Tuesday Watch

Evening Headlines
Bloomberg:

• Greece's Third Bailout Seen in Debt With Junk Grade: Euro Credit. Greece's bonds and credit ratings are factoring in a third bailout for the nation that analysts and investors say will require greater concessions from its international creditors.
  
• S&P May Downgrade Almost All U.S. CDOs Backed by Structured Debt. Standard & Poor’s said it may lower almost all of the ratings it has assigned to U.S. collateralized debt obligations backed by structured-finance securities after a change in its methodology for grading the debt. The bonds under review had $63 billion of balances at issuance, New York-based S&P said today in a statement. These types of CDOs, which package assets such as mortgage bonds into securities with varying risks, helped spark the worst financial crisis since the Great Depression as some slices with AAA grades lost all of their value within a year.
• Buffett Message Is 'Do as I Say, Not as I Do': Alice Schroeder. The last few years have been a struggle for investors in Berkshire Hathaway Inc. (BRK/B) Since the March 2009 market low, the Standard & Poor’s 500 Index has risen 80 percent compared with 44 percent for Berkshire, even though crashing stock prices and unprecedented volatility perfectly suited Warren Buffett’s investing style.
• Australia Passes 30% Tax on Iron-Ore, Coal Mining Profits. Australia passed legislation that will reap about $11 billion in taxes within three years from BHP Billiton Ltd. (BHP), Rio Tinto Group and other iron-ore and coal miners as the government seeks to turn its budget to surplus. Prime Minister Julia Gillard’s Minerals Resource Rent Tax was passed in the upper house yesterday and will become law on July 1 after receiving backing from the ruling Labor party and the Greens, who hold the balance of power in the Senate.
• Banks May Be Skirting Oversight in Muni Bond Sales, SEC Says. Wall Street banks may not be exercising adequate oversight of state and local government bond sales, the Securities and Exchange Commission said, warning investors about risks in the $3.7 trillion municipal market. Reviews of underwriters showed that some may not be sufficiently examining bond documents for evidence of fraud, the agency’s Office of Compliance Inspections and Examinations said today. Banks are required to review bond documents to guard against false statements and can face sanctions if they don’t. “To protect investors, it is important that broker-dealers perform adequate due diligence to assess the financial and operational condition of states and municipalities before selling their securities,” Carlo di Florio, the director of the compliance office, said in a statement.
• Disney(DIS) Sees $200 Million Loss From 'John Carter' Picture. Walt Disney Co. (DIS), the world’s largest entertainment company, said the box-office flop “John Carter” will post a loss of about $200 million, one of the biggest ever for a single film. The film division will report a fiscal second-quarter operating loss of $80 million to $120 million as result of the picture, Burbank, California-based Disney said today in an e- mailed statement.
• GE Capital Rating May Be Cut Below Parent as Moody's Sees Risk. General Electric Co.’s (GE) financial unit may be given a lower debt rating than the parent company because of higher risk, Moody’s Investor Services said. The Aa2 ratings of both Fairfield, Connecticut-based GE and General Electric Capital Corp. (GELK) are both on review for possible downgrade and may “no longer be equalized,” Moody’s said today in a statement. “The review is based on Moody’s view that finance companies have higher risks than previously considered, implying a wider gap between the risk profiles of GECC and GE’s industrial businesses,” according to the statement.
