North American Investment Grade CDS Index 92.25 -.37%
European Financial Sector CDS Index 88.58 -1.28%
Western Europe Sovereign Debt CDS Index 193.92 +.67%
Emerging Market CDS Index 205.79 +.93%
2-Year Swap Spread 15.0 -3 bps
TED Spread 22.0 unch.
Economic Gauges:
3-Month T-Bill Yield .05% unch.
Yield Curve 270.0 +1 bp
China Import Iron Ore Spot $179.50/Metric Tonne +.34%
Citi US Economic Surprise Index 11.70 -.4 point
10-Year TIPS Spread 2.56% -1 bp
Overseas Futures:
Nikkei Futures: Indicating +54 open in Japan
DAX Futures: Indicating +43 open in Germany
Portfolio:
Higher: On gains in my Medical, Retail, Biotech and Tech sector longs
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 surges to a new multi-year high, despite US/European debt fears, emerging markets inflation worries, higher energy prices, more hawkish Fed commentary and Mideast unrest. On the positive side, Road & Rail, Education, Gaming, Retail, HMO, Hospital, Drug, Biotech, Medical, Bank, Wireless, Telecom, Computer Service and Internet shares are especially strong, rising more than +1.0%. Tech and Transport shares are outperforming. The Portugal sovereign cds is falling -2.45% to 664.54 bps and the Italy sovereign cds is declining -2.0% to 151.99 bps. The UBS-Bloomberg Spot Ag Index is falling -.96%. On the negative side, Construction, Disk Drive, Steel and Coal shares are under pressure, falling more than -.75%. Copper is declining -1.6%, oil is rising +.83% and lumber is falling another -2.21%. The US price for a gallon of gas is rising .01/gallon today to $3.88/gallon. It is up .76/gallon in 71 days. The Greece, Ireland and Portugal sovereign cds are still near or at record highs.The US dollar continues to trade very poorly, which remains a huge longer-term negative for the US economy and stocks. The Shanghai Composite, after opening higher, reversed and fell another -.49% last night, finishing near session lows. Brazil shares are also weak today with the Bovespa dropping -1.29%. The broad market continues to trade very well and further short-covering, after a brief pause, is likely. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less tech/financial sector pessimism, earnings optimism, buyout speculation, more economic optimism, investor performance angst, less fed uncertainty and technical buying.
Fed Says Recovery is 'Moderate'; Bond Buying to End in June. Federal Reserve policy makers said the economy is recovering at a “moderate pace” and a pickup in inflation is likely to be temporary, as they agreed to finish $600 billion of bond purchases on schedule in June. “The economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually,” the Federal Open Market Committee said today in its statement after a two-day meeting in Washington. “Increases in the prices of energy and other commodities have pushed up inflation in recent months,” and the Fed expects “these effects to be transitory,” the statement said. The Fed, discussing its securities portfolio, said it “is prepared to adjust those holdings as needed to best foster maximum employment and price stability.” “The Fed’s view of the world hasn’t changed very much,” Gary Stern, former president of the Minneapolis Fed, said in an interview with Bloomberg Radio. “They continue to emphasize the transitory nature of inflation” and “continue to talk about the economy improving at a moderate pace.” The Fed left its benchmark interest rate in a range of zero to 0.25 percent, where it’s been since December 2008, and retained a pledge in place since March 2009 to keep it “exceptionally low” for an “extended period.” “The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate” for stable prices and maximum employment, the Fed said. The “depressed” housing industry remains a weak spot in the economy, it said. The Fed repeated that it will “pay close attention to the evolution of inflation and inflation expectations.” Food and beverage prices rose in the first quarter by the most since 2008, based on the Labor Department’s Consumer Price Index, while the cost of regular-unleaded gasoline has increased by 26 percent this year to $3.88 a gallon as of yesterday.The increases helped slow U.S. growth to a 2 percent pace in the first quarter, according to the median estimate of analysts surveyed by Bloomberg News, from 3.1 percent in the prior period. Since the Fed announced the second round of asset purchases on Nov. 3, yields on 10-year Treasuries increased to 3.31 percent as of yesterday from 2.57 percent. The dollar weakened by 3.5 percent to the lowest since August 2008 against an index of six currencies. Bernanke is still seeing objections from politicians within the U.S. and abroad almost six months after the Fed began the unprecedented second round of asset purchases. Senator Mark Kirk, a first-term Republican from Illinois, sent Bernanke a letter on April 25 expressing concern about inflation. He called for an early end to asset purchases should Bernanke “also find the trends that I have now heard widely about.” Russian Prime Minister Vladimir Putin said last week that compared with the U.S., his country doesn’t have the “same opportunity to make trouble.” The U.S. is “financing the government by using a printing press,” he said.
