Tuesday Watch

Evening Headlines
Bloomberg:

• Japan Lifts Atomic Alert to Highest Level, Matching Chernobyl. Japan raised the severity rating of its nuclear crisis to the highest, matching the 1986 Chernobyl disaster, after increasing radiation prompted the government to widen the evacuation zone and aftershocks rocked the country. Japan’s Nuclear and Industrial Safety Agency today raised the rating to 7. The accident at the Fukushima Dai-Ichi station was previously rated 5 on the global scale, the same as the 1979 partial reactor meltdown at Three Mile Island in Pennsylvania. The stricken nuclear plant, located about 220 kilometers (135 miles) north of Tokyo, is leaking radiation in Japan’s worst civilian nuclear disaster after a magnitude-9 quake and tsunami on March 11. Tokyo Electric Power Co. said its plant, which has withstood hundreds of aftershocks, may spew more radiation than Chernobyl before the crisis is contained. “The radiation leaks haven’t stopped,” Junichi Matsumoto, general manager of the utility’s nuclear power and plant fitting division, said in Tokyo today. “If the leaks continue, the total radiation from the reactors may exceed” that from Chernobyl.
• Libya Rebels Spurn African Union Cease-Fire Unless Qaddafi Gives Up Power. Libya’s rebels turned down an African Union cease-fire proposal that would leave Muammar Qaddafi in power, as the regime’s continued shelling and sniper fire in Misrata claimed civilian lives, including a three-year- old girl. “Qaddafi must leave immediately if he wants to survive,” the head of Libya’s rebel council, Mustafa Abdel Jalil, said at a televised news conference yesterday in Benghazi. In Misrata, Libya’s third largest city, the situation was “very bad” with shelling coming within a few hundred yards of a hospital, according to James Elder, a UNICEF spokesman in Cairo. “All day, casualties have poured in, including families killed,” he said in an e-mail yesterday after talking by Skype with a doctor at the hospital. He said the doctor described a three-year-old girl killed by a sniper’s bullet in the head.
• Junk Spreads Diverging Fastest in Year on Oil: Credit Markets. The difference in relative yields between the highest-rated junk bonds is expanding at the fastest pace in a year, signaling growing concern that rising oil prices will slow the global economy. U.S. notes ranked B yield 458 basis points more than government debt on average, according to Bank of America Merrill Lynch data. That compares with a spread of 331 for bonds rated a tier higher at BB. The difference, which stands at 127 basis points, grew 20 basis points in March, the most since Greece became the first euro member to take a bailout in May.
  
• Moussa Koussa Tells BBC Libya Must Avoid Falling Into Civil War. Libya’s former Foreign Minister Moussa Koussa, who defected to the U.K. last month, called tonight for all parties involved in the conflict in Libya to “work to avoid taking Libya into a civil war.” Libyans themselves must find a solution for Libya, Koussa said to the BBC. “We refuse dividing Libya. The unity of Libya is essential to any solution, any settlement in Libya,” Koussa said to the broadcaster.
• Oil Falls for a Second Day After IMF Cuts Growth Forecasts for U.S., Japan. Oil declined for a second day after the International Monetary Fund cut its growth forecasts for the U.S. and Japan, saying high crude prices pose a risk to global economic expansion. Futures tumbled from a 30-month high yesterday as the IMF said in its World Economic Outlook that the U.S. economy will expand at a slower pace than in 2010 amid an unemployment rate above 8 percent and a drop in consumer confidence. Oil for May delivery slid as much as $1.21, or 1.1 percent, to $108.71, in electronic trading on the New York Mercantile Exchange, and was at $109.06 at 9:27 a.m. Sydney time. The threat of further oil-price increases has become a “key downside risk” for global growth, according to the IMF report. Oil will rise 36 percent in 2011 to $107.16 a barrel, based on the average prices of U.K. Brent, Dubai and West Texas Intermediate crudes, the IMF said. The January forecast was for oil at $89.50 a barrel this year.
• Alcoa(AA) Shares Drop After Aluminum Producer's Quarterly Sales Miss Estimates. Alcoa Inc. (AA), the largest U.S. aluminum producer, fell in New York trading after reporting first-quarter sales that missed analysts’ estimates as the dollar weakened. Alcoa declined 62 cents, or 3.5 percent, to $17.15 at 7:19 p.m. after the close of regular New York Stock Exchange trading. The company’s sales increased 22 percent to $5.96 billion from $4.89 billion a year earlier, Alcoa said today in a statement. That trailed the $6.06 billion average estimate of eight analysts in a Bloomberg survey. Alcoa, traditionally the first company in the Dow Jones Industrial Average to report quarterly results, said its earnings were curbed by a weaker U.S. dollar, and higher energy and raw-material costs. Some costs for materials, such as caustic soda used in the processing of bauxite, are increasing following the earthquake and tsunami in Japan, Chief Financial Officer Chuck McLane said on a conference call to discuss the earnings. “We are seeing increasing tightness in the Asian caustic market,” McLane said. “Due to this disruption as well as the continuing unrest in the Middle East, we expect to see higher input costs for fuel oil.” Crude-oil prices on the New York Mercantile Exchange averaged 20 percent more in the first quarter than a year earlier.
• Toyota(TM) Tells U.S. Dealers to Brace for Reduced Car Supplies. Toyota Motor Corp. (7203) told U.S. dealers that assembly disruptions triggered by last month’s record earthquake and tsunami in Japan may thin supplies of vehicles into the third quarter. The world’s largest automaker will build vehicles at “significantly reduced levels,” Bob Carter, group vice president of U.S. sales, said in a memorandum to dealers.
• Silver Options Trader Bets $1 Million on Price Drop by July. A trader’s almost $1 million bet that an exchange-traded fund tracking silver will decline by July was today’s biggest single options trade on U.S. exchanges as futures on the metal reached a 31-year high. The 100,000 puts, or options to sell 100 shares each of the iShares Silver Trust (SLV) at $25 by July, changed hands at the ask price of about 10 cents and exceeded the open interest of 6,054 outstanding contracts before today, indicating that a buyer of a new bearish position initiated the transaction. The ETF rose to $40.33, the highest intraday level since trading began five years ago, before falling 1.6 percent to $39.21 at 4 p.m. New York time. It hasn’t closed below $25 since November. “It’s definitely a massive downside bet on silver,” said Henry Schwartz, president of Trade Alert LLC, a New York-based provider of options-market data and analytics.
• Marvell(MRVL) Founders Accuse Goldman Sachs(GS) of Fraud in Suit Over Margin Calls. Two co-founders of Marvell Technology Group Ltd. (MRVL) sued Goldman Sachs Group Inc. (GS) alleging the investment bank tricked them into selling company shares by claiming the sale was needed to cover a margin loan, according to a complaint filed today in state court in San Francisco. Sehat Sutardja, Marvell’s chief executive officer, and Weili Dai, the company’s former chief operating officer, said they were duped into selling shares in 2008 that are now worth $141.5 million. Goldman Sachs pressured them by claiming a regulatory rule, which didn’t exist, required them to sell their stock, according to the complaint. Goldman Sachs held millions of shares of Marvell stock in 2008, they said.
• Taylor Rule Gives 'Early Warning' at the Fed: Chart of the Day. The Federal Reserve should increase borrowing costs for the first time in two years, according to the Taylor Rule, a measure of where interest rates should be set given inflation and growth projections. The Taylor Rule, based on the consumer price index and the jobless rate, indicates the Fed's target for overnight loans between banks should be .35%. "Inflation expectations have shot up in the past three to four months," said Andy Cossor, Hong Kong-based chief Asia market strategist at DZ Bank AG, Germany's fifth-largest lender. "Some early warning lights may be starting to flash at the Fed. It has had its foot hard on the accelerator. The Taylor Rule and other yardsticks are sending a signal that it's time to start reconsidering that." The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices, widened to 2.67 percentage points yesterday, the most in three years.
• JPMorgan(JPM), Bank of America(BAC) Earnings May Show Weaker Revenue as Loans Stall. U.S. banks such as JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) may report weak revenue for the first quarter after lending by the industry dropped in almost every category. Bank loans and leases fell $87.4 billion to $6.97 trillion from the end of 2010 through March 30, or 1.3 percent, according to Federal Reserve data. Deposits at U.S. banks rose the same percentage to $7.97 trillion, showing households and businesses are still hoarding cash instead of borrowing, analysts said. “While loan growth tends to be seasonally weak in the first quarter, this quarter is tracking worse than seasonality would suggest,” Barclays Capital Inc. analysts led by Jason Goldberg wrote in an April 8 report. “We fear companies have been disappointed.”