• Facebook(FB) Said to Plan Paying 1.1% Feed to Banks. Facebook Inc. (FB), the social- networking website seeking to raise $5 billion in an initial public offering, will pay underwriters a 1.1 percent fee, two people with knowledge of the company’s plans said. The fee will be shared among Facebook’s underwriters, said the people, who asked not to be named because the details are private. Facebook has hired 31 banks to manage the IPO, including Morgan Stanley (MS) as lead underwriter. The lead bank typically earns a bigger cut of the total. At 1.1 percent, the company will be paying its banks one- fifth the typical rate for IPOs. Underwriters were paid an average of 5.48 percent in 127 offerings last year, Bloomberg data show.
• Shanghai Bonded Copper Stocks Gain to 530,000 Tons, Survey Shows. Copper inventories at bonded warehouses in Shanghai climbed to 530,000 metric tons last week, according to the median estimate in a Bloomberg News survey of seven traders and analysts. This companies with about 200,000 tons in the fourth quarter, according to Qu Yi, an analyst at CRU International Ltd. "Tepid demand at the world's largest user failed to absorb the imports," said Fang Junfeng, an analyst at Shanghai CIFCO Futures Co. "If you look at the sustained cash discount, you'd know how bad the consumption is at a time when we're supposed to see a seasonal pickup." The metal for immediate delivery on Shanghai's Changjiang Nonferrous Metals Market was quoted at a discount of about 250 yuan($40) to the front-month futures contract on the Shanghai Futures Exchanged yesterday. SHFE inventories were at 227,276 tons last week, almost four times as many as the beginning of December. Unwrought copper imports by China were the second-highest level ever in February, as arrivals of the refined metal, copper alloy and products totaled 484,569 tons, data from the General Administration of Customs showed.
• Mercedes Record 25% Discount Tops Shrinking China Margins. There has never been a better time to buy a Mercedes-Benz in China (CNVSTTL). The problem for luxury carmakers such as Daimler AG (DAI) is that the incentives are likely to get even bigger. Mercedes dealers are offering record markdowns of 25 percent on high-end models such as the S300 sedan, according to data stretching back to 2009 at cheshi.com, which tracks prices at more than 3,000 Chinese dealerships. BMW AG (BMW)’s 7-series and Audi AG (NSU)’s A8Ls sell for 20 percent below sticker prices, waiting lists have vanished and salesmen are dangling perks ranging from free iPhones to Hermes-bag coupons. The escalating price competition shows that the case is weakening for luxury cars to fetch higher prices and profit margins in Beijing than in New York and Berlin as supply catches up to demand. The discounts, which began late last year with entry-level models, are spreading to the priciest high-end sedans as the world’s second-largest economy slows and China’s rich find an increasing abundance of vehicles to choose from. “This year’s luxury-car discounting is the most I’ve ever seen,” said Scott Laprise, automotive analyst at CLSA Asia Pacific, who has been based in Beijing for more than five years. “China’s luxury car price premium is eroding.”
• Ship Owners Losing After $11.4 Billion Battle for Boxes: Freight. After a quarter in which companies selling space on container lines doubled rates, the amount the owners of the ships are being paid is the least in two years. Operators, who charter vessels and then charge shippers per container, are demanding $1,379 for a 20-foot box on the China- to-Europe trade route, up 97 percent this year, according to Clarkson Plc (CKN), the largest shipbroker. A measure of how much they’re paying ship owners fell 4.2 percent since the start of January, data from the Hamburg Shipbrokers’ Association show. The gap is growing because operators are leaving vessels idle or hiring fewer ships, driving down how much they pay owners, while restricting supply and boosting box rates.