U.S. Durable-Goods Orders Rise for Third Month as Equipment Is Replenished. Demand for U.S. durable goods rose in March for a third consecutive month, indicating business investment will pick up. Bookings for equipment meant to last at least three years climbed 2.5 percent after a 0.7 percent gain the prior month that reversed a previously reported drop, the Commerce Department said today in Washington. The increase reflected growing demand for machinery, computers and automobiles. Orders excluding transportation equipment rose 1.3 percent, the best performance so far this year. Orders for non-defense capital goods excluding aircraft, items like computers and communications gear, increased 3.7 percent after increasing 0.5 percent the prior month. Shipments of such goods, used in calculating gross domestic product, increased 2.2 percent after increasing 0.4 percent.Demand for machinery rose 4.2 percent, increased 10 percent for computers and related products and rose 3.7 percent for autos. Economists may mark up forecasts for first-quarter gross domestic product after the report showed inventories jumped. Stockpiles grew by 1.3 percent in March, the same as in the prior month.
Gold Futures Surge to Record on Outlook for Sagging Dollar, Low U.S. Rates. Gold futures rose to a record $1,524.20 an ounce on speculation that the Federal Reservewill be slow to raise U.S. borrowing costs, weakening the dollar and boosting the appeal of the precious metal as an alternative asset. The dollar fell to the lowest since December 2009 against the euro after the Fed kept borrowing costs at a record low and said it would continue $600 billion in bond purchases through June. Gold futures for June delivery rose $13.60, or 0.9 percent, to settle at $1,517.10 at 1:48 p.m. on the Comex in New York. After the close, the metal reached the all-time high. The price has gained 31 percent in the past year.
Crude Oil Futures Increase After Report Shows U.S. Fuel Stockpile Decline. Crude oil increased after a U.S. Energy Department report showed that gasoline stockpiles tumbled to the lowest level since August 2009. Futures climbed as much as 0.8 percent after the department said gasoline inventories fell 2.51 million barrels to 205.6 million last week. “Gasoline supplies are definitely on the light side,” said Kyle Cooper, director of research for IAF Advisors in Houston. “With gasoline supplies falling and prices climbing, refiners can pay more for oil. They are going pay more to take delivery of extra barrels of crude because they know they will make money processing it into gasoline.” Crude oil for June delivery rose 41 cents, or 0.4 percent, to $112.62 a barrel at 1:31 a.m. on the New York Mercantile Exchange. Prices are up 37 percent from a year ago. Regular gasoline at the pump, averaged nationwide, increased 1 cent to $3.879 a gallon yesterday, the highest level since Aug. 3, 2008, AAA said on its website. Gasoline demand rose 0.8 percent to 9.06 million barrels a day over the past four weeks, 1.6 percent lower than a year earlier, according to the report. Refineries operated at 82.7 percent of capacity, up 0.2 percentage point from the prior week. That’s down from 89 percent of capacity a year earlier.
Radiation Readings at Stricken Japanese Plant Rise to Highest in Crisis. Radiation readings at Japan’s Fukushima Dai-Ichi station rose to the highest since an earthquake and tsunami knocked out cooling systems, impeding efforts to contain the worst nuclear crisis since Chernobyl. Two robots sent into the reactor No. 1 building at the plant yesterday took readings as high as 1,120 millisierverts of radiation per hour, Junichi Matsumoto, a general manager at Tokyo Electric Power Co., said today. That’s more than four times the annual dose permitted to nuclear workers at the stricken plant. “Tepco must figure out the source of high radiation,” said Hironobu Unesaki, a nuclear engineering professor at Kyoto University. “If it’s from contaminated water leaking from inside the reactor, Tepco’s so-called water tomb may be jeopardized because flooding the containment vessel will result in more radiation in the building.”
