Bull Radar

Style Outperformer:

• Mid-Cap Value +.17%

Sector Outperformers:

• 1) Oil Tankers +2.81% 2) Coal +2.7% 3) Road & Rail +2.69%

Stocks Rising on Unusual Volume:

• VECO, CREE, CYN, STI, SCHL, JVA, ITMN, ADTN, SZYM, RBCN, NUVA, CME, OVTI, CSX, OSG, MBI, ACI, BTU, ABD and AFFY
  

Stocks With Unusual Call Option Activity:

• 1) ITMN 2) BTU 3) TIVO 4) GES 5) DLPH
  

Stocks With Most Positive News Mentions:

• 1) UNP 2) LVLT 3) VECO 4) LMT 5) GEOI
  

Charts:

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

Thursday Watch

Evening Headlines
Bloomberg:

• Fitch Puts U.K. Debt on Negative Outlook Days Away From Budget. Fitch Ratings said Britain risks losing its top investment grade because of its limited ability to deal with shocks, days before Chancellor of the Exchequer George Osborne will present his annual budget. Fitch changed the outlook on Britain to “negative” from “stable,” indicating a “slightly greater” than 50 percent chance that the AAA rating will be reduced within two years, the company said in a statement in London late yesterday, citing the weak economic recovery, high debt levels and threats from Europe’s debt crisis. Osborne will meet coalition partners later this week to agree on a budget he will present on March 21. The decision “reflects the very limited fiscal space to absorb further economic shocks in light of such elevated debt levels and a potentially weaker than currently forecast economic recovery,” Fitch said.
• Spanish Stocks Left Out of Rally on Rajoy Budget Gap Skepticism. Spanish stocks are the only developed market suffering losses this year as Prime Minister Mariano Rajoy fails to rein in the budget deficit fast enough to assure investors. The IBEX 35 Index (IBEX) has dropped 2.1 percent in 2012, the only decline among 24 developed markets tracked by Bloomberg. That compares with an 11 percent rally in the Stoxx Europe 600 Index (SXXP), the best start to a year since 1998. The Spanish gauge has erased all gains that followed the European Central Bank’s Dec. 8 announcement of unlimited three-year loans for banks at below- market borrowing costs. Investors are shunning Spain after Rajoy said the budget deficit will be higher than forecast while Germany praised Italian Prime Minister Mario Monti’s “bold” austerity measures. Spanish benchmark borrowing costs rose above Italy’s for the first time in almost eight months in March, while analysts have cut profit estimates for Spain this year at the fastest pace among Europe’s 10 largest markets. “Since you got Monti in Italy, the market has said, ‘Fine, Italy is in safe pair of hands,’” said Jacob de Tusch-Lec, a fund manager who helps oversee $18 billion at Artemis Investment Management in London. “It is tough to see in Spain for now what can resolve the crisis. Things are so bad that as an investor you ask yourself, ‘Do I need to be there?’”
• Republicans Accuse IRS of Scrutinizing Tea Party Groups. Senate Republicans today expressed concern that the Internal Revenue Service was singling out Tea Party groups for extra scrutiny in deciding whether to grant them tax-exempt status. “It is critical that the public have confidence that federal tax compliance efforts are pursued in a fair, even- handed, and transparent manner - without regard to politics of any kind,” the senators wrote to IRS Commissioner Douglas Shulman.
• Oil-and-Gas Boom Interrupts Greening of America: Caroline Baum. Anecdotes are no substitute for hard data. But when they start to reach a critical mass and they all tell the same story, you know something big is going on. -- A longtime car salesman relocates to south Texas to capitalize on the soaring demand for truckers to haul sand to hydraulic fracturing sites across the Eagle Ford shale formation. Nearby, the Corpus Christie School District can’t find bus drivers, who are getting paid a lot more to cart sand. -- Workers pour into Williston, North Dakota, drawn by offers of six-figure salaries for jobs connected with the Bakken shale formation. Even though housing development is sky- rocketing, the Wal-Mart parking lot looks like an RV park, packed with campers providing temporary living quarters until housing construction catches up with demand. -- There is no oil-and-gas drilling in Idaho, but Fleetwood Homes has been ramping up production and hiring workers to build pre-fab homes for shipment to the Bakken oil field in North Dakota, according to the Wall Street Journal. -- Energy independence, the Holy Grail for every U.S. president since Jimmy Carter, is within reach, oil-industry executives and analysts tell NPR. Within the next 10 years, the U.S. will no longer have to import crude oil and will be able to export natural gas, energy economist Philip Verleger says. PFC Energy Chief Executive Officer Robin West compares the impact of the “shale gale” to the fall of the Berlin Wall. -- Some long-haul trucking companies are converting to natural gas because of the cost advantage over diesel, according to Bloomberg News. Fleet owners that don’t convert a portion of their vehicles to natural gas will find themselves at an economic disadvantage. For anyone who hasn’t read or heard about it yet, there’s an oil-and-gas boom under way in the U.S. By some estimates, the U.S. has three times the proven shale oil reserves of Saudi Arabia.