Wall Street Journal:

• Pakistan Tells U.S. to Halt Drones. Pakistan has privately demanded the Central Intelligence Agency suspend drone strikes against militants on its territory, one of the U.S.'s most effective weapons against al Qaeda and Taliban leaders, officials said.
• President Open to Deal on Debt Cap. White House officials have opened the door to a deal with Republicans that would allow the U.S. to increase its ability to borrow, potentially easing worries in financial markets that the country might default on its debt.
• This Takeover Pits Bureaucrat vs. Bureaucrat. Just when deal-making has snapped back to life, the nation's two main antitrust cops are locked in a series of increasingly tense feuds over which agency should take the lead in big cases. The latest standoff between the Justice Department and Federal Trade Commission centers on a key piece of the Obama administration's health-care overhaul. That battle has worsened already poor relations between the two agencies, sparking concern that billions in freshly minted business deals could be delayed as they squabble for control. At times, officials have resorted to coin flips and turn-taking games to settle which agency will get jurisdiction.
• Exchange Gives Peek Into China's Secret Copper Stocks. The Shanghai Futures Exchange is conducting a little-known test program that would allow copper futures to be backed by stockpiles from two bonded warehouses, giving traders and analysts their first glimpse into how much metal actually lies behind the warehouses' doors. Copper inventories held at SHFE warehouses jumped 12% in the program's first week thanks to an added 30,104 metric tons of copper at the two locations. While overall SHFE inventory levels have fluctuated since then, the amount of bonded copper remained the same. China is the world's biggest consumer of copper, and metal traders and analysts have long thought that the country harbors vast private stores that aren't reflected in exchange or government reports. Much of it is in Shanghai, sitting in bonded warehouses. "We've got no idea how big those stocks are," said Robin Bhar, senior metals analyst at Crédit Agricole Corporate & Investment Bank. "People can make guesses about how big they are and where they were at the beginning of the year, but they're really guessing." This glimpse into the shadowy part of China's market is already sparking a debate about the state of global supplies of copper, which is used in goods ranging from electronics to appliances to houses. China's refined-copper imports fell 28% in February from a year earlier, to just 158,185 metric tons. March copper imports were down 33% on the year to 304,299 metric tons, but off February lows. Some of the copper imported into China in recent years was bought by speculative investors there for resale. Now, that copper's records are behind it, those investors are selling aggressively, traders and analysts say.
• Germany Rebuffs U.S. Calls to Shut Iran Bank. Germany is resisting international pressure to freeze the activities of an Iranian-owned bank based in Hamburg that U.S. officials say provides the financial lifeblood for some of Iran's blacklisted companies. U.S. and European Union officials in recent months have stepped up pressure on Germany to close down the European-Iranian Trade Bank AG—including a Feb. 2 letter from 11 U.S. senators to German Foreign Minister Guido Westerwelle that urged immediate action. The U.S. says the German-licensed bank, known as EIH Bank for its German initials, has become a major financial conduit for Iranian companies involved in weapons proliferation. Last September, it added EIH to its own blacklist of entities banned from the U.S. financial system. Germany has rebuffed such appeals, arguing that it has no proof of illegal activity.
• Details Emerge in Berkshire(BRK/A) Deal That Led to Resignation. David Sokol, the Berkshire Hathaway Inc. executive who resigned last month, had more conversations with bankers for Lubrizol Corp. than previously disclosed, according to a regulatory filing that adds more detail about the chemical maker's interest in a potential deal.

MarketWatch:

• Obama Regrets 2006 Debt-Ceiling Vote. Five years ago, a new U.S. senator from Illinois voted against raising the limit on how much debt the federal government could issue. He said it would be a big mistake.“Increasing America’s debt weakens us domestically and internationally,” the senator said at the time. “Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”
• Trump: The Next Ross Perot? (video) Donald Trump says he will 'probably' run as an independent candidate for U.S. president if he does not receive the Republican nomination.

CNBC:

• Brazil's Petrobras(PBR) Looks to Chinese Financing. Brazil’s oil giant Petrobras is taking advantage of the BRIC country summit in China to test the waters for Chinese financing.
• Einhorn's Shorts Dragged Down Fund's Returns. In the first quarter, Einhorn's Greenlight Capital Qualified LP dipped 2.9 percent, compared to an average 2 percent gain for the hedge fund industry.

Business Insider:

• D.E. Shaw's Top 30 Long-Term Stock Picks.
• N.Y. Feds Ramp Up Crackdown On Mexican Cartel Networks.
• U.S.-Pakistan Relations Near Collapse. The relationship between The United States and Pakistan has always been fraught with "issues," but it is hard to remember a time when things were this bad. And The New York Times is now reporting that things are getting worse:
• Simon Johnson Explains "What The Banks Did To Us" And Why "Seriously -- Goldman Sachs(GS) Can't Fail".
  

Zero Hedge:

• Radiation Up to 4 Times Higher Than Chernobyl Evac Zone Found In Soil 30 km Away From Fukushima; Rice Harvest In Question.
• Are ETFs Really Safe? An Interview With Andrew Bogan.
  

New York Times:

• Gas Prices Rise, and Economists Seek Tipping Point. The question, economists agreed, is what happens if prices continue to go up and remain high. Prices for a gallon of regular unleaded gas are topping $4 at more service stations nationwide, revisiting the bleak territory of three years ago, when the average price for a gallon of regular gas reached a peak of $4.11 on July 17, 2008, according to the Oil Price Information Service.

CNN Money:

• Amazon(AMZN) Offers Cheaper Kindle -- With Ads.

Rasmussen Reports:

• Confidence That U.S. is Winning War on Terror Down to Lowest Level Since 2006. A new Rasmussen Reports national telephone survey finds that just 32% of Likely U.S. Voters now believe the United States and its allies are winning the war on terror. That's down eight points from a month ago and the most pessimistic assessment since October 2006.

AP:

• Ford(F) Says Asian Operations May Face Parts Shortages Later This Month Due to Japan Quake. Ford Motor Co. says that its Asia-Pacific operations may have to slow or stop production later this month because of parts shortages from Japan. Ford has had to temporarily halt operations in the U.S. and Europe because of shortages, but this was the first word of possible production cuts in Asia. Ford has 13 plants in its Asia-Pacific region, including eight assembly plants in Australia, Thailand, Taiwan, Vietnam, India, the Philippines and China. Ford doesn't have any production facilities in Japan but, like other automakers, does source parts from suppliers that were hurt by the March 11 earthquake and tsunami. Ford said in a regulatory filing Monday that it expects its operations will be affected beginning the last week of April and into May. It didn't say which factories or for how long, but said it doesn't expect any production disruption to have a big impact on the company's overall financial results. It is pursuing other sources for some of its supply. However, if the supply of a key material or part from Japan is disrupted and it can't find an alternate, Ford said it may have to reduce or temporarily halt vehicle production. That could hurt both the company's results and Ford Motor Credit Co.'s financial condition, it added.

Reuters:

• Falcone-Backed Telecom Tests IPO Water. Billionaire hedge fund investor Philip Falcone may have found a way out of his risky wireless telecom bet through a possible initial public offering, three sources said.
• Short Bets in US Stocks Rise in Late March. Short interest on both the New York Stock Exchange and Nasdaq rose through the second half of March, the exchanges said on Monday, suggesting investors added to their short positions on expectations of further losses as the market slid. The Standard & Poor's 500 index .SPX hit its 2011 low on March 16 as Japan's natural and nuclear crisis, as well as unrest in Libya and the Middle East, hurt investor sentiment. Short interest on the NYSE rose 0.85 percent to 12.64 billion shares through March 31, from 12.54 billion shares as of March 15. Short interest on the Nasdaq rose 1.6 percent in the second half of March to 6.67 billion shares, from 6.56 billion shares as of March 15.
• Transocean(RIG) Drills in Record Water Depth Off India. A rig owned by Transocean Ltd (RIGN.VX)(RIG.N) has drilled in the deepest-ever water depth off India, eclipsing a record set eight years before in the Gulf of Mexico, the company said on Monday.

Financial Times:

• Arab Spring Sends Chill Through Israelis. Israelis may talk of the Arab spring, yet most have come to regard the eruption of popular protests across the Middle East with a distinct sense of wintry gloom. According to one opinion poll, 56 per cent of Israelis believe current events in the Arab world will be “bad for Israel” – almost double the proportion who say the country will benefit.

The Guardian:

• British warplanes see heaviest day of action so far as Nato steps up bombing campaign.

Business Spectator:

• This Housing Bubble Will Break Our Banks. In last week's post I showed that there is a debt-financed, government-sponsored bubble in Australian house prices. Now let’s look at what this might mean for the Australian banks who have sated on this housing hot air if, or rather when, the bubble is pricked.

Economic Times:

• India's environment ministry may soon give its final forest clearance to 50 coal blocks to be developed by companies including Reliance Power Ltd., Jindal Steel & Power Ltd., Steel Authority of India Ltd. and Hindalco Industries Ltd.

Korea Economic Daily:

• Apple Inc.(AAPL) and Google Inc.(GOOG) may face complaints from South Korean Internet portal site operators for unfair trade practices, citing industry officials.