Greek, Portuguese Yields, CDS Reach Records as El-Erian Sees 'Lost Decade'. Greek, Irish and Portuguese bonds slumped and costs to insure the securities against default climbed to all-time highs as concern deepened that the nations will need to restructure their debts. Greek two-year yields rose above 25 percent for the first time, while 10-year yields advanced to euro-era highs for the ninth consecutive day. Portuguese two- and 10-year and Irish 10- year yields also reached records. German two-year notes slid as a report showed inflation in Europe’s largest economy accelerated in April and the nation sold 10-year bonds. “The talk about restructuring or rescheduling of Greek debt is not going away,” said Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London. “As long as no one can offer the market reassurance that there isn’t going to be a rescheduling or a restructuring, then the market will keep on pricing in more and more.” Greek two-year yields surged as much as 171 basis points to 25.95 percent and were at 25.53 percent as of 4:17 p.m. in London. Ten-year yields soared as much as 101 basis points to 16.34 percent. Portuguese 10-year yields rose as much as 10 basis points to 9.71 percent, while two-year yields climbed 19 basis points to 11.87 percent, also records. The cost of insuring debt sold by Greece, Ireland and Portugal rose to records today, according to traders of credit- default swaps. Contracts on Greece jumped 21 basis points to 1,376 basis points, according to CMA. Contracts on Irish debt added 11 basis points to 685, while Portuguese swaps climbed seven basis points to 688. Greece faces the risk of a Latin American-style lost decade as a result of its debt crisis, Mohamed El-Erian, chief executive officer at Pacific Investment Management Co., the world’s biggest manager of bond funds, told Germany’s Handelsblatt. The extra yield, or spread, investors demand to hold Greek 10-year bonds instead of similar-maturity German bunds widened 81 basis points to 1,289 basis points, after reaching 1,305, the most since at least March 1998, when Bloomberg started collecting the data.
CFTC Proposes Protecting Swaps User Margin From Peer Default. The Commodity Futures Trading Commission approved a proposal to allow swaps users who post collateral to a clearinghouse to have their margin protected against another investor’s bankruptcy, a move that may increase trading costs.
PetroChina Profit Misses Estimates on State Fuel-Price Curbs. PetroChina Co., Asia’s biggest company by market value, posted a 14 percent gain in first- quarter profit, missing estimates, after increases in state- controlled fuel prices lagged behind gains in crude oil costs.China’s government raised fuel prices by less than 11 percent so far this year to contain inflation even as New York crude averaged 20 percent higher in the quarter from a year earlier. The higher price of oil increased PetroChina’s operating costs by 46 percent, according to the statement.
Apple(AAPL) Denies Tracking iPhone Locations. Apple Inc. (AAPL), facing scrutiny from consumers and lawmakers over data collection on its iPhone, said it isn’t tracking customers’ location and plans to retain less information on the device. “Apple is not tracking the location of your iPhone,” the Cupertino, California-based company said in a statement today. “Apple has never done so and has no plans to ever do so.”
Wall Street Journal:
White House Releases Obama Birth Certificate. The White House on Wednesday released President Barack Obama's original "Certificate of Live Birth" from Hawaii amid persistent questions about his citizenship from some of his political opponents. Mr. Obama said he has watched the debate over his birthplace with "bemusement." Lawmakers from both parties, investigative reporters and others have probed his birthplace and confirmed "that yes, in fact, I was born in Hawaii on Aug. 4, 1961, in Kapiolani hospital."