• Watch Bernanke's 'Little' Inflation Capsize U.S.: Amity Shlaes. The thing about inflation is that it comes out of nowhere and hits you. Monetary policy is like sailing. You’re gliding along, passing the peninsula, and you come about. Nothing. Then the wind fills the sail so fast it knocks you into the sea. Right now, the U.S. is a sailboat that has just made open water, and has already come about. That wind is coming. The sailor just doesn’t know it.
• Wise Up on Goldman Sachs(GS). In his extraordinarily public resignation letter, Greg Smith, who had spent time recruiting the best and the brightest to Goldman Sachs, wrote, “I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.” The proper functioning of Wall Street is too vital to the economy to tolerate the duplicitous practices of Goldman Sachs and firms like it, especially after what the American people did to rescue these businesses in their darkest hours. The country’s political class appears to lack the power or will to hold large financial institutions to account. There is a massive leadership vacuum at the top of Wall Street today; and it’s quite possible that only continued, relentless public shaming will force the leaders of these firms to make the kinds of cultural changes necessary to bring their actions in line with normative behavior.
• China's Foreign Direct Investment Falls for Fourth Month. Foreign direct investment in China fell for a fourth straight month in February as companies reined in spending amid a slowdown in the world’s second-biggest economy and the prolonged European debt crisis. Investment declined 0.9 percent to $7.73 billion last month from a year earlier, the Ministry of Commerce said in a statement today, following a 0.3 percent drop in January. Overseas spending in the first two months decreased 0.6 percent to $17.7 billion. The outlook for foreign investment in China is “grim,” ministry spokesman Shen Danyang said last month, citing “slack” external demand, rising operating costs and funding difficulties faced by some companies.
• Buffett, Branson, Clooney, Among Guest for Cameron State Dinner. Billionaires Warren Buffett and Richard Branson and actor George Clooney are among the guests invited by President Barack Obama to a state dinner honoring U.K. Prime Minister David Cameron. The guest list released by the White House before tonight’s dinner includes business executives, government officials, entertainers and Obama political allies and donors. Joining Buffett, the chairman of Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A), and Branson, founder of Virgin Group Ltd., are Blackstone Group LP President Tony James, Orin Kramer of Boston Provident Partners LP, movie producer Harvey Weinstein and Supreme Court Justice Antonin Scalia. It also includes Obama supporters such as Matthew Barzun, a former CNET Networks Inc. executive, who is leading fundraising for the president’s re-election campaign and Terry McAuliffe, a former Democratic National Committee chairman, and Neil Bluhm, a Chicago billionaire and co-chairman of Urban Shopping Centers Inc. (URB), who is an Obama fundraiser. The guests will dine on three courses and dessert, starting out with crisped halibut with potato crust, according the menu released by the White House. The main course is bison Wellington, which the menu describes as “a perfect pairing of U.S. and U.K. cultures.” As with the last two state dinners, the menu notes only that “an American wine will be paired with each course.” The White House hasn’t listed the wines on menus since Obama’s dinner in January 2011 for Chinese President Hu Jintao. One of the wines served then was a top-rated 2005 Cabernet Sauvignon from Washington state that originally sold for $115 a bottle and went for as much as $399 by the time of the dinner. While the White House paid a price closer to the $115 price, according to the vintner, some Obama critics highlighted the higher price as an extravagance.
• Rice Prices 10-30% Higher in Many Asian Nations. A number of countries in the Asia Pacific region have come close to their limit for agricultural expansion, Jose Graziano da Silva, director general of the Food and Agriculture Organization, said in prepared statement to be delivered at a conference in Hanoi today. High food prices and volatility remain a threat to nations, with retail rice prices in many Asian countries 10 percent to 30 percent higher than in 2011, according to the remarks.
  