Economic Observer:

• China's land ministry may raise the minimum price it will sell land for some industrial projects to help curb investment growth.

Beijing News:

• Beijing's average new home prices fell 10.9% in March from a year ago to 19,679 yuan per square meter, the first year-on-year decline since September 2009, citing the city's housing and urban-rural development commission.

China Securities Journal:

• China's Ministry of Finance is considering a reduction of export rebates for some aluminum and stainless steel products. Export rebates for some aluminum products may be reduced to 9% from 13%. The entire 5% export rebate for stainless steel products may be removed.

China National Cotton Reserves Corp.:

• China's imports of cotton for March dropped 15% on a year earlier to 276,400 tons.

Evening Recommendations
Barclays Capital:

• Rated (PLCE) Overweight, target $63.
• Rated (ANF) Overweight, target $81.
• Rated (BEBE) Overweight, target $8.
  
• Rated (ARO) Overweight, target $31.
• Rated (ANN) Overweight, target $36.
• Rated (URBN) Overweight, target $37.
  
• Rated (GPS) Overweight, target $28.
• Rated (EXPR) Overweight, target $25.
• Rated (LULU) Underweight, target $90.
• Rated (TLB) Underweight, target $6.
• Rated (ZUMZ) Underweight, target $26.
  
• Rated (LTD) Underweight, target $34.
  

Night Trading

• Asian equity indices are -1.75% to -.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 105.0 +1.0 basis point.
  
• Asia Pacific Sovereign CDS Index 112.0 +3.0 basis points.
  
• S&P 500 futures -.48%.
  
• NASDAQ 100 futures -.40%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (FAST)/.52

Economic Releases
7:30 am EST

• The NFIB Small Business Optimism Index for March is estimated to rise to 95.0 versus a reading of 94.5 in February.

8:30 am EST

• The Import Price Index for March is estimated to rise +2.1% versus a +1.4% gain in February.
• The Trade Deficit for February is estimated at -$44.0 Billion versus -$46.3 Billion in January.

2:00 am EST

• The Monthly Budget Deficit for March is estimated at -$189.0 Billion versus -$222.5 Billion in February.

Upcoming Splits

• (NDSN) 2-for-1
  

Other Potential Market Movers

• The Fed's Dudley speaking, Fed's Hoenig speaking, Fed's Tarullo speaking, Fed's Fisher speaking, $32 Billion 3-Year Treasury Notes Auction, weekly retail sales reports, IBD/TIPP Economic Optimism Index for April, (SUPG) analyst day and the (QDEL) analyst meeting could also impact trading today.
  

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

Stocks Lower into Final Hour on Emerging Markets Inflation Fears, Japan Concerns, Technical Selling, Mideast Unrest

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: About Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 16.66 -6.72%
  
• ISE Sentiment Index 121.0 +4.31%
  
• Total Put/Call .91 +5.81%
  
• NYSE Arms 1.03 -10.03%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 93.51 +.73%
  
• European Financial Sector CDS Index 76.58 -3.62%
  
• Western Europe Sovereign Debt CDS Index 160.83 bps -.10%
  
• Emerging Market CDS Index 194.18 +.71%
  
• 2-Year Swap Spread 18.0 unch.
  
• TED Spread 25.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .04% unch.
  
• Yield Curve 275.0 -1 bps
  
• China Import Iron Ore Spot $183.0/Metric Tonne +1.22%
  
• Citi US Economic Surprise Index +32.80 -1.3 points
  
• 10-Year TIPS Spread 2.64% -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating -90 open in Japan
• DAX Futures: Indicating -1 open in Germany

Portfolio:

• Slightly Higher: On gains in my Medical, Biotech and Retail sector longs and ETF hedges
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bearish as the S&P 500 trades near session lows despite falling eurozone debt angst, earnings optimism, diminishing govt shutdown fears, buyout speculation and falling energy prices. On the positive side, Medical Equipment, Drug, Airline, Food, Retail and Tobacco shares are slightly higher on the day. The Transports are just -.2% lower on the day. Oil is falling -3.2% and gold is declining -.74%. On the negative side, Coal, Hospital, Education, Gaming, Construction, Networking, Disk Drive, Paper, Steel, Oil Service, Energy, Oil Tanker, Alt Energy and Utility shares are under meaningful pressure, falling more than -1.50%. Cyclicals and small-caps are underperforming again. Commodity-related stocks have been heavy throughout the day. The UBS-Bloomberg Ag Spot Index is down just -.29%, copper is falling -1.1% and Lumber is falling another -3.47%. Lumber is down about -20.6% in about 2 weeks. The Ag Spot Index is still near levels that sparked the Tunisian riots. The US price for a gallon of gas is up +.03 today to $3.77/gallon. It is up .65/gallon in 55 days. The 10-year TIPS spread is maintaining recent gains despite today's energy price pullback, which is also a large negative. Stocks in China and India reversed opening gains and closed at session lows overnight. I still think investors are underestimating the extent of the inflation problems in many key emerging markets. As well, the Japan nuclear situation remains more tenuous than perceived, in my opinion. The broad US market feels a bit tired and a number of market leaders continue to trade poorly. Trading is sloppy and somewhat random. Given the numerous headwinds, the market still remains extraordinarily resilient, notwithstanding today's losses. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting, technical selling, rising Mideast unrest, emerging markets inflation fears, more hawkish fed commentary, profit-taking and Japan concerns.

Today's Headlines

Bloomberg:

• Oil-Price Risk Threatens Stronger Global Recovery, IMF Says. The threat of further oil-price increases has become a “key downside risk” for global growth, compounding the difficulties posed by overheating in emerging economies and persistent unemployment in developed nations, the International Monetary Fund said. The IMF stressed an “urgent” need for deficit reduction in the U.S., while recommending that emerging counterparts raise interest rates and let their currencies appreciate amid inflation pressures. In advanced economies, where unemployment remains high and bank credit “is still very sluggish,” monetary policy can remain accommodative, the IMF said. In the U.S. and the U.K. new programs to purchase government bonds “appear unnecessary, given current prospects for activity and developments in inflation expectations,” it said.
• Oil Drops From 30-Month High as IMF Cuts Growth Forecasts. Oil fell from a 30-month high after the International Monetary Fund cut its growth forecasts for the U.S. and Japan, indicating high oil prices pose a risk to global economic expansion. Crude tumbled as much as 2.9 percent as the IMF predicted in its World Economic Outlook that the U.S. economy will expand at a slower pace than in 2010 amid an unemployment rate above 8 percent and a drop in consumer confidence. Oil for May delivery fell $2.59, or 2.3 percent, to $110.20 a barrel at 1:31 p.m. on the New York Mercantile Exchange. Futures settled at $112.79 a barrel on April 8, the highest closing price since Sept. 22, 2008. Prices have risen 30 percent in the past year.
• Soros Warns Moral Hazard 'Looms Larger' as Volcker Says Big Banks Can Fail. Moral hazard in the financial system “looms larger than ever before,” even after the Dodd- Frank law gave U.S. federal agencies tools to regulate institutions that may be deemed too big to fail, said billionaire investor George Soros. “The evidence is overwhelming that the first priority of the authorities is to prevent a market collapse, and everything else has to take second place,” Soros, chairman of Soros Fund Management LLC, said yesterday at a conference in Bretton Woods, New Hampshire. Europe’s refusal to allow members of the monetary union to restructure their debt has added to moral hazard in the financial system, Soros said. “Look at the situation in Europe, for instance, where authorities are insisting on no renegotiation or restructuring on outstanding debt because that could possibly provide a financial banking crisis,” Soros said. “At the present we bail out, but in the future we will bail in. It has absolutely no credibility.”
• Hedge Funds Boost Bullish Bets on Grain, Soy as Demand Rises. Hedge funds boosted their bullish bets on corn and soybeans to the highest in four weeks as demand surged for food, livestock feed and fuel. Bullish bets on wheat jumped the most since early December. The funds and other large speculators increased net-long positions, or wagers on rising prices in corn by 14 percent to 322,069 futures and options contracts as of April 5, according to data from the Commodity Futures Trading Commission. Bullish soybean bets gained 2.9 percent to 118,280 contracts. Holdings for both commodities were the highest since March 8.
• Endo(ENDP) to Buy American Medical(AMMD) for $2.9 Billion to Trim Pain-Drug Dependence. Endo Pharmaceuticals Holdings Inc. (ENDP) agreed to buy American Medical Systems Holdings Inc. (AMMD), the maker of incontinence treatments, for $2.9 billion to help reduce its dependence on its top-selling painkiller Lidoderm. American Medical shareholders will get $30 a share, Chadds Ford, Pennsylvania-based Endo said today in a statement. That’s 34 percent above the April 8 closing price for Minnetonka, Minnesota-based American Medical. Endo, whose shares jumped 5.8 percent in Nasdaq Stock Market trading, will also assume $312 million of American Medicine Systems debt.
• Level 3(LVLT) Surges on Deal to Buy Global Crossing(GLBC) for $1.9 Billion. Level 3 Communications Inc. (LVLT), the unprofitable provider of broadband services, jumped the most in almost two years after agreeing to buy Global Crossing Ltd. (GLBC) for about $1.9 billion. Level 3, based in Broomfield, Colorado, will acquire Global Crossing in an all-stock transaction to expand its network over three continents and reduce expenses, the companies said in a statement today. The deal is worth $23.04 a share based on Level 3’s closing stock price on April 8, 56 percent more than Global Crossing’s share price that day.
• Dollar May Rise Against Euro on Interest-Rate Outlook, UBS Says: Tom Keene. The dollar may gain this year as faster-than-expected growth and inflation in the U.S. force the Federal Reserve to tighten monetary policy, according to UBS AG. Sentiment towards the dollar, especially among Asian investors, will improve once the Fed ends its $600 billion asset-purchase program in June, said Mansoor Mohi-Uddin, Singapore-based chief currency strategist at UBS AG. He declined to say when he expects the Fed to start raising interest rates. The dollar has fallen 7.3 percent against the euro this year. “U.S. inflation numbers keep on printing higher,” Mohi- Uddin said in a radio interview today on “Bloomberg Surveillance” with Tom Keene. “The way the dollar is now against the euro, against the Australian dollar, has not priced in the risk that the Fed can end quantitative easing. It has not priced in the risk that U.S. policy will lead to stronger growth in America.” The euro may decline because the market is expecting more interest-rate increases by the European Central Bank than policy makers are likely to deliver, Mohi-Uddin said. “The European Central Bank may go for a couple more rate hikes this year, but the market is pricing in five rate hikes in the next 12 months,” said Mohi-Uddin. “We think that’s too high and that’s why we are cautious about the euro at this level against the dollar.”
• Discouraged Workers Complicate Fed's Response to Jobless Fall. The jobs market still isn’t working for many Americans. Some 6.3 million people have been out of work and looking for a job for more than six months. The employment-to-population ratio is lower than it was when the recession ended as companies have been slow to add to payrolls. And big sources of hiring in the past -- government, health care and retailing -- may not be able to reprise that role in the future as lawmakers limit outlays and consumers curb spending. “The trends are a little bit scary,” said Nobel laureate Michael Spence, a professor at New York University. “There’s been a break in an important part of the social contract” for many Americans who are finding they can’t get ahead.
• Tenet(THC) Sues Community Health(CYH) Over Medicare Billing After Spurning Takeover. Tenet Healthcare Corp. (THC), after rejecting Community Health Systems Inc. (CYH)’s unsolicited buyout offer, said it sued that company for allegedly overbilling Medicare in admitting patients to its hospitals. Community Health Systems shares plunged. Tenet, based in Dallas, fell $1.35 cents, or 18 percent, to $6.20 in New York Stock Exchange composite trading at 10:35 a.m. Community Health fell $14.79, or 37 percent, to $25.51., before trading curves were implemented.
• Missouri Attorney General Opposes U.S. Health Law in Break With Democrats. Missouri Attorney General Chris Koster said Congress exceeded its authority when it passed a law requiring citizens to obtain health insurance, according to a filing with a federal appeals court. The Obama administration asked the U.S. Court of Appeals in Atlanta to overturn a Jan. 31 ruling by U.S. District Judge C. Roger Vinson in Pensacola, Florida, that the Patient Protection and Affordable Care Act is unconstitutional. The U.S. argued the mandate portion of the law was “a valid exercise of Congress’s commerce power.” Missouri legislators passed measures calling on Koster to oppose the 2010 statute. “The federal courts, in reviewing this aspect of the law, must either expand Congress’ Commerce Clause authority, justify the provision on alternate constitutional grounds, or strike down the individual mandate,” Koster, a Democrat, said in a letter accompanying his so-called amicus, or friend-of-the- court, brief.

Wall Street Journal:

• Japan Broadens Nuclear Evacuation Zone. An aftershock that shook Japan's northeast region temporarily shut down power supply and makeshift cooling systems at the Fukushima Daiichi plant Monday, highlighting the vulnerability of the crippled facility a month after a massive earthquake triggered the nation's worst nuclear-power crisis. Cooling functions at three of the plant's six reactors were restored 50 minutes after the temblor that rattled Fukushima and surrounding areas. Regulators said the suspension didn't appear to have caused any significant safety issues. Still, the latest quake served as a reminder of how lingering aftershocks and the risk of tsunami could easily upset the delicate efforts to stabilize the problems at the stricken plant.
  
• Yellen Says Fed Won't Repeat Mistakes of '70s. The Federal Reserve is unlikely to have to raise interest rates soon because the surge in global commodity prices should have a temporary impact on U.S. inflation, a key Fed official said Monday. However, Fed Vice Chairman Janet Yellen said in prepared remarks that the U.S. central bank will keep a close eye on inflation developments to avoid the mistakes of the 1970s, when high oil prices led to sharp increases in consumer prices.
• Economists See Growth Accelerating Later in Year. The U.S. economic recovery is expected to gain momentum over the rest of the year, despite a sharp pullback in growth during the just-finished first quarter, according to economists surveyed by The Wall Street Journal. On average, the 56 economists polled downgraded their estimate of first-quarter growth in gross domestic product to 2.7% at a seasonally adjusted annual rate. That is down from an average first-quarter forecast of 3.6% just two months ago. The economy grew at a 3.1% rate in the fourth quarter. The respondents, not all of whom answer every question, cited the still-weak housing market, severe weather, declining confidence and the earthquake in Japan as factors contributing to the pullback. The single biggest factor named by 35 economists was the rising price of oil sparked by Mideast unrest. "High oil prices usurp confidence and erode spending by consumers still struggling with lost wealth," said Sean M. Snaith of University of Central Florida.
• US Home-Loan Brokers Face New Limits On Pay. New rules governing how mortgage-loan officers get paid are meant to protect consumers and make it clearer how the mortgage professional is making money off the loan--but some in the industry say the rules are creating new problems.
• Toyota(TM) Says Vehicle Shortage Could Linger. Toyota Motor Corp. has warned its U.S. dealers that the company's supply of new vehicles could become "significantly impacted" by the summer, according to a memo distributed on Sunday. The memo is the clearest statement by Toyota that the shortage caused by the March 11 earthquake and tsunami in Japan will last into the third quarter.

MarketWatch:

• Hedge Funds Enjoy Record Inflows in February. Industry assets at highest level since crisis: BarclayHedge, TrimTabs.
• Nuclear Radiation Risk From Japan Crisis. What science and medicine have learned since Chernobyl.

CNBC.com:

• Trump: Obama Is To Blame For High Oil Prices. Real estate developer Donald Trump blames President Obama for the rising price of oil, warning, "this country can never, ever recover" if oil prices continue to go up. "That's really the life's blood of the country," Trump told CNBC in a phone interview on Monday. The Trump Organization chairman, who says he's considering running for president, plans to decide "before June" on the matter. He contended that Obama is not a leader and is "in bed with these (OPEC) people. He doesn't speak the way you have to speak to them."
• Drivers Starting to Cut Back as Gasoline Prices Keep Rising. With the price of gas above $3.50 a gallon in all but one state, there are signs that Americans are cutting back on driving, reversing a steady increase in demand for fuel as the economy improves. Gas sales have fallen for five straight weeks, the first time that has happened since November, according to MasterCard SpendingPulse, which tracks spending at 140,000 service stations nationwide.

Business Insider:

• Part of Libya's Vast Arsenal Is Up For Grabs.
• Here's Richard Koo's New Blistering Presentation On Why QE2 Has Been a Disaster.
• The Key Reason Why Spain Will Ultimately Be Forced To Take a Bailout.
  

Zero Hedge:

• Interactive Brokers Buries Chinese Reverse Mergers: Announces 100% Margin Increase.
• CHBT: Chinese Fraud Du Jour? Not even a full hour of trading can pass anymore without a fresh Chinese fraud getting exposed. Today's plunge target: China Biotics. From BDOWatch:

New York Times:

• Bailout for Portugal Will Put Politicians in a Vise. To secure a bailout worth about €80 billion, Portugal may have to agree to international creditors’ demands that it impose tougher austerity measures than those its own lawmakers rejected less than a month ago. This paradoxical situation is fueling divisions in Lisbon before a June 5 general election that was itself called because of a parliamentary standoff over how to clean up the public finances. In fact, Portuguese politicians may be more concerned about not getting blamed by voters for seeking outside help than about negotiating favorable terms for that rescue, valued at $116 billion.

LA Times:

• CIA Has Slashed Its Terrorism Interrogation Role. The agency has stopped trying to detain or interrogate suspects caught abroad, except those captured in Iraq and Afghanistan.