MarketWatch:
Amazon's Bezos Defends Spending; Stock Tops High. Shares of Amazon.com Inc. shares jumped to a record high Wednesday following strong first-quarter sales growth, as well as a letter from Chief Executive Jeff Bezos that defended the company’s massive investments in technology and infrastructure. By early afternoon, Amazon(AMZN) stock was up more than 6% to $193.43. The shares have risen more than 20% in the last six weeks
CNBC.com:
A Major Bear Goes Bullish. David Rosenberg, the curmudgeonly senior strategist and economist at Gluskin Sheff in Toronto, told clients Wednesday in his daily newsletter that he’s finally given up his long-held position that the market is heading for a thud, if not an all-out crash.
Lobbyist Fires Warning Shot Over Donation Disclosure Plan. After a brief truce of sorts between the White House and business leaders, the top lobbyist at the U.S. Chamber of Commerce took aim at President Obama on Tuesday over an as-yet unannounced plan to force government contractors to disclose their political giving. The lobbyist, R. Bruce Josten, said in an interview that the powerful business bloc “is not going to tolerate” what it saw as a “backdoor attempt” by the White House to silence private-sector opponents by disclosing their political spending. Mr. Josten said the chamber was concerned about a variety of Obama administration policies that it considered potentially damaging to businesses in a time of economic uncertainty. Those concerns include the efforts to carry out last year’s health care plan, a vast expansion of business regulations under the Dodd-Frank measure passed by Congress and the slow pace of new trade agreements with foreign nations. American businesses “are losing market share” globally to countries like Canada that have enacted new trade pacts, Mr. Josten said. “The rest of the world — while we’re sitting around doing nothing — is racing ahead.”
Washington Post:
Trump's Donation History Shows Democratic Favoritism. Billionaire Donald J. Trump, an early presidential favorite among tea party activists, has a highly unusual history of political contributions for a prospective Republican candidate: He has given most of his money to the other side. Recipients include Senate Majority Leader Harry M. Reid(Nev.), former Pennsylvania governor Edward G. Rendell, and Rahm Emanuel, a former aide to President Obama who received $50,000 from Trump during his recent run to become Chicago’s mayor, records show.
Circumcision Ban a Step Closer to the Ballot. The ban would outlaw circumcision in the city on any male under 18 years old - even for religious reasons. Breaking the law would count as a misdemeanor punishable by a fine of up to $1,000 and jail time for up to a year. Opponents say the ballot measure would never stand up in court because it violates the freedom of religion clause of the U.S. Constitution.
Boston Herald:
Jack Welch: Fed's Free Money Policies Court Disaster. Former General Electric CEO Jack Welch is warning that the Federal Reserve’s easy-money policies will eventually cause a major economic “blowout.” Speaking at the Massachusetts Institute of Technology yesterday, Welch slammed the Fed’s decision to keep the interest that banks pay for money at essentially zero percent since Wall Street crashed in 2008. “We’re at this point now where money is (interest) free,” Welch said in a speech at the Sloan School of Management. “With free money ... something’s going to blow here — and blow big. Because you can’t have free money and (Wall Street) risk-taking all in the same culture and not expect a blowout.”
Reuters:
Apple(AAPL) to Sell iPad 2 in India From April 29. Apple's iPad 2 will be available in Indian stores from Friday, just over a month after the company started selling the updated version of its popular tablet device in the United States.
China to Keep Family Planning Policy. China will stick to its current family planning policy and maintain a low birth rate, citing Chinese president Hu Jintao.
Dawn.com:
Pakistan Government Expects $981 Million From US by June. ISLAMABAD: Expecting a disbursement of $981 million by the US by June this year under the coalition support fund and Kerry-Lugar-Berman Act, Finance Minister Dr Abdul Hafeez Shaikh on Tuesday identified five major challenges of the next year’s budget.