• U.S. May Sanction India Over Level of Iran-Oil Imports. Obama administration officials say they are worried India may run afoul of a new U.S. law restricting payments for Iranian oil, forcing the White House to impose sanctions on one of its most important allies in Asia.
  

Wall Street Journal:

• Euro-Zone Firms Find Loans Hard to Get. Portuguese leather-goods maker Antonio & Mateus Ltd. had a plan to cope with the country's economic downturn. The small manufacturer decided it needed to find clients abroad, and earlier this year it landed a large order for purses from a French company. With limited funds to start production for the new order, the company asked its longtime bank, Banco BPI SA, for a €25,000 ($32,560) loan. The request was turned down within three days, despite a clean banking record.
• Yahoo(YHOO) Is Big Gun in Facebook Fight. Yahoo Inc.'s patent suit against Facebook Inc. pits a weakened Internet pioneer against a fast-growing tech powerhouse, but some intellectual-property experts say it is Yahoo that has the power position in the fight. Experts in the field view the number and quality of Yahoo's patents as potent weapons against Facebook in what could be a long and costly legal battle as the social-networking website prepares for its long-awaited initial public offering.
• Google(GOOG) Gives Search a Refresh. Google Inc. is giving its tried-and-true Web-search formula a makeover as it tries to fix the shortcomings of today's technology and maintain its dominant market share. Over the next few months, Google's search engine will begin spitting out more than a list of blue Web links. It will also present more facts and direct answers to queries at the top of the search-results page.
• ESL Fund Seeks to Calm Concerns on Sears Vendors. Edward S. Lampert's hedge fund has stepped in to make sure make sure vendors continue to supply Sears Holdings Corp. stores by assuming some of the risk of financial institutions that provide a form of insurance to the vendors.
• New iPad: a Million More Pixels Than HDTV. Apple's(AAPL) iPad could be described as a personal display through which you see and manipulate text, graphics, photos and videos often delivered via the Internet. So, how has the company chosen to improve its wildly popular tablet? By making that display dramatically better and making the delivery of content dramatically faster.
• SEC Cracks Down on Pre-IPO Trading. Federal regulators are cracking down on an obscure but booming market for trading shares in companies before they go public. The Securities and Exchange Commission brought charges against two money managers, alleging they misled and overcharged investors on funds formed to buy shares of Facebook Inc., Twitter Inc. and other social-media companies.

Business Insider:

• Rod Blagojevich Just Gave An Utterly Bizarre Farewell Statement The Day Before He Goes To Prison For 14 Years.
• If Patents Are Weapons, These Companies Are Armed To The Teeth.
• Meredith Whitney: Invest In Citi(C)? Not In My Lifetime.
• 'Jerry Maguire' Memo Now Circulating Around Goldman Is Urging Employees To Follow Greg Smith And Quit.

Zero Hedge:

• The Vampire Squid's Problems. Smith’s sentiments are appreciated, but actually he is wrong about a fundamental point, at least in today’s business environment. Goldman doesn’t have to give a damn about its clients because the vampire squid has found a much more lucrative way of insuring their bottom line: government largesse. Let’s be clear: the bailout of AIG was not a bailout of AIG. It was a bailout of Goldman Sachs, to whom AIG were a counter-party. AIG’s failure would have meant Goldman’s balance sheet — already stuffed with derivatives dynamite — blew up. Goldman — along with a whole slew of other firms who created and invested in these dynamite products — would have been bankrupt. And so the real problem is not Goldman’s rapaciousness. It’s the fact that systemic rapacity is being subsidised and protected by the government. Malpractice and malinvestment — such as the current global derivatives mesh which spreads risk around balance sheets like a pandemic — will in nature always eventually be punished by failure. That’s precisely what we saw in 2008, and that’s precisely what governments around the world crystallised and condoned through their bailout programs. Goldman have no incentive to change their business practices under the present conditions, and they won’t.
• Is Syria Near The Tipping Point?
  