TechCrunch:

• U.S. Venture Funds Raised $7.7 Billion In First Quarter. U.S. venture capital firms raised more money last quarter than in any period since 2001. The total raised for new funds was $7.7 billion, according to Dow Jones LP Source. The capital going into VC funds was up 97 percent from a year ago, when they raised $3.9 billion.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 19% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Thirty-nine percent (39%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -20 (see trends).

Reuters:

• NATO to Continue Airstrikes to Aid Libya Civilians. NATO will continue to target Libyan leader Muammar Gaddafi's forces as long as they continue to threaten civilians, a NATO official said on Monday. South African President Jacob Zuma has urged NATO to stop air strikes on government targets to give a ceasefire "a chance", after Gaddafi accepted an African Union roadmap for ending the conflict in Libya including an immediate ceasefire. "We will continue to put pressure on forces threatening civilians and our operations will continue," a NATO official told Reuters, speaking on condition of anonymity. "Our aircraft are still flying and when we see a threat to civilians, we will engage," the official said. The official said Libyan government forces shelled the Libyan city of Misrata on Monday morning. "It does not appear that this indication of a peace deal has any substance at this point," the official said.
• Nasdaq(NDAQ), ICE(ICE) Not Walking Away from NYSE(NYX) Bid - Sources. Nasdaq OMX Group (NDAQ.O) and IntercontinentalExchange Inc (ICE.N) are not going to walk away from their bid for NYSE Euronext (NYX.N), despite the NYSE board's rejection of the unsolicited offer, according to people familiar with the matter. The two exchanges have been working behind the scenes to rally support from NYSE shareholders for their bid, asking them to press the NYSE board to talk to Nasdaq and ICE about the offer, one of the sources said.
• Karzai Says West Had Role in Bank Crisis. Afghan President Hamid Karzai accused foreigners on Monday of contributing to a corruption scandal at the country's biggest lender, and vowed to impose Afghan terms on the country's "strategic partnership" with the United States. Politically well-connected Kabulbank lost hundreds of millions of dollars through fraud, bad loans and mismanagement, and the scandal has jeopardised the country's flow of aid, because of disputes with the International Monetary Fund about how to handle it. Karzai warned that those responsible for bad loans would have to repay within a month or face trial, and promised tighter regulations of the sector in future. But he also said foreigners helped plunge the private bank into crisis.

USA Today:

• Boehner: GOP Not Going to 'Roll Over' on Debt. House Speaker John Boehner today defended the budget deal that kept the government running and expressed low expectations for President Obama's upcoming speech on the deficit. Boeher, speaking this morning on Fox News, warned the Obama administration that the Republican majority in the U.S. House will not automatically vote for an increase to the nation's debt limit. "We are not going to do the typical Washington thing and roll over and increase the debt limit without addressing the underlying problem," Boehner said in his first TV interview since reaching a budget agreement for the rest of fiscal 2011. The United States has about $14.3 trillion in debt. The nation will reach its debt limit -- the amount of money it can legally borrow -- sometime in mid-May.

Financial Times:

• Junk-bond funds had record inflows last week as retail investors' appetite for high-yield corporate debt reasserted itself after a lull in March, citing EPFR, which tracks fund flows. Globally, $1.47 billion was invested in high-yield funds last week, the highest weekly figure ever; in the U.S., inflows amounted to $933 million.

Telegraph:

• ICB Tells UK Banks Capital Reserves Must Be Higher. Britain's banks will today be told they must massively increase their capital reserves to protect savers and taxpayers from another financial crisis.

Kyodo News:

• Japan may raise its estimate of the severity of the Fukushima Dai-Ichi nuclear plant accident to level 7, the highest on the International Nuclear and Radiological Event Scale. That would put the accident's severity at the same level of the 1986 Chernobyl accident. Japan's current assessment is 5, the same as the 1979 partial meltdown at Three Mile Island in the U.S.

Xinhua:

• China 'Very Concerned' About Unrest, Citing Xi. China is "very concerned" about unrest in West Asia and North Africa, and wants an "early" return to stability, citing remarks by Vice President Xi Jinping to visiting Moroccan Foreign Minister Taieb Fassi Fihri.

China Business Indepth:

• China's March consumer price index likely rose 5%, citing an official of the National Bureau of Statistics.

Ma'an:

• The Palestinian Authority plans to publish a report this week saying it will be ready to establish an independent state during September, citing Planning Minister Ali Al-Jerbawi. The report is being prepared for presentation to a conference of international donors this week in Brussels.

Bear Radar

Style Underperformer:

• Small-Cap Value (-.78%)

Sector Underperformers:

• 1) Hospitals -4.26% 2) Coal -1.74% 3) Networking -1.25%

Stocks Falling on Unusual Volume:

• ALXN, TEVA, STEC, IOC, F, D, TDSC, DLLR, LPNT, WPRT, VRNT, EZPW, ISCA, NTCT, SSYS, HTWR, SINA, RAIL, GTLS, EXPE, PAAS, GNTX, ENSG, LAYN, KEYN, CYH, GNI, FIX, NRT, UHS, PPL, HCA, WWE, PTY, BHE and CIE
  

Stocks With Unusual Put Option Activity:

• 1) MTL 2) SLV 3) OIH 4) INFN 5) AMR
  

Stocks With Most Negative News Mentions:

• 1) AAP 2) NSM 3) ALXN 4) CYH 5) JACK
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume
  

Bull Radar

Style Outperformer:

• Large-Cap Value (+.16%)

Sector Outperformers:

• 1) Tobacco +1.06% 2) Foods +.80% 3) Medical Equipment +.75%

Stocks Rising on Unusual Volume:

• GLBC, TYC, CCOI, EFII, AMMD, ENDP, BIIB, HRBN, MCP, MSG and QCOR
  

Stocks With Unusual Call Option Activity:

• 1) EUO 2) THC 3) ACE 4) LYB 5) EXPE
  

Stocks With Most Positive News Mentions:

• 1) CWH 2) LRY 3) OSIS 4) HIL 5) COLM

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume
  

Monday Watch

Weekend Headlines
Bloomberg:

• Dozens Dead in Yemen, Egypt, Syria as Protests Shake Middle East Countries. Scores of people were killed or wounded in Yemen, Egypt and Syria, and Libyan rebels battled loyalists in three cities, as protests against entrenched regimes shook the Middle East. Yemeni security forces fired on demonstrators in three cities yesterday, leaving many wounded, and Syrian contingents shot at a funeral for protesters killed in an earlier demonstration. Egyptian military leaders blamed “outlaws” trying to “thwart the revolution” for killing at least one person when soldiers broke up a protest in central Cairo, which also left 71 injured. Almost four months after a 26-year-old vegetable seller set himself alight in despair over Tunisia’s social, political and economic conditions, protestors in a half-dozen countries are trying to sweep away regimes that have ruled for decades. Countries from North America, Europe and the Middle East itself are also struggling to contain Libya’s dictator, Muammar Qaddafi, and ease the transition to democracy from Egypt to Yemen. “We’re obviously in a period of unraveling of the old, and violence is a part of that,” said Robert Danin, a senior fellow for Middle East and Africa studies at the Council on Foreign Relations in Washington.
  