Japan Debt Outlook Cut to 'Negative' by S&P on Reconstruction. Japan’s sovereign-rating outlook was cut to “negative” by Standard & Poor’s as the nation’s reconstruction needs following last month’s earthquake will likely add to what’s already the world’s biggest debt load. The outlook on Japan’s local-currency debt rating, at AA-, the fourth-highest grade, was lowered from “stable,” S&P said in a statement today. The company had reduced the rating by one step in January in the first cut since 2002. Moody’s Investors Service said last month the disaster may bring forward the “tipping point” for the country’s bond market. Today’s decision adds to pressure on Prime Minister Naoto Kan, who has yet to detail how the rebuilding will be paid for and how he plans to rein in longer-term fiscal deficits. As public spending increases, revenue will likely decline because of the economic hit from the disaster, with a report today showing retail sales tumbled the most in 13 years last month. “Japan has repeatedly suffered under poor leadership, but this disaster has made that point even clearer,” said Noriaki Matsuoka, an economist at Daiwa Asset Management Co. in Tokyo. “The government needs to decide how it’s going to fund its next reconstruction package.”
China's Slumping Small-Caps Haven't Hit Bottom on Earnings, GF Fund Says. Chinese small-company stocks will extend the steepest two-day drop in three months as more companies miss profit estimates amid government tightening, said GF Fund Management Co., China’s sixth-biggest asset manager. The CSI Smallcap 500 Index (SH000905) slumped 1.7 percent to 4,970.57 yesterday, capping a two-day, 3.8 percent retreat that’s the most since Jan. 18. The CSI 300 Index of larger companies slid 2.1 percent during the same two-day period. The ChiNext index of start-up companies dropped to the lowest since October. Earnings per-share at the 320 companies that have released first-quarter earnings in the 500-member small-cap index trailed analysts’ estimates by 14 percent, according to data compiled by Bloomberg. “Earnings expectations for small caps were too high and many of them failed to meet expectations,” said Chen Shide, a Guangzhou-based manager of small-cap stocks at GF Fund, which oversees about $15.9 billion. “Small caps definitely haven’t reached a bottom yet. Investors are now beginning to pay for ramping up share prices over the past two years.”
LivingSocial Buyers Richer, Smarter Than Groupon's, Study Says. People who buy online coupons from LivingSocial are richer, younger and smarter than customers of market leader Groupon Inc., according to a study by Nielsen Co. LivingSocial users are 49 percent more likely than the average American online to make at least $150,000 a year, compared with 30 percent for Groupon, according to the survey released today. They are also more likely to be younger than 35 and to have college or graduate degrees.
Regeneron(REGN), Sanofi Therapy Extends Lives of Colorectal Cancer Patients. Regeneron Pharmaceuticals Inc. (REGN) and Sanofi-Aventis SA (SAN) said an experimental drug used in combination with chemotherapy extended the lives of patients with advanced colorectal cancer in a study. Shares rose as much as 12 percent in extended trading.
Australian Consumer Prices Advance 1.6%, Most Since 2006. Australian consumer prices gained the most in five years in the first quarter as natural disasters boosted food costs and Middle East tensions drove fuel bills higher. The consumer price index rose 1.6 percent from the previous three months, the biggest jump since 2006, the Bureau of Statistics said in Sydney today. That was more than the 1.2 percent median estimate in a Bloomberg News survey of 26 economists. Prices were 3.3 percent higher than a year earlier.
Threatened Florida Everglades Need U.S. EPA to Police Cleanup, Judge Rules. The U.S. Environmental Protection Agency should step in to protect the Florida Everglades because state authorities haven’t done enough, a federal judge in Miami ruled. The state of Florida and the South Florida Water Management District “have not been true stewards of protecting the Everglades in recent years,” U.S. District Judge Alan S. Gold wrote in today’s ruling. “It is now, and has been for a while, time to take concrete and substantial progress toward preserving the Everglades before this national treasure is permanently destroyed to the extent of irreparable destruction,” Gold said. The Miccosukee Tribe of Indians of Florida, whose members are the only residents of the Everglades, sued the U.S. and the EPA in June 2004. The tribe is seeking to force the government to review and disapprove an amended version of the Everglades Forever Act, a law passed by the Florida Legislature in 1994 to resolve litigation over a plan to clean up the wetlands, according to Gold’s ruling.