CNBC:

• Dodd-Frank Could Shutter May Community Banks: Former FDIC Chair. Community banks have a lot to fear from the Dodd-Frank financial reforms, which could put half of them out of business, former FDIC Chairman Bill Isaac told CNBC Wednesday.
• China Removes Top Leadership Contender Bo From Post. The Communist Party boss of China's southwestern city of Chongqing, Bo Xilai, has been removed, state news agency Xinhua said on Thursday, following a scandal involving a senior aide who took refuge in a U.S. diplomatic mission last month. Bo, who has been a high-profile contender for top leadership, has been the subject of much speculation since Vice Mayor Wang Lijun, his longtime police chief, went to ground in the U.S. Consulate in nearby Chengdu until he was coaxed out and placed under investigation. The incident and the rumors it fanned have blotted Bo's prospects of climbing to the Party's top ruling body when a new generation of leaders is unveiled at a meeting late this year.

IBD:

• Pioneer(PXD) Bets On West Texas Shale Oil To Rival Bakken.
  

NY Times:

• Public Exit From Goldman Sachs(GS) Raises Doubt Over a New Ethic.

Forbes:

• ObamaCare: If Possible, The News Is Getting Worse. ObamaCare is taking on water as we head into the second anniversary since it passed, and the news about the president’s signature legislation gets worse by the day. To mark the law’s two-year anniversary, the House of Representatives is planning a vote to repeal one of the law’s most unpopular provisions — the Independent Payment Advisory Board (IPAB), which many seniors fear will become Medicare’s rationing board. A few days later, the Supreme Court will hear a remarkable six hours of oral argument in the case with 26 states challenging the law’s constitutionality.

Boston Globe:

• Ben & Jerry's Renames Ice Cream Flavor to Support Gay Marriage.

Reuters:

• Guess(GES) Sees Weak Profit; Shares Drop. Guess Inc forecast a weak first-quarter profit as it expects belt-tightening by European governments to hurt consumer spending, sending the U.S. clothing maker's shares tumbling nearly 13 percent in trading after the bell. Consumers in Europe have been hit by austerity measures as governments look to curb spending amid a debt crisis that has threatened to tear the single-currency Euro zone apart. "We expect European consumers, many in the south of Europe, to be affected in the short term by the austerity plans unless something dramatic happens with credit, banking or consumer confidence there," Chief Executive Paul Marciano said on a conference call with analysts. Europe contributed about 40 percent to Guess' total revenue for the fiscal year ended January. The company also expects margins to be pressured early this year by an overhang of last year's rise in product costs.

Telegraph:

• Britain's Inflationary Route to Default. George Osborne’s idea of refinancing the national debt with 100-year gilts, or even gilts issued in perpetuity, is a bit too clever by half.

China Business News:

• Chinese Airlines' 1Q Profit May Drop 50% on Year. Airfares for domestic flights have dropped on year for the first time in three years. Airlines may post core operating losses in Feb. because of lower passenger and cargo volumes and high fuel prices, citing Zhu Feng, an analyst at Industrial Securities Co.

Securities Time:

• China Brokers Limit ChiNext Stock Account Openings. Chinese brokerage halted account openings for inexperienced investors for trading shares listed on the start-up company board, citing brokerage notices.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.50 to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 144.50 -2.5 basis points.
  
• Asia Pacific Sovereign CDS Index 118.75 -4.5 basis points.
• FTSE-100 futures +.07%.
  
• S&P 500 futures +.14%.
  
• NASDAQ 100 futures +.23%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ROST)/.85
• (SCHL)/-.69
• (DOLE)/-.12

Economic Releases
8:30 am EST

• Empire Manufacturing for March is estimated to fall to 17.5 versus 19.53 in February.
• The Producer Price Index for February is estimated to rise +.5% versus a +.1% gain in January.
• The PPI Ex Food & Energy for February is estimated to rise +.2% versus a +.4% gain in January.
• Initial Jobless Claims are estimated to fall to 357K versus 362K the prior week.
• Continuing Claims are estimated to fall to 3408K versus 3416K prior.
  