• Qaddafi Accepts Mediators' 'Road Map' to Cease-Fire, Reports Say. agreed to accept an Libyan leader Muammar QaddafiAfrican Union peace plan that could lead to a cease-fire with rebels, South African President Jacob Zuma said in Tripoli yesterday, the Associated Press and Reuters reported. Zuma presented Qaddafi with a four-point program including a cease-fire, humanitarian aid, protection for foreign nationals and political reforms, a spokesman for the African Union, Noureddine Mezni, said in an interview late yesterday with the BBC. Zuma said he will meet today with rebel leaders in Benghazi.
• Syrian Officer Killed, Soldiers Injured as Tanks Enter Oil Hub. A Syrian army officer was killed and several soldiers were injured when gunmen ambushed their vehicle in the coastal oil hub of Banias, where tanks were deployed to contain protests spreading across the country, state television reported, citing unidentified people. Tanks had moved into the city, whose oil terminal is the nation’s main export point, according to Al Arabiya and Associated Press reports. Three people were killed and dozens were injured in Banias today, Syrian state television reported, citing a nurse in a hospital in the city.
• Corporate Profits Rise to Record Before Quake Curbs Supplies. Corporate profits probably rose to a record last quarter, with demand for items from Caterpillar Inc. (CAT) equipment to Daimler AG (DAI) cars holding up so far in the face of supply disruptions from the earthquake in Japan. The estimates six months out may prove too rosy, investors said. Earnings for Standard & Poor’s 500 Index companies probably gained 12 percent in the three months ended March 31, from a year earlier, according to analysts’ estimates compiled by Bloomberg. For the second quarter, most analysts have left unchanged their earnings estimates, calling for another 12 percent increase at S&P companies, the data show. For the year, they predict a gain of 17 percent.
• Wen Urges Regions to Curb Real Estate in Drive to Restrain Inflation Rate. Chinese Premier Wen Jiabao asked local governments to take responsibility to keep housing affordable and said stabilizing consumer prices in the country is the top priority. The central government’s aim to control the property market is “clear” and the determination is “firm,” Wen said during a visit to eastern China’s Zhejiang province, according to a statement on the government’s web site today. The Chinese government is intensifying efforts to curb speculation in the real-estate market after housing prices gained for 19 consecutive months through December. Consumer prices in February climbed 4.9 percent from a year earlier, exceeding the government’s annual inflation target of 4 percent. The country will adopt measures including on the reserve ratio, interest rates and the exchange rate to support the real economy, he said.
• Copper Imports by China Drop 33% on Year on Demand Risk. Copper imports by China, the largest consumer, climbed 29 percent in March from a two-year low as fabricators stepped up production. Shipments fell 33 percent from the same month last year. While the increase from the previous month reflected a recovery in manufacturing which grew for the first time in March in four months and the Chinese New Year holiday in February, the decline from last year may boost concern over whether the level of demand in the country is being sustained. Domestic prices have traded at a discount to London since July on ample supplies. “March imports fell from last year,” Yan Lei, an analyst at Guoyuan Securities Co., said from Shanghai today. “We understand consumption in March was similar to last year’s levels, which could only mean that smelters really ramped up domestic production. If the output numbers don’t show that, it may be time to start worrying about China’s copper demand.” “There is a risk that a slowdown in the economy because of the tightening measures will damp metals demand,” said Ren Gang, head of research at Maike Futures Co. “We still need to keep a close eye on macro-economic developments.”
• China's March Car Sales 'Below' Expectations as Incentives End. China’s passenger-car sales grew in March at a pace that was below forecasts after incentives ended and fuel prices rose, the China Association of Automobile Manufacturers said. Dispatches of cars including multipurpose vehicles and sport-utility vehicles to dealerships rose 6.52 percent from a year earlier to 1.3 million units, the association said in a statement today. That pace was about one-tenth of the 63 percent sales increase reported in March of last year. “The overall vehicle sales growth in March was below our expectations,” Zhu Yiping, the association’s statistics head, said at a briefing in Beijing today. March has historically been a peak period for car sales in China following the week-long Chinese New Year holiday that was celebrated this year from Feb. 2 through Feb. 8, according to the association. General Motors Co. (GM), China’s biggest overseas automaker, posted slower sales growth in the nation for the second month in March as the government reinstated a 10 percent sales tax and phased out subsidies for vehicle trade-ins in rural areas.
• Germany Says Greek Loan Relief May Not Work as EU Rules Out Restructuring. Loan relief granted to Greece last month may be inadequate to restore the country’s financial health, German Finance Minister Wolfgang Schaeuble said after European officials again ruled out debt restructuring. Euro-area leaders decided on March 11 to reduce interest rates on loans for Greece under its 110 billion-euro ($159 billion) rescue package and to extend their maturities. Greece also gained the right to sell bonds directly to the region’s rescue fund. “Whether that is enough and how this continues will have to be monitored closely,” Schaeuble told reporters today after a meeting of European Union finance ministers and central bank chiefs in Godollo, Hungary. The doubts about Greece’s finances emerged as EU officials said a planned aid package for Portugal would draw a line under the region’s debt crisis, which was triggered by Greece and engulfed Ireland four months ago, when that nation received an 85 billion-euro rescue. The funds for Portugal are projected by the EU to total around 80 billion euros. Greece’s economic contraction is projected at 3 percent in 2011 as austerity measures bite. The economy shrank 4.5 percent last year, more than forecast. The nation’s overall debt will peak at 159.4 percent of GDP in 2012, according to EU projections made Feb. 24. “We do exclude restructuring,” EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Hungary today.
• Too Much Money Too Fast Threatens Emerging Market Stability, Haldane Says. Bank of England official Andrew Haldane said financial stability may be threatened by capital flows from developed countries that are too quick and substantial for emerging nations to absorb. “The global flow of funds could become an increasingly powerful generator of global financial instabilities,” Haldane, the bank’s executive director for financial stability, said in a speech delivered today in Bretton Woods, New Hampshire. “Pressures could mount on policy makers to protect against the rising tide of capital flow-induced instability, including through capital restrictions and macro-prudential measures.” Haldane said a “big fish small pond” problem arises when investors in developed countries shift funds to smaller economies and less-developed markets. To illustrate the scale, he said a drop of 0.1 in an index of investment “home bias” for advanced countries in 2007 would have reallocated about $4.5 trillion to foreign markets. That compares with a market capitalization of $6.8 trillion of emerging economies among the Group of 20 nations.
• Senate Panel Critical of Goldman(GS) to Release Crisis Findings. The U.S. Senate panel that spent a full day last year questioning Goldman Sachs Group Inc. (GS) executives including Chief Executive Officer Lloyd C. Blankfein about the company’s business practices before the 2008 credit crisis will release its findings next week. The Permanent Subcommittee on Investigations report, “Wall Street and the Financial Crisis: Anatomy of a Financial Collapse,” is likely to focus, at least in part, on role of Goldman Sachs, which paid $550 million last year to resolve regulatory claims that it misled investors in sales of collateralized debt obligations linked to subprime mortgages. “Significant new information” will be included in the April 13 report, the panel said in a statement yesterday. Senators Carl Levin of Michigan, the Democrat who leads the subcommittee, and Tom Coburn of Oklahoma, its top Republican, will issue findings drawn from a two-year probe by lawmakers and staff members.
• Rockets Fired at Gbagbo's Ivory Coast Residence by Forces from UN, France. United Nations and French helicopters opened fire on the residence of Ivory Coast’s former leader, Laurent Gbagbo, and the offices of state television in the city of Abidjan, according to eyewitnesses. UN Secretary General Ban Ki-moon said that he requested French assistance to mount the military operation “to prevent the use of heavy weapons which threaten the civilian population of Abidjan and our peacekeepers.”
• BHP(BHP) Says Not Aware of Basis for Market Speculation on Woodside. BHP Billiton Ltd. (BHP) said the market is currently fully informed of all material information and the company “is not aware of any basis for the market speculation” in relation to Woodside Petroleum Ltd. (WPL). The Sunday Times reported in London yesterday that BHP is in talks to buy Royal Dutch Shell Plc (RDSA)’s 24 percent stake in Woodside and make a A$46 billion ($48.6 billion) takeover offer, saying that UBS AG is advising Shell on its options. Woodside shares pared gains after the announcement, trading at A$47.49 at 12:22 p.m. in Sydney. The Perth-based company had climbed as much as 7.6 percent before BHP made the statement.
• Stiglitz Urges New Global Reserve Currency to Stem Imbalances. The world economy needs a new global reserve currency to help prevent trade imbalances that are reflected in the national debt of the U.S., said Nobel-prize winning economist Joseph Stiglitz. A “global system” is needed to replace the dollar as a reserve currency and help avoid a weakening of U.S. credit quality, said Stiglitz, a professor at Columbia University in New York. The dollar fell to an almost 15-month low against the euro last week, and the U.S. trade deficit widened more than forecast in January to the highest level in seven months. President Barack Obama and congressional leaders negotiated a last-minute deal two nights ago to avert a government shutdown. Within weeks, the government may be forced to increase the $14.3 trillion federal debt ceiling to ensure the U.S. will meet its financial obligations. The ratio of general government debt, including state and local governments, to gross domestic product is projected to climb to 100 percent in 2012, the most of any country with an AAA ranking, Fitch Ratings said last week. To finance its budget deficits, the U.S. sells bonds to overseas investors and governments, boosting the dollar reserves of those nations. Overseas holdings of dollar reserves rose to $3.14 trillion in the fourth quarter of last year, according to International Monetary Fund figures. “Reserves are IOU’s,” Stiglitz said. “When IOU’s get big enough, people start saying maybe you’re not a good credit risk. Or at least, they would change in their sentiment about credit risk.” Stiglitz, who won the 2001 Nobel Prize for economics, was attending the Institute for New Economic Thinking’s conference in Bretton Woods at the hotel where U.S. and European officials met in 1944 to remake the global monetary system. The existing monetary system means “there’s a very good risk of an extended period of low growth, inflationary bias, instability,” Stiglitz said. It’s “a system that’s fundamentally unfair because it means that poor countries are lending to the U.S. at close to zero interest rates.”
• George Soros Says China's Inflation Is 'Serious Concern'. (video) "It would be very advantageous to allow the currency to appreciate as a way of controlling inflation," Soros said. "The authorities missed that opportunity. You now have inflation somewhat out of control, and causing some serious danger of wage-price inflation."
  

