buying from Malaysia's state oil firm Petronas and France's Total. "As long as there is money to be made, and economic benefits to be taken advantage off, Iran will always find ready sellers of gasoline from the international market," a trader said. "The politicians don't understand markets...sanctions are cosmetic."
• U.S. SEC Plans IDs for Fast Traders, Option Fee Caps.
  

Financial Times:

• EU Tries to Break Logjam on Hedge Funds. A fresh effort to unblock the logjam over new EU rules to regulate hedge funds and private equity funds and allay US fears of regulatory protectionism is being spearheaded in the European parliament. Jean-Paul Gauzes, the French MEP responsible for steering the AIFM directive through the EU’s parliamentary process, has proposed a “two-tier” approach to the registration of non-EU funds – in an effort to resolve disagreements over one of the directive’s most controversial proposals. Under Mr Gauzes’ plan, non-EU managers looking to market in the EU would be able to obtain a “passport” to do so throughout the bloc if they agreed to comply with the EU’s new rules on registration, leverage and so on. This would have to be backed by an agreement with their home country market regulator to oversee that compliance. Mr Gauzes’ revisions would also allow funds based outside the EU to gain passport rights if the jurisdiction in which they were housed met four conditions: concerning fiscal standards, rules on information exchange between supervisors, reciprocity and anti-money laundering rules. If a jurisdiction fell short of some of those four standards, the funds might still be able to seek country-by-country marketing approval. But if a jurisdiction fell short of all of them, the funds would be barred from marketing in the EU.It was unclear on Tuesday whether Mr Gauzes’ latest suggestion would win support.

Handelsblatt:

• Europe's rescue package for Greece may turn out to be three times as large as originally announced, citing people in the European Commission. The package might amount to as much as $123 billion. Handelsblatt also cited a German government official as saying it could be "at least twice as high" as communicated so far. European finance ministers agreed that the program will cover a three-year period.

Rheinishe Post:

• A group of professors will file a lawsuit with Germany's Constitutional Court aimed at blocking any European Union loans to Greece, citing Joachim Starbatty, one of the academics. The loans would violate the EU's Maastricht Treaty on monetary union and would also constitute an illegal subsidy, citing Starbatty. Greece should voluntarily leave the 16-nation euro region, Starbatty said.

DigiTimes:

• Prices of Semiconductor Components to be Raised Again in 2Q10, Says IC Channels. The tight supply of most semiconductor components in the channels, including power management (PWM) ICs, MOSFETs and DRAM, will continue with no relief in sight since foundries are already running at full capacity, according to sources at IC distribution channels. Prices for semiconductor components could climb up more than 10% in the second quarter of 2010 after having been raised by 5-10% on average in the first quarter, the sources indicated. Prices of MCP (multi-chip package) products were raised by the highest percentage points in the first quarter due to a shortage in the supply of NOR flash chips, said the sources, noting that MCP supplies are likely to remain tight through the rest of 2010. MCU (microcontroller unit) suppliers who did not raise their quotes in the first quarter are expected to hike prices in the second quarter, added the sources.

Bear Radar

Style Underperformer:

• Large-Cap Growth (+.69%)

Sector Underperformers:

• Education (-1.90%), HMOs (-1.15%) and Drugs (-.65%)

Stocks Falling on Unusual Volume:

• MOS, UNH, AGU, HCSG, CAGC, GWW and KND
  

Stocks With Unusual Put Option Activity:

• 1) XRX 2) BPOP 3) VNO 4) KR 5) EXC