9:00 am EST

• Net Long-Term TIC Flows for January are estimated to rise to $38.5B versus $17.9B in December.

10:00 am EST

• Philly Fed for March is estimated to rise to 12.0 versus 10.2 in February.
  

Upcoming Splits

• (ALK) 2-for-1
  

Other Potential Market Movers

• The Spain/France bond auctions, EU Finance Ministers meeting, SNB rate decision, (STR) analyst day, (LRN) analyst meeting, (MDU) analyst meeting, (EPL) analyst day, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by real estate and industrial 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 day.

Stocks Slightly Lower into Final Hour on Falling Euro, Profit-Taking, Global Growth Fears, More Shorting

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 15.75 +6.42%
  
• ISE Sentiment Index 84.0 -10.64%
  
• Total Put/Call .80 -5.88%
  
• NYSE Arms .61 -59.19%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 91.63 -2.13%
  
• European Financial Sector CDS Index 153.72 -4.48%
  
• Western Europe Sovereign Debt CDS Index 235.0 -7.5%
  
• Emerging Market CDS Index 225.96 -1.34%
  
• 2-Year Swap Spread 26.25 unch.
  
• TED Spread 39.25 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -60.0 +3.75 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .08% unch.
  
• Yield Curve 189.0 +11 bps
  
• China Import Iron Ore Spot $144.30/Metric Tonne +.14%
  
• Citi US Economic Surprise Index 39.90 -1.1 points
  
• 10-Year TIPS Spread 2.38 +4 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating an unch. open in Japan
• DAX Futures: Indicating a +3 open in Germany

Portfolio:

• Slightly Higher: On gains in my Retail and Tech sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, added to my (EEM) short
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish, as the S&P 500 trades near session lows despite falling energy prices, less Eurozone debt angst and another surge in market leader (AAPL). On the positive side, Defense, Computer Service, Bank, HMO and Restaurant shares are higher on the day. Oil is falling -1.03%, Lumber is rising +1.3% and Gold is down -2.0%. The 10Y Yield is rising +15 bps to 2.27%. Major Asian indices rose around +1.0% overnight with the exception of Shanghai, which fell -2.6% on comments from Wen Jiabao that home prices are still far from reasonable levels. I continue to believe that investors are overly optimistic on the prospects for a new major aggressive easing cycle out of China. I also think the hard-landing scenario still can’t be ruled out. Major European indices rose around +.5%, led by a +1.3% gain in German shares. The Bloomberg European Financial Services/Bank Index rose +1.64%. The Germany sovereign cds is down -4.6% to 71.50 bps, the France sovereign cds is down -4.4% to 171.80 bps, the Italy sovereign cds is down -4.6% to 366.42 bps and the Saudi sovereign cds is down -5.4% to 120.08 bps. Moreover, the European Investment Grade CDS Index is down -3.6% to 108.08 bps. On the negative side, Utility, Coal, Alt Energy, Oil Service, Disk Drive, Networking, Telecom, Construction, Homebuilding, Gaming, Road & Rail and Airline shares are under pressure, falling more than -1.0%. Copper is down -1.7%. The Transports remain laggards, which continues to be a broad market red flag. As well, the Philly Fed ADS Real-Time Business Conditions Index continues to trend lower from its mid-December peak, falling -14.0% over the last 5 days despite investor perceptions that the US economy is accelerating. The Portugal sovereign cds is jumping +3.8% to 1,311.41 bps. The Portugal cds is breaking out technically, but still off its Jan. record high of 1,554.04 bps. Lumber is -4.2% since its Dec. 29th high despite the better US economic data, more dovish Fed commentary, improving sentiment towards homebuilders, equity rally and decline in eurozone debt angst. Moreover, the weekly MBA Purchase Applications Index has been around the same level since May 2010. The Baltic Dry Index has plunged over -60.0% from its Oct. 14th high and is now down around -50.0% ytd. China Iron Ore Spot has plunged -20.3% since Sept. 7th of last year. Shanghai Copper Inventories are up +724.% ytd and are still very near their recent all-time high. I still think this is more of a red flag for falling demand rather than the intentional hoarding, which many suggest. The major averages are consolidating yesterday’s breakout advance in a healthy fashion. Banks are leading the averages again today. The euro and bonds are trading poorly. While these are longer-term positives, an acceleration lower in these two would likely lead to near-term equity turbulence. The ease with which my (AAPL) long still moves higher likely indicates a test of $600 is imminent. For the recent equity advance to maintain traction, I would still expect to see further European credit gauge improvement, a further subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade mixed-to-lower into the close from current levels on a decline in the euro, profit-taking, rising global growth fears and more shorting.