Wall Street Journal:

• Obama Puts Taxes on Table. President Barack Obama will lay out his plan for reducing the nation's deficit Wednesday, belatedly entering a fight over the nation's long-term financial future. But in addition to suggesting cuts—the current focus of debate—the White House looks set to aim its firepower on a more divisive topic: taxes. In a speech Wednesday, Mr. Obama will propose cuts to entitlement programs, including Medicare and Medicaid, and changes to Social Security, a discussion he has largely left to Democrats and Republicans in Congress. He also will call for tax increases for people making over $250,000 a year, a proposal contained in his 2012 budget, and changing parts of the tax code he thinks benefit the wealthy.
• Treasury's Massad is Likely to Be Next TARP Overseer. The White House is expected to nominate Timothy Massad as Treasury Department assistant secretary for financial stability, placing him in charge of managing the government's Troubled Asset Relief Program investments, people familiar with the matter said.
• SEC Boots Up for Internet Age. Federal securities regulators are weighing demands to make it easier for fast-growing companies to use social networks such as Facebook and Twitter to raise money by tapping thousands of investors for very small amounts of shares. The Securities and Exchange Commission is looking at adapting its rules to encourage Internet-age techniques for small companies raising capital. The issue is part of a wider review by the agency into whether to ease decades-old constraints on share issues by closely held companies.
• Pimco's Total Return Fund's US Govt-Related Holdings Is Negative -3% in March. Bond king Bill Gross, founder and co-chief investment officer of Pacific Investment Management Co., has turned more bearish on the U.S. government-related bonds including Treasurys, reflecting his worries over the country's swelling fiscal deficit and mounting debt burden.
• Kremlin Connection Fails to Save BP(BP) From Oligarchs. As BP PLC struggles this week to save its historic Arctic drilling deal with Russia's state oil company, OAO Rosneft, one thing is apparent: BP should have heeded a gentle warning from Vladimir Putin. In January when Mr. Putin, Russia's prime minister, congratulated BP and endorsed the Rosneft partnership in a Moscow meeting, he also offered words of caution, according to people familiar with that meeting. Mr. Putin warned it is simplistic to believe that the Kremlin controls everything in Russia.
• Hot Prospects: 12 Coveted Executives.
• Warning Signs for Copper Market. As analysts and investors seek clues to the strength of the recent rally in commodity prices, some are taking a closer look at the copper market, where warning signs are emerging. Copper prices have almost quadrupled after a two-year rally, largely driven by the belief that China, the world's largest copper user, has an insatiable appetite for the metal. But Chinese buyers are now facing the double whammy of higher copper prices and the government's aggressive moves to tighten credit. Moreover, evidence has recently surfaced of previously unreported copper stockpiles, a sign that much of the purchased copper hasn't been put to use. The stash is estimated by people in China and several Western banks to be around one million tons, or about 15% of the country's annual consumption.
• Steel Price Softens as Supply Solidifies. The world's steelmakers are increasing output despite softer demand, pushing down prices. In a few countries, notably Brazil and the U.S., steel prices remain high, thanks to steady demand in the former and limited output in the latter.
• Ad Spending to Rise. U.S. advertising spending is expected to increase 2.5% to $155.2 billion in 2011 as marketers in the financial, retail and automotive sectors open up their wallets following the recession. But it will take several years before spending reaches pre-recession levels, according to new forecasts from Publicis Groupe SA's ZenithOptimedia. Global ad spending, meanwhile, is now forecast to increase 4.2% to $470.8 billion. That's a pullback from the previous forecast.
• Cap and Evade. Why do Americans hate politics? Consider last week's Senate spectacle on whether to rein in the Environmental Protection Agency's plans to regulate carbon dioxide. Democrats deliberately turned the votes into a hall of mirrors, with multiple amendments to dodge accountability.
• Obama opposes spending cuts right up to the time he calls them historic. This is getting to be a habit. President Obama ferociously resists tax cuts, trade agreements and spending cuts—right up to the moment he strikes a deal with Republicans and hails the tax cuts, trade agreements and spending cuts as his idea. What a difference an election makes.
• In Fast-Growing China, Dangers Threaten to Hamper Its Success. Here are three problems that could turn China into an also-ran over the next few years.

Bloomberg Businessweek:

• Europe Tightens Nuclear Checks as Japan Ships Approach Port. European ports including Rotterdam and Antwerp are tightening safety checks as they prepare to unload the first ships from Japan since last month’s earthquake led to radioactive discharges from a damaged nuclear plant. Rotterdam, Europe’s biggest container port, will screen for radiation while ships are still at sea. Antwerp, the No. 2, will make similar checks aboard vessels for which Japan was one of the last 10 ports of call, with any abnormal readings triggering an inspection by Belgium’s Federal Agency for Nuclear Control. Ships that left Japan soon after March 11’s magnitude-9 earthquake and tsunami led to leaks at the Fukushima Dai-Ichi atomic plant will reach Europe mid-month after a 30-day journey.

CNBC:

• The Downside of Brazil's Boom: Rising Inflation and a Surging Real. This past week, the Brazilian Finance Ministry took another shot at cooling capital flows and restricting credit, a campaign economists expect will have little impact in curbing inflation or reigning in the rising Real. “This liquidity is going to continue from one to two years, so we have to be inventive and control external flows of capital and inflation. Exchange rates cripple the country, but inflation kills,” said one government official in an interview this past week.

IBD:

• Informatica(INFA) Builds Bridges Between Business Systems.

NY Times:

• JPMorgan(JPM) Accused of Breaking Its Duty to Clients. In the summer of 2007, as the first tremors of the coming financial crisis were being felt on Wall Street, top executives of JPMorgan Chase were raising red flags about a troubled investment vehicle called Sigma, which was based in London. But the bank chose not to move out $500 million in client assets that it had put into Sigma two months earlier. Sigma collapsed a year later. Now, new documents unsealed late last month as part of a lawsuit by bank clients against JPMorgan show for the first time just how high the warnings about Sigma went — all the way to the office of the bank’s chief executive, Jamie Dimon.

NY Post:

• Medicare CPR. Government health care is already on life support — here’s how to save it.

CNNMoney:

• Gas Prices in 'Firing Range' of All-Time High. Gas prices have jumped nearly 20 cents over the past two weeks, approaching the all-time high, according to a survey published Sunday. The average price of a gallon of self-serve regular is $3.76, the Lundberg Survey found. The previous survey three weeks ago found an average of $3.57. That means prices are now just 35 cents -- "within firing range" -- of the all-time high of $4.11 set in July 2008, said publisher Trilby Lundberg. "Unless crude oil relents and slips, we can expect a further rise at the pump because pump prices do not reflect all of the crude oil price hikes that have occurred," Lundberg said. Here are the average prices in some other cities:

Forbes:

• EPA: New Radiation Highs in Little Rock Milk, Philadelphia Drinking Water. Milk from Little Rock and drinking water from Philadelphia contained the highest levels of Iodine-131 from Japan yet detected by the Environmental Protection Agency, according to data released by EPA Saturday. The Philadelphia sample is below the EPA’s maximum contaminant level (MCL) for iodine-131, but the Little Rock sample is almost three times higher.Nonetheless, the EPA does not consider the milk dangerous because the MCL is set for long-term exposure, and the iodine-131 from Japan’s Fukushima-Daichi nuclear accident is expected to be temporary and deteriorate rapidly.
• The Fed's "Loose" Money Stance Is Making Credit Tight.
  

Zero Hedge:

• Video of Tsunami Smashing into Fukushima Nuclear Power Plant; Reactor 1 Radiation Counter "Breaks" After Reporting 100 Sieverts/Hour. This, of course, is in the past. What is far more disturbing is that the official Fukushima data from the Ministry of Economics, Trade and Industry, which has so far provided the most comprehensive daily data dump on Fukushima, has stopped reporting the dry well radiation reading in Reactor 1. This is the same reactor where following Thursday's Earthquake, METI represented a mindblowing reading of 100 Sieverts/hour in the dry wall: a number on par with the worst data out of Chernobyl.
• Egypt Revolution: Take 2. (video) Remember how happy the Egyptain population was to depose one dictator only to have him replaced with a ruling military junta, and how prosaic, not to mention cynical, our assumption was that the newly "democratic" country has three months before the country experiences another post-Thermiodrian revolution? Well, our estimate was three weeks off.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 21% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Thirty-nine percent (39%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -18 (see trends).

USA Today:

• New Product-Safety Complaint Database Under Attack. The database survived recent congressional attempts to take away its funding, but was again targeted on Capitol Hill last week at a hearing on a broad overhaul of the Consumer Product Safety Improvement Act. The law gave CPSC new authority to regulate unsafe products but businesses say it is overly burdensome.