Wall Street Journal:

• House GOP Budget to Target Tax Rates. House Republicans, seizing on what they hope is a potent campaign issue in the midst of a muddled political and economic landscape, will introduce a 2013 budget Tuesday that cuts tax rates and provides for two individual brackets of 10% and 25%. The budget would end the Alternative Minimum Tax, which was originally aimed at the wealthy but which ensnares a growing number of middle-class taxpayers each year. The plan would nearly eliminate U.S. taxes on American corporations' earnings from overseas operations.
• MBIA(MBI) Abandons Bonus Plan. MBIA Inc. abandoned plans to pay bonuses to top executives for 2011 after objections from New York's top financial regulator, who argued that the bond insurer would not survive without his help, according to people familiar with the situation.
• U.S. Offers Afghan Review of Night Raids on Homes. The Obama administration is offering to cede some control over nighttime missions into Afghan village homes, U.S. officials say, in a bid to ease tensions with Afghan President Hamid Karzai that took on new urgency with the deadly rampage in a Kandahar village last week. The administration's most significant concession on night raids would subject the operations to advance review by Afghan judges, U.S. military officials said. One option under discussion in the U.S.-Afghan talks would require warrants to be issued before operations get the green light.
• Chevron's(CVX) Troubled Waters. Brazilian prosecutors' planned criminal charges against Chevron Corp. executives for an offshore oil leak threatens to stifle foreign companies' drilling plans in this petroleum-rich nation. Brazil will file criminal charges Wednesday against executives from Chevron and drilling-rig operator Transocean Ltd., accusing them of environmental crimes related to an offshore oil spill in November, prosecutor Eduardo Santos de Oliveira said in an interview Monday.
• French School Killings Spark Horror. A manhunt was under way in this southern French city for a lone gunman who opened fire on a Jewish school Monday, killing four people including a father and his two sons, with a weapon used in two similar attacks in recent days.
• Solar-Panel Users Prepare for Tariffs on Chinese Imports. As U.S. trade officials prepare their preliminary decision on a dumping complaint against Chinese solar-panel makers, U.S. panel users are preparing for new tariffs on Chinese imports by lining up new sources of the panels, sometimes at a significant cost.
• ObamaCare's Flawed Economic Foundations. The insurance mandate has almost nothing to remedying costs imposed on the system by those without coverage.

MarketWatch:

• China's Stock-Market Supervision Suffering. Understaffed securities regulator, weak legal system cited.
• $5 Gas Prices Would Tank Consumer: Wilbur Ross. Wilbur Ross, the billionaire private-equity investor known for turning around struggling companies, said Monday he is concerned about the impact of rising gasoline prices on the U.S. economy. “What I am worried about is the following: gas prices have been high and the effect on the consumer has been hidden,” due to the mild winter, Ross told MarketWatch in an interview Monday at the New York Stock Exchange, on the sidelines of an event promoting investment in Ireland. “If we hit $5 at the gas pump over the summer, that would have a profound effect on the consumer,” he said.

Business Insider:

• JEFFERIES: The Collapse Of India's Investment Cycle Is Far From Being Played Out.
• Oprah Winfrey Network Lays Off One-Fifth of Staff.
• One Man's 'Astonishing' Escape From A North Korean Death Camp.

Zero Hedge:

• ABC Reports Russian Troops Have Arrived In Syria, Russia Denies.
• To Bail Or Not To Bail: A Simple Question Of Math; And Why Taxpayers Will Be On The Hook Until The End.

CNBC:

• Small Car Prices Rising. You knew it was only a matter of time until we saw the rotation into small cars putting the squeeze on buyers. In fact, we are now seeing it with both new and used small cars. Across the board, prices for these cars are moving up along with gas prices.

NY Times:

• For LSAT, Sharp Drop in Popularity for Second Year.
  

Washington Post:

• Human Rights Watch Says Abuses Continue In Myanmar Conflict Zone Despite Reforms. It sounds a lot like the old, military-run Myanmar, and not much like the reform-minded new one: A feared army attacking civilians indiscriminately, razing homes and raping women while the government prevents international aid from reaching tens of thousands of displaced survivors.

Forbes:

• The Expanding Wealth of Washington. Throughout the brutal and agonizingly long recession, only one large metropolitan area escaped largely unscathed: Washington, D.C. The city that wreaked economic disasters under two administrations last year grew faster in population than any major region in the country, up a remarkable 2.7 percent. Boom times in the capital — particularly amid a weak recovery elsewhere — are driving this growth. Since 2007, notes Stephen Fuller at George Mason University, the D.C. region’s economy has expanded 14 percent compared with a mere 3 percent for the rest of the country. Washington’s unemployment never scaled over 7 percent, well below the national average, and is now down to around 5.5 percent, about the lowest of any major metropolitan area. Unemployment of course is much higher, reaching 25 percent, in some of the district’s poorer neighborhoods. This prosperity is rooted largely in the steady growth of the federal workforce, as federal spending accounts for one-third of the region’s economy. Over the past decade 50,000 bureaucratic jobs have been added in the area while local federal spending grew 166 percent. The D.C. region, with 5 percent of the nation’s population, garners more than three times that percentage in payroll and more than four times that percentage in procurement dollars.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 26% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-one percent (41%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -15 (see trends).
• 56% Favor Repeal of Health Care Law, 39% Oppose Repeal. The latest Rasmussen Reports national telephone survey of Likely U.S. Voters shows that 56% at least somewhat favor repeal of the health care law, including 46% who Strongly Favor it. Thirty-nine percent (39%) oppose repeal, with 29% who are Strongly Opposed.

USA Today:

• Apple(AAPL) Sells 3 Million New iPads in 3 Days. Apple said it sold 3 million of the new iPad tablet computers over the weekend, setting a company record.

Reuters:

• Vatican Bank Image Hurt as JPMorgan(JPM) Closes Account. JP Morgan Chase is closing the Vatican bank's account with an Italian branch of the U.S. banking giant because of concerns about a lack of transparency at the Holy See's financial institution, Italian newspapers reported.
• Hedge Funds Key Sellers of Treasuries, Report Says. Hedge funds, other large investors sold 78% of their holdings of 2Y Treasuries in the week ended March 13, according to a report by BofA Merrill analyst Mary Ann Bartels.
• Amazon.com(AMZN) to Buy Kiva Systems for $775 Million. Amazon.com Inc said on Monday it agreed to buy Kiva Systems Inc for $775 million in cash, a deal that will bring more robotic technology to the e-commerce company's giant network of warehouses. The acquisition, which has been approved by Kiva's stockholders, is expected to close in the second quarter of 2012, Amazon added in a statement.
• Adobe Revenue Slows Ahead of Upgrades, Shares Fall. Adobe said it expects to post second-quarter revenue of $1.090 billion to $1.140 billion, compared with the average analyst forecast of $1.1 billion. It forecast second-quarter profit, excluding items, of 57 to 61 cents per share, compared to the Street view of 60 cents. Shares of Adobe closed at $34.51 on Nasdaq and fell 4.4 percent to $33.00 in extended trading.
• BHP Billiton(BHP) Sees China Iron Ore Demand Flattening. BHP Billiton, the world's biggest miner, is seeing signs that iron ore demand from top consumer China is flattening but is pushing ahead with its ambitious plans to expand production. "Growth is going to flatten off," BHP's iron ore division president, Ian Ashby said ahead of the Global Iron Ore & Steel Forecast Conference in Perth on Tuesday. Chinese demand for iron ore has been the driving force behind years of expansion work by the world's biggest mining companies. BHP has being pursuing a strategy of running at full production and expanding capacity in long-life, low-cost commodity assets. Ashby said BHP was sticking with its $10 billion iron ore expansion plan and was mining ore at a rate of 165-170 million tonnes per year. That is above its production guidance of 159 million tonnes in fiscal 2012 ending June 30, maintaining the company's No.3 global ranking in iron ore behind Vale and Rio Tinto .
• Monti's Moment of Truth, Facing Trade Unions. Mario Monti will walk into a meeting with Italy's trade union bosses on Tuesday, knowing it can help make, or break, his brief tenure as prime minister - and hopes of dragging the economy out of the mire.
• Michael Kors(KORS) Raises Forecast. Michael Kors Holdings Ltd reported strong retail sales and raised its earnings outlook on Monday, sending the fashion company's shares up 3 percent in after-hours trading.
• Williams(WMB) Buying Infrastructure in Marcellus Shale. Williams Cos Inc struck a $2.5 billion deal to buy a natural gas gathering and processing business in the Marcellus shale, increasing its exposure to the boom in liquids-rich natural gas. Soaring supplies of natural gas in the United States have pushed prices for the fuel to their lowest in a decade. In response, exploration and production companies have increased output of crude oil and natural gas that can be stripped of fuels like propane that fetch higher prices. Williams is buying the Caiman Eastern Midstream business, a unit of privately held Caiman Energy, through its master limited partnership, Williams Partners LP. Williams owns 72 percent of Williams Partners, as well as the partnership's general partner. Williams Partners plans to fund the purchase price of the acquisition with a $1.78 billion in cash and the issuance to Caiman of about 11.8 million Williams Partners common units valued at about $720 million.