Fed's 'Extended Period' Pledge May End in 2011, Economists Say. Federal Reserve officials will probably prepare to pull back from record stimulus by dropping a pledge this year to hold the main interest rate near zero for an “extended period,” according to a Bloomberg News survey. Thirty-three of 44 economists surveyed said the central bank will remove the two-word phrase from its post-meeting statement in 2011, with 18 betting it will move by September. The Fed may wait until 2012 to announce sales of mortgage or Treasury securities it bought to reduce borrowing costs, with 26 respondents expecting a plan next year, according to the survey, conducted from April 20 to April 25.
Wall Street Journal:
Karzai Told to Dump U.S. Pakistan Urges Afghanistan to Ally With Islamabad, Beijing. Pakistan is lobbying Afghanistan's president against building a long-term strategic partnership with the U.S., urging him instead to look to Pakistan—and its Chinese ally—for help in striking a peace deal with the Taliban and rebuilding the economy, Afghan officials say. The pitch was made at an April 16 meeting in Kabul by Pakistani Prime Minister Yousuf Raza Gilani, who bluntly told Afghan President Hamid Karzai that the Americans had failed them both, according to Afghans familiar with the meeting.
Silver Rush Spreads to Stock Market. The mania for silver has spread to the stock market as day traders pile into the buying. Trading got so heated during the past two days that shares traded in the iShares Silver Trust, the biggest exchange-traded fund tracking the price of silver, topped that of the SPDR S&P 500 ETF, usually one of the most actively traded securities in the world. Day traders "are going crazy," says Joseph Saluzzi, co-head of trading at brokerage firm Themis Trading. "It's typical of the bubbly speculation that's been going on in silver."
Libyan Rebels Jolted by Counterattack. Col. Moammar Gadhafi's forces launched a surprise ground and artillery attack Tuesday against this city's port, threatening Misrata's sole lifeline to the world just two days after rebels drove the last government forces out of the city.
Silicon Valley Office Market Booms. Technology firms, from tiny start-ups to giants like Google Inc., are again racing to expand, sparking a turnaround in the Silicon Valley office market that seemed far off just a few months ago. The amount of occupied office space in the area is on pace to increase by three million square feet this year, which would be the biggest one-year jump since 1999, according to Jones Lang LaSalle Inc. Rents for the best space in the most highly desired market, downtown Palo Alto, are up 25% from a year ago, while the vacancy rate has fallen to about 7%, the brokerage firm says.
Barclays(BCS) to Sell Some U.S. Properties, Loans. In one of the largest commercial real-estate offerings by a bank in recent months, Barclays Capital is looking to sell commercial real-estate loans and properties on which it has foreclosed.
US Truck Tonnage Up in March Despite Fuel Prices. The index that tracks tonnage hauled by American trucks rose in March despite rising fuel prices, on the back of the ongoing economic recovery. The American Trucking Associations' advance seasonally adjusted For-Hire Truck Tonnage Index rose 1.7 percent in March, after falling a revised 2.7 percent in February. "While I still think the industry will continue to grow and recover from the weak freight environment we've seen in recent years, the rapid spike in fuel prices will slow that growth," said ATA chief economist Bob Costello in a note. Higher fuel prices might cut into consumer spending, which will hurt the trucking industry as the tonnage of goods transported drops. Year-on-year, tonnage hauled climbed a seasonally adjusted 6.3 percent.
Shippers May Raise Fuel Fees. These should be good times for railroads and trucking companies. After all, an improving economy means that more goods and commodities need to be delivered to the nation’s ports and department stores. But rising fuel prices have taken a toll on their business.
Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 22% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty percent (40%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -18 (see trends).
USA Today:
Traditional Incandescent Bulbs on Their Way Out Starting Jan. 1. The United States is on the verge of a lighting revolution that will oust the traditional incandescent in favor of more energy efficient (and less polluting) alternatives. Are you ready? On Jan. 1, nationwide, a new federal law means the 100-watt incandescent will start disappearing from store shelves. Instead, an expanding line of alternative bulbs will be sold bearing new nutrition-like labels on their boxes. The labels will tout a bulb's lumens, a measure of brightness, rather than its wattage, a measure of energy use. They will also estimate its yearly energy cost.