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.0%

Sector Underperformers:

• 1) Gold & Silver -4.22% 2) Road & Rail -2.37% 3) Homebuilders -1.90%

Stocks Falling on Unusual Volume:

• NOR, SU, CCI, FLT, UAM, CCH, CHL, MTGE, TUDO, VLCCF, JVA, MDRX, VOCS, SSRI, MET, SYX, KNM, C, FLT, CJES, H, GS, LNG and PK
  

Stocks With Unusual Put Option Activity:

• 1) COP 2) MET 3) IR 4) ABX 5) COF
  

Stocks With Most Negative News Mentions:

• 1) CCI 2) JNPR 3) EMC 4) JNJ 5) RAI
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.08%

Sector Outperformers:

• 1) HMOs +.44% 2) Semis +.33% 3) Computer Services +.27%

Stocks Rising on Unusual Volume:

• NXPI, AAPL, WLP, AXP, CLF, GEOY, IDT, FRAN, ASCA, ZION, PWRD, SZYM, ELGX, BBBY, LHCG, MITK, BTH, STI, SGA, GWRE, RLD, CIT and COF
  

Stocks With Unusual Call Option Activity:

• 1) ETFC 2) AKS 3) KFT 4) XHB 5) STI
  

Stocks With Most Positive News Mentions:

• 1) STT 2) APC 3) MU 4) PDCO 5) CMA
  

Charts:

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

Wednesday Watch

Evening Headlines
Bloomberg:

• Merkel Says Europe Is 'Good Way' Up Mountain, Not Over It. German Chancellor Angela Merkel said that European efforts to resolve the debt crisis are making progress, even as “imbalances” in euro-area economies show that the task is far from complete. “We’ve come a good way along the mountain path, but we’re not completely over the mountain,” Merkel told reporters in Rome late yesterday after talks with Italian Prime Minister Mario Monti. “I suspect that in the next few years there will continue to be new mountains -- there won’t be a celebratory event in which we say we’re over the mountain and now we can sit among the trees and say that we’ve done it.” Merkel praised Monti’s “bold” efforts since taking office on Nov. 16 to overhaul Italy’s economy, which include 20 billion euros in austerity measures and steps to deregulate services amid surging Italian bond yields that threatened to rip apart the currency region. Aided by European Central Bank liquidity measures, Italian 10-year borrowing costs have fallen to 4.89 percent from a euro-era record of 7.26 percent on Nov. 25. Monti, a former European Union competition commissioner, said Italy has “arrested” the crisis though not yet overcome it. “Italy still has homework to do,” he said. Italy prefers to rely on its “own strengths” rather than seek any external aid during the worst moments of the crisis.
• Fed Says 15 of 19 Banks Have Adequate Capital in Stress Scenario. The resilience of the largest U.S. financial firms when tested against a recession more severe than the last one shows regulators have succeeded in pushing banks to build fortress-like balance sheets. The Fed yesterday said 15 of 19 banks would be able to maintain capital levels above a regulatory minimum in an “extremely adverse” economic scenario, even while continuing to pay dividends and repurchasing stock. Those results were due to scrutiny by the Fed on capital payouts over the past three years, the central bank said.
• Rising Costs, Risks Threaten Futures Brokers, DeWaal Says. Changes to how clearinghouses are used to back derivatives trades are putting brokerages on “a dangerous path” that threatens the futures business model, said Gary DeWaal, general counsel of Newedge USA LLC. The risk to brokerages, known as futures commission merchants, or FCMs, began with the Dodd-Frank Act requirement to guarantee swap trades with clearinghouses, DeWaal said in an interview today at the Futures Industry Association annual conference in Boca Raton, Florida.
• Oil Trades Near 2-Day High as Economy Lifts U.S. Demand Outlook. Oil for April delivery was at $106.63 a barrel, down 8 cents, in electronic trading on the New York Mercantile Exchange at 1:43 p.m. Sydney time. The contract yesterday increased 37 cents to $106.71 a barrel, the highest close since March 9. Prices are 7.9 percent higher this year. Brent oil for April settlement slid 21 cents to $126.01 on the London-based ICE Futures Europe exchange.
• Apple(AAPL) Drives Record $1.24 Trillion of Company Cash, Moody's Says. Apple Inc. (AAPL), the world’s most valuable business, led U.S. corporations in amassing a record $1.24 trillion of cash last year as memories of the 2008 credit crisis linger, according to Moody’s Investors Service. Excluding Apple, with $97.6 billion of cash and no outstanding debt, the figure was relatively unchanged at $1.15 trillion, even as revenue and cash flow from operations rose to a record, Moody’s analysts led by Richard Lane said in a report yesterday. Investment-grade companies graded A3 or higher by Moody’s hold $594.3 billion, or 54 percent, Moody’s said in the report, which tracked cash and liquid investments for non- financials.