Globe and Mail:

• Canadian Bank Regulator Proposes Heightened Scrutiny of Mortgage Market. Canada’s financial regulator is proposing strict rules to tighten lending practices in the housing sector, a move that could cool the red-hot market after months of warnings about rising consumer debt. The new rules would require banks to take a closer look at how much a property is worth before issuing a mortgage – and to know more about the monthly finances of borrowers before the money is doled out.

China Daily:

• China Insurers Put Under Greater Supervision. The heads of China's four leading insurance companies have been brought under high-level supervision by promotion to vice-minister status, from bureau level previously. Personnel appointments at the companies will be supervised by the Organization Department of the Communist Party of China Central Committee instead of the China Insurance Regulatory Commission, the report said.

National Business Daily:

• China will "substantially" raise the threshold for entry into the drug sales business, citing Xie Wei, an official at the food and drug administration of the southwestern Chinese province of Sichuan.

Evening Recommendations
Piper Jaffray:

• Rated Rated (CF) Overweight, target $230.

Night Trading

• Asian equity indices are -.75% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 146.50 n/a.
  
• Asia Pacific Sovereign CDS Index 110.50 -3.0 basis points.
• FTSE-100 futures -.17%.
  
• S&P 500 futures -.09%.
  
• NASDAQ 100 futures -.05%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (TIF)/1.41
• (DSW)/.50
• (JEF)/.29
• (ORCL)/.56
• (JBL)/.58
• (CTAS)/.52

Economic Releases
8:30 am EST

• Housing Starts for February are estimated to rise to 700K versus 699K in January.
• Building Permits for February are estimated to rise to 686K versus 676K in January.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bernanke speaking, Fed's Kocherlakota speaking, Greek bond auction, weekly retail sales reports and the (GAS) analyst day could also impact trading today.
  

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

Stocks Rising into Final Hour on Euro Bounce, More Financial/Tech Sector Optimism, Short-Covering, Investor Performance Angst

Broad Market Tone:

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

Equity Investor Angst:

• VIX 14.80 +2.28%
  
• ISE Sentiment Index 108.0 -28.48%
  
• Total Put/Call .75 unch.
  
• NYSE Arms 1.26 +87.67%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 86.64 -2.73%
  
• European Financial Sector CDS Index 137.89 -4.50%
  
• Western Europe Sovereign Debt CDS Index 219.68 -2.29%
  
• Emerging Market CDS Index 215.99 -2.61%
  
• 2-Year Swap Spread 25.25 unch.
  
• TED Spread 39.25 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -59.75 +.25 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .08% unch.
  
• Yield Curve 199.0 +5 bps
  
• China Import Iron Ore Spot $144.70/Metric Tonne unch.
  