Reuters:
BofA(BAC) to Introduce Credit Card Penalty Rates in June. Bank of America Corp, one of the largest U.S. credit card issuers, plans to start charging penalty interest rates for credit card customers who miss payments. Beginning on June 25, the bank will begin charging a penalty rate of as much as 29.99 percent to customers who make late payments on their credit card balances, a company spokeswoman confirmed on Tuesday. Unlike a wholesale interest rate increase, borrowers would be charged the penalty rate only on new purchases after the rate is changed, and a customer will receive 45 days advance notice of any penalty rate being placed on their account.
Deadlock in Libya Exposes International Rifts. Military deadlock in Libya has exposed growing international rifts, with critics of NATO bombing calling it another case of the West trying to overthrow a regime by stretching the terms of a U.N. resolution. "Is there a lack of such crooked regimes in the world?" Russian Prime Minister Vladimir Putin asked on Tuesday. "Are we going to bomb everywhere and conduct missile strikes?" And a senior African Union official accused Western nations of undermining an AU peace plan that would not require the departure from power of Muammar Gaddafi. British and U.S. officials met on Tuesday to discuss how to step up military pressure on Gaddafi, as the Libyan leader's army fought fierce clashes with rebels in besieged Misrata. More than a month of British and French-led NATO air strikes have failed to dislodge Gaddafi or bring major gains for anti-government rebels who hold much of east Libya.
Sony Playstation Suffers Massive Data Breach. Sony Corp suffered a massive breach in its video game online network that led to the theft of names, addresses and possibly credit card data belonging to 77 million user accounts in what is one of the largest-ever Internet security break-ins.
Amazon(AMZN), Spending Aggressively, Expects Rosy Revenue. Amazon.com gave a confident revenue forecast that suggested its aggressive expansion into new businesses is paying off, soothing concerns about its slimmed-down profit margin. Shares were down 1.2 percent after Amazon reported a 32.8 percent decline in first-quarter profits. But that was a far cry from the big sell-off when the company last reported quarterly results and shares lost 9 percent.
Broadcom(BRCM) Revenue Forecast Disappoints, Shares Fall. Chipmaker Broadcom Corp forecast current-quarter revenue below Wall Street estimates, pushing its shares down 8 percent as some investors worried the shortfall might last beyond the quarter. Blaming weak demand on key cellphone customers, Broadcom forecast a second-quarter revenue range with a midpoint of $1.8 billion, compared with average Wall Street expectations of $1.9 billion, according to Thomson Reuters I/B/E/S. The warning is likely the result of a bleak outlook from Nokia Corp and some weakness at Samsung Electronics, according to analysts.
Panera(PNRA) Raises 2011 Earnings Forecast. Panera Bread Co (PNRA.O) raised its full-year earnings forecast above Wall Street's target after its first-quarter profit topped expectations, sending its shares up 1.7 percent.
Financial Times:
The U.S. government may review its system of expediting visas for Chinese officials and their families after China's government canceled several bilateral academic and cultural programs, citing a U.S. official.
Financial Times Deutschland:
Germany exiting nuclear power would not result in a burden to the environment as additional carbon dioxide emissions from coal-fired plants would be offset elsewhere, citing comments by Jochen Flasbarth, president of the country's Federal Environment Agency.
NHK:
Tokyo Electric Power Co. said the spent-fuel cooling pool of the No. 4 reactor at its Fukushima Dai-Ichi nuclear plant may be leaking water. Tepco thinks an explosion last month may have caused the leak and will investigate further.
China News Service:
China is studying rules to control developers' profits to keep home prices at a reasonable level, citing Xu Kunlin, head of the National Development and Reform Commission's pricing supervision department.
Economic Observer:
China's top economic planning agency has arranged to meet with several large domestic coal producers this morning at which the government will ask the companies to "appropriately" control price increases, citing a person familiar with the situation.