Wall Street Journal:

• Santorum Wins Alabama, Mississippi. Former Pennsylvania Sen. Rick Santorum won the Alabama and Mississippi primaries Tuesday, pulling off another pair of surprise victories and boosting his claim to be the conservative alternative to Republican front-runner Mitt Romney.
• Romney's Delegate Strategy Pressures Rivals.
• China's Wage Hikes Rip9ple Across Asia. More Asian governments are pressing businesses to hike wages as a way to prevent outbreaks of labor unrest, raising the specter of higher manufacturing costs for global companies—and the products they sell world-wide. In the latest move, Malaysia's cabinet has approved the country's first-ever minimum wage to be imposed soon, according to people familiar with the matter. The decision follows similar moves elsewhere in the region, as officials from Thailand to Indonesia follow efforts by China over the past two years to boost pay after years of widening gaps between rich and poor.
• A Warning for Women of the Arab Spring by Shirin Ebadi. I hope that in the countries where people have risen against dictatorships, they will reflect on and learn from what happened to us in Iran.
  

MarketWatch:

• Canada's Housing Market Flirts With Bubble. After a brief dip, home prices have shot up; incomes haven’t kept up.
  

Business Insider:

• Here's What Really Happened Today When JPMorgan(JPM) Announced Its New Dividend.
• Obama's Big Health-Care Reform Is Going To Cost Double What He Said. The Congressional Budget Office, the bi-partisan number-crunching office that 'scores' legislation for the cost has revised its forecasts for the cost of health-care reform. Obamacare is going to cost about double what the president and Democrats promised. When the bill was passed, President Obama and Nancy Pelosi would cost "around $900 billion over ten years." Looks like it is going to be close to $1.8 trillion.
  

Zero Hedge:

• Japan's Shocking Keynesian Slip: "We Are Worse Than Greece".
• Troika Finds Greece Already Likely To Miss Bailout Budget Targets.
• Fed Stress Test Released: Citi, SunTrust, Ally and MetLife Have Insufficient Capital.
• 4 Big 'Troubles' in Little China. (graphs)
  

IBD:

• Teradata(TDC) Helps Clients Analyst Data Influx.
  

Washington Post:

• CBO: Deficit Estimate for 2012 Hiked to $1.2 Trillion After Payroll Tax Cut, Jobless Benefits. A new estimate from congressional economists says the government will run a $1.2 trillion deficit for the budget year ending just a few weeks before Election Day. It would be the fourth straight year of trillion dollar-plus deficits. The almost $100 billion spike from earlier projections for the fiscal 2012 deficit comes almost exclusively because Congress passed legislation recommended by President Barack Obama to renew a 2 percentage point cut in payroll taxes and jobless benefits for people languishing on unemployment rolls for more than six months.

The American Spectator:

• The Chu Energy Plan. The administration's pie-in-the-sky energy planning is working exactly as one might have predicted. Dr. Chu's proposal to hike gas prices in the United States to European levels was published in the Wall Street Journal on December 12, 2008. Six weeks later, on January 21, 2009, he was sworn into office as President Obama's Secretary of Energy.