Reuters:

• Iran's Ahmadinejad Fires Controversial Chief of Staff. Iranian President Mahmoud Ahmadinejad dismissed his chief of staff on Saturday, the official IRNA news agency reported, sidelining a controversial figure who is seen as a possible future presidential contender. Esfandiar Rahim-Mashaie, a target for Ahmadinejad's detractors within the conservative ruling elite, has survived many calls to be sacked and had enjoyed the confidence of the president, to whom he is related by the marriage of their children. While Mashaie retains several other governmental posts, his position as chief of staff has been taken by another close Ahmadinejad aide, Hamid Baqaie, IRNA reported. Mashaie angered many hardliners by suggesting Iran was a friend to all nations, including the people of Israel, and by promoting an "Iranian" school of Islamic thought, seen by many in the Islamic Republic as unacceptable.
• U.S.-Pakistan Intelligence Operations Frozen Since January. Joint U.S.-Pakistan intelligence operations have been halted since late January, a senior Pakistani intelligence officer said, reflecting strain in a relationship seen as crucial to combating militants and the war in Afghanistan. Uneasy U.S.-Pakistani ties have become even more tense after a string of diplomatic disputes so far this year.
• Interview - Ivory Coast's Abidjan Risks Health Disaster - MSF. The battle for Ivory Coast's main city Abidjan is pushing its four million residents ever closer to a health disaster, relief agency Medecins Sans Frontieres (Doctors Without Borders) said on Sunday. Widespread cuts in water supply come as medicines are running out, while violent militias are dissuading many from venturing out into the streets to seek food already retailing at multiples of its peace-time price. "It is a city of four million, most of whom don't have access to health facilities," MSF Abidjan Field Coordinator Henry Gray told Reuters in a telephone interview from his downtown office, as fire from automatic weapons rang out in the background.
• Nasdaq(NDAQ) Says Its Offer is Superior After NYSE(NYX) Snubs Bid. Nasdaq OMX Group and IntercontinentalExchange responded late Sunday to NYSE Euronext's rejection of their joint proposed bid, reaffirming that their cash and stock offer is superior to the offer submitted by rival Deutsche Boerse AG. "The feedback we have received from NYSE Euronext stockholders is very positive, and we would expect NYSE Euronext would, at the very least, meet with us and our advisors to discuss the merits of the proposed combination," Robert Greifeld, Chief Executive Officer of Nasdaq, said in the statement. NYSE on Sunday said it was sticking with its deal with Deutsche Boerse, calling the rival offer from Nasdaq OMX Group too risky and counter to the Big Board's vision.
• Japan Fails to Stop Radioactive Discharge into Ocean. Japan is struggling to regain control of the Fukushima Daiichi nuclear plant that was damaged by the magnitude 9 quake and 15 metre tsunami. The nuclear plant's operator, Tokyo Electric Power Co (TEPCO) , has been pumping sea water into the reactors to cool the nuclear core, and then discharging the water, after it has become contaminated, back into the Pacific Ocean.

Financial Times:

• US Watchdogs to Sue Executives of Failed Banks. US regulators are expected to file up to 100 lawsuits against executives and directors of failed banks in the next two years, as they seek to hold people accountable for management failings and recover billions of dollars, industry experts said. The Federal Deposit Insurance Corporation is only now beginning to step up its efforts to make an example of overly aggressive executives or inattentive directors of the 348 banks that have failed since 2008. The FDIC says the failures have cost its insurance fund $59bn. However, analysis by Nera Economic Consulting of material on the FDIC’s website suggests it has lost $80bn.

Telegraph:

• Eurozone Ship Is On The Course That Was Set For It: Heading For The Rocks. Two events last week saw the crisis in the eurozone deepen - the Portuguese bail-out and the ECB's interest rate increase. But much more is brewing.

The Guardian:

• Chinese Christians Arrested for Trying to Hold Open-Air Service. Members of Shouwang church bundled into vans in Beijing in latest Communist party suppression of protest and dissent. Dozens of Christians who planned to hold an outdoor service in Beijing in protest at being made "homeless" from their place of worship have been arrested, in the latest Communist party crackdown on dissent and demonstrations. Police cordoned off the walkway where a mobile phone text message had said the service would happen. Officers and plainclothes guards took away dozens of people; it was unclear how many were church members, supporters or bystanders. The Shouwang church, a Protestant group with about 1,000 members, claims official pressure forced it out of a place of worship it had been renting. Bob Fu, of the China Aid Association, a US-based group critical of China's controls on religion, said police had told one church elder the planned service would be an "illegal gathering". Police kept church elders and pastors in their homes to stop them trying to attend the service, and some were held in police stations, Fu said. "Many members of the church are professionals and students, and some are human rights lawyers, which also makes the church a target," he added. Reuters reporters were kept away from the site of the planned service, followed by police officers and shoved away by plainclothes guards who would not say whom they worked for. Fu said: "I think this reflects the overall panic mood of the government leadership over what's happening in the Middle East and north Africa. I don't see any possibility that the government will yield to [the church's] demands, given the climate there. It's reasonable to expect more clashes." Chinese authorities have detained many dozens, if not hundreds, of dissidents, human rights activists and persistent protesters. Many remain in custody.

Financial Times Deutschland:

• IMF Managing Director Dominique Strauss-Kahn said there are "still unsolved problems" in Germany's banking industry, citing Strauss-Kahn. There is a need in some cases for recapitalization and stabilization, both in Germany and in other EU states.

Bild am Sonntag:

• About 90% of Germans expect that the European Union will have to rescue more member states after giving aid to Portugal, citing a poll by researcher Emnid on April 7.

Diario de Noticias:

• A team of officials from the IMF, European Commission and European Central Bank will arrive in Lisbon on April 12 to start negotiating the aid plan for Portugal.

Commercial Times:

• Apple Inc.(AAPL) may introduce its iPad 3 tablet computers in the third quarter, citing officials at its component suppliers.

Press Trust of India:

• India's Environment Minister Jairam Ramesh said the country won't bow to international pressure on legally binding commitments to reduce carbon emissions.

Asahi:

• Japan will order an evacuation of some people living within 30 kilometers of the crippled Fukushima Dai-Ichi nuclear plant, expanding the evacuation zone from the current 20-kilometer radius may also be subject to the evacuation order, the report said.

Xinhua:

• China Merchants Bank Co. will face a "relatively big capital shortfall" over the next five years because of stricter regulatory requirements, citing comments from the bank's President Ma Weihua.
• Brazil will seek "reciprocity" in the relationship between Latin America's largest economy and China, citing an interview with President Dilma Rousseff. Brazil and China are "equals" and should work together to benefit their economies, including joint investment in oil, as Brazil develops its offshore reserves, Rousseff said.
  

China Business News:

• China should continue its property control measures, citing central bank adviser Xia Bin. China should also impose high progress income taxes on real estate transactions, Xia said.

China's Securities Journal:

• China will soon order a halt of all planned electrolytic aluminum projects because of overcapacity in the industry, citing Su Bo, Vice Minister of Industry and Information Technology. The utilization rate for production capacity in the electrolytic aluminum industry is at about 60%.
• China may continue to raise interest rates this year as the country still faces pressure of rising prices and its deposit rate remains in the negative territory, citing Xia Bin, an adviser to the People's Bank of China.
  

GulfNews.com:

• Airlines' Credit Risk Up on Oil Spike. The cost to protect airline debt climbed as crude oil rose above $113 (Dh414) for the first time in 30 months. Credit-default swaps on AMR(AMR)and Continental Airlines(CAL) surged as oil climbed 2.5 per cent after Barclays Capital said strikes on Libyan fields by forces loyal to Muammar Gaddafi ended hopes for a prompt export resumption and may send prices toward $130 a barrel. "The whole margin story's going to be a big issue this quarter to see how much rising commodity prices have affected the bottom line," said Adam Richmond, a strategist at Morgan Stanley in New York. "Sectors that are very sensitive to commodity prices from consumer discretionary, retail, travel, sectors like that, this is a big focus." Airlines are "all very worried" about crude oil prices, AMR Chief Executive Officer Gerard Arpey said at a conference in Dallas. Credit-default swaps on AMR soared to 21 per cent upfront, according to broker Phoenix Partners Group. That's in addition to 5 per cent a year, meaning it would cost $2.1 million initially and $500,000 annually to protect $10 million of AMR's debt. Swaps on United Continental Holdings, Delta Air Lines and JetBlue Airways. jumped to a mid-price of 8.5 per cent upfront, the data show. Swaps on Continental Airlines increased to 7.5 per cent upfront.

Weekend Recommendations
Barron's:

• Made positive comments on (MSG).
• Made negative comments on (GCAP).

Night Trading

• Asian indices are -.50% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 104.0 -.5 basis point.
• Asia Pacific Sovereign CDS Index 109.50 unch.
  
• S&P 500 futures +.28%.
• NASDAQ 100 futures +.43%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SHAW)/.48
• (AA)/.27

Economic Releases

• None of note

Upcoming Splits

• (NDSN) 2-for-1
  

Other Potential Market Movers

• The Fed's Yellen speaking, $32 Billion 3-Month/$30 Billion 6-Month Treasury Bills Auctions, CIBC Energy/Infrastructure Conference and the ISI Retail Summit could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and automaker shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the week.