China Securities Journal:
China may increase tightening of the property market, citing people from the real estate industry. The nation may require down payments of 50% for first-home purchases if property prices continue to rise, citing a loan official at a domestic bank. China's land ministry will also issue policies to control the price of land. The banking regulator may also tighten regulation of loans trust companies extend to developers.
China should reduce dollar holdings in its foreign-exchange reserves as dollar assets have falling yields and rising risks, the China Securities Journal said in a front-page editorial.
Evening Recommendations Citigroup:
Upgraded (IACI) to Buy, target raised to $42.
Upgraded (LO) to Buy, target raised to $122.
Reiterated Buy on (HSY), boosted target to $64.
Reiterated Buy on (AMG), target $128.
BMO Capital Markets:
Rated (MSTR) Outperform, target $180.
Night Trading
Asian equity indices are +.25% to +1.0% on average.
Asia Ex-Japan Investment Grade CDS Index 104.50 unch.
Durable Goods Orders for March are estimated to rise +2.3% versus a -.9% decline in February.
Durables Ex Transports for March are estimated to rise +2.0% versus a -.6% decline in February.
Cap Goods Orders Nondef Ex Air for March are estimated to rise +3.8% versus a -1.3% decline in February.
10:30 am EST
Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,700,000 barrels versus a -2,322,000 barrel decline the prior week. Distillate inventories are expected to rise by +250,000 barrels versus a -2,504,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,000,000 barrels versus a -1,583,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.88% versus a +1.1% gain the prior week.
12:30 pm EST
The FOMC is expected to leave the benchmark fed funds rate at .25%.
2:15 pm EST
Bernanke speaks at Fed Press Conference.
Upcoming Splits
None of note
Other Potential Market Movers
The weekly MBA mortgage applications report and the 5-Year Treasury Notes Auction could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by technology and automaker shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
North American Investment Grade CDS Index 92.59 -.90%
European Financial Sector CDS Index 91.25 +1.76%
Western Europe Sovereign Debt CDS Index 192.62 +1.69%
Emerging Market CDS Index 203.57 -.29%
2-Year Swap Spread 18.0 unch.
TED Spread 22.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .05% unch.
Yield Curve 269.0 -3 bps
China Import Iron Ore Spot $178.90/Metric Tonne unch.
Citi US Economic Surprise Index 12.10 +1.9 points
10-Year TIPS Spread 2.57% -2 bps
Overseas Futures:
Nikkei Futures: Indicating +102 open in Japan
DAX Futures: Indicating +33 open in Germany
Portfolio:
Higher: On gains in my Medical, Biotech, Retail and Tech sector longs
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 surges to a new multi-year high, despite US/European debt fears, emerging markets inflation worries and Mideast unrest. On the positive side, Airline, Road & Rail, HMO, Hospital, Paper, Tobacco and Biotech shares are especially strong, rising more than +1.75%. Small-caps and cyclicals are outperforming. The Transports are also hitting a multi-year high. Copper is rising +.38%. The 10-Year Yield is falling -6 bps to 3.31%. The US Muni CDS Index is falling -2.44% to 137.86 bps. Weekly retail sales jumped +5.0%, which is the largest percentage increase since the week of May 2, 2006. On the negative side, Restaurant, Construction, Computer and Coal shares are lower on the day. Lumber is falling another -2.38%. The US price for a gallon of gas is rising .01/gallon today to $3.87/gallon. It is up .75/gallon in 70 days. The Greece sovereign cds is climbing +5.72% to 1,435.67 bps, the Ireland sovereign cds is rising +3.35% to 662.63 bps and the Portugal sovereign cds is rising +2.41% to 675.50 bps. The Greece, Ireland and Portugal sovereign cds are now all at new record highs.The US dollar continues to trade very poorly. The Shanghai Composite fell another -.88% last night, breaking below its 50-day moving average. The China 7-Day Repo Rate jumped +56 bps to 4.43% last night, which is the highest level since February 23rd. I suspect volatility will increase tomorrow, but stock action will be rather muted in response to the Fed's comments. Bonds may weaken after recent gains. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less tech sector pessimism, earnings optimism, buyout speculation, falling long-term rates and technical buying.