Reuters:

• Most Americans Would Back US Strike Over Iran Nuclear Weapon - Poll. The poll showed 56 percent of Americans would support U.S. military action against Iran if there were evidence of a nuclear weapon program. Thirty-nine percent of Americans opposed military strikes. Asked whether they would back U.S. military action if it led to higher gasoline prices, 53 percent of Americans said they would, while 42 percent said they would not. The Reuters/Ipsos poll also found that 62 percent of Americans would back Israel taking military action against Iran for the same reasons.
• Japan Q1 Business Mood Worsens But Seen Improving. Big Japanese manufacturers turned slightly more pessimistic about business conditions in January-March, but sentiment is expected to improve in the next quarter with the yen off record highs and due to spending for post-quake reconstruction. Wednesday's data suggests the Bank of Japan's closely-watched tankan sentiment survey, due next month, is unlikely to show a sharp worsening in sentiment.
• Exclusive: US Dangles Secret Data for Russia Missile Shield Approval. The Obama administration is leaving open the possibility of giving Moscow certain secret data on U.S. interceptor missiles due to help protect Europe from any Iranian missile strike. A deal is being sought by Washington that could include classified data exchange because it is in the U.S. interest to enlist Russia and its radar stations in the missile-defense effort, a Pentagon spokeswoman said Tuesday in written replies to Reuters.
  

Financial Times:

• Hedge Funds to Pay More for Litigation Insurance. Hedge funds are being asked to pay an average 5 per cent to 10 per cent more to buy officers’ and directors’ insurance in response to an expected increase in litigation from insider trading and regulatory investigations, a survey has found. Richard Canter, president of SKCG, the New York risk management adviser to hedge funds that conducted the survey, said hedge funds with poor performance and high redemption requests are quoted rates that are 15 per cent higher than three months ago.
• Bundesbank Steps Up Pressure On Draghi. Germany’s Bundesbank has stepped up pressure on Mario Draghi, European Central Bank president, to plan the withdrawal of exceptional help for eurozone banks, warning of potentially dangerous side-effects for the region’s financial system.
• Brusssels Probes Possible Telecoms Collusion. Europe’s biggest telecoms companies are facing the threat of a European Commission probe focusing on whether meetings between their top executives led to possible collusion.

Telegraph:

• Getting to Grips With the EU's New Fiscal Pact. A picture paints a thousands words. Over the course of countless summits, European leaders have strained to produce the right narrative for photographers: extravagant triple-kiss greetings, toothy grins, and wistful stares between Angela Merkel and Nicolas Sarkozy. But tonight in Brussels the choreography went horribly wrong: Jean Claude Juncker, head of the group of 17 euro zone finance ministers, was snapped strangling his Spanish counterpart.

Dong-A Ilbo:

• North Korean secret agents are luring defectors in South Korea to China to abduct and execute them, citing unidentified sources.

Evening Recommendations
Citigroup Global Markets:

• Reiterated Buy on (CLF), target $96.

Night Trading

• Asian equity indices are +.75% to +1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 147.0 -8.5 basis points.
  
• Asia Pacific Sovereign CDS Index 123.25 -4.25 basis points.
• FTSE-100 futures +.67%.
  
• S&P 500 futures -.03%.
  
• NASDAQ 100 futures -.06%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GEOI)/.39
• (GES)/1.04

Economic Releases
8:30 am EST

• The Import Price Index for February is estimated to rise +.6% versus a +.3% gain in January.
• The Current Account Deficit for February is estimated to widen to -$115.0B versus -$110.3B in January.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,600,000 barrels versus an +832,000 barrel gain the prior week. Distillate supplies are estimated to fall by -1,500,000 barrels versus a -1,944,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,000,000 barrels versus a -396,000 barrel decline the prior week. Finally, Refinery Utilization is estimated unch. versus a +.3% gain the prior week.
  

Upcoming Splits

• (ALK) 2-for-1
  

Other Potential Market Movers

• The Fed's Bernanke speaking, Italian Bond auction, 30Y T-Note auction, weekly MBA mortgage applications report, BoJ Monthly report and the UBS Consumer Conference could also impact trading today.
  

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