• Citi US Economic Surprise Index 33.10 -7.9 points
  
• 10-Year TIPS Spread 2.43 +1.5 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating a -29 open in Japan
• DAX Futures: Indicating a +23 open in Germany

Portfolio:

• Higher: On gains in my Tech, Retail and Biotech sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 trades near session highs despite recent gains, rising energy prices, some disappointing US economic data and rising global growth fears. On the positive side, Coal, Oil Tanker, Internet, Networking, I-Banking, Gaming, Computer, Education and Airline shares are especially strong, rising more than +1.0%. Financial and Tech shares are outperforming again. Copper is rising +.7%. The 10Y Yield is rising +8 bps to 2.38%. The Germany sovereign cds is down -2.2% to 67.0 bps, the France sovereign cds is down -5.58% to 155.17 bps, the Italy sovereign cds is down -1.99% to 348.91 bps and the Brazil sovereign cds is down -4.22% to 115.34 bps. Moreover, the European Investment Grade CDS Index is down -5.06% to 98.40 bps. On the negative side, Telecom and Homebuilding shares are under mild pressure, falling more than -.50%. Oil is up +.61%. Major Asian Indices were mostly lower overnight, led down by a -1.1% decline in India. Indian shares had been one of the world's best performers ytd, but have fallen -6.2% in 4 weeks as inflation/growth worries persist. I expect these shares to underperform over the intermediate-term, as well. The Philly Fed ADS Real-Time Business Conditions Index continues to trend lower from its mid-December peak despite investor perceptions that the US economy is accelerating. The China Blended Corporate Spread Index is rising +.85% to 591.0 bps. Lumber is -3.6% since its Dec. 29th high despite the better US economic data, 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 -20.5% since Sept. 7th of last year. Shanghai Copper Inventories are right near a new record and have risen +783.0% ytd. I still think this is more of a red flag for falling demand rather than the intentional hoarding, which many suggest. US stocks continue to trade very well as they consolidate recent gains in a healthy fashion and ignore almost all negatives. One of my longs, market leader (AAPL), keeps grinding higher despite the many recent opportunities for investors to "sell the news". I mentioned another one of my longs, (GOOG), was trading well last week and it is breaking out of its recent range today. Oil is trading as if the next trading move is higher, which remains a broad market negative. Rhetoric in Asia with regards to North Korea is heating up, which is something else to keep an eye on. As well, the 2013 US fiscal cliff will become more of a focus for investors as the year progresses.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-higher into the close from current levels on a bounce in the euro, short-covering, more financial/tech sector optimism and investor performance angst.

Today's Headlines

Bloomberg:

• Greek Swaps Sellers to Pay $2.5 Billion to Settle Contracts. Sellers of credit-default swaps on Greece will have to pay as much as $2.5 billion to settle contracts triggered by the nation’s debt restructuring. The settlement was determined after dealers agreed a final value for Greek bonds of 21.5 percent of face value at an auction, according to administrators Markit Group Ltd. and Creditex Group Inc., and is in line with where the notes have been trading.
• Fisher Says Economy Doesn't Need More Easing, Reuters Reports. Federal Reserve Bank of Dallas President Richard Fisher said the U.S. economy doesn’t need more liquidity, according to Reuters. “There is plenty of liquidity,” Fisher said today during a roundtable discussion at a business event in London, according to Reuters. “We need no more,” he said, according to the news service.
• Bernanke Seen Not Knowing Jobless Rate Below Fed Forecasts. David Waldrop, 59, says he considers himself retired after searching unsuccessfully for work comparable to the job he lost in July 2007 at the U.S. Department of Energy in Atlanta. “There was certainly nothing in my area at my level,” he said. While the right opening might pull him back to employment, for now he sees his exit from the U.S. labor force as permanent. “I don’t see it happening,” he said. “I don’t see anything offering opportunities.” Waldrop is one of millions who have dropped out of the labor market in the aftermath of the deepest recession since the Great Depression, causing the employment-to-population ratio to fall to 58.6 percent from 62.7 percent at the end of 2007. Federal Reserve Chairman Ben S. Bernanke says the decline reflects weakness in the economy that’s causing discouraged Americans to leave the workforce, bolstering his decision to add to his record monetary stimulus in January.
• Fed's Dudley Says U.S. Isn't 'Out of the Woods': Economy. Federal Reserve Bank of New York President William C. Dudley said signs the economy is improving don’t dispel risks to growth that include higher gasoline prices, fiscal cutbacks and a weak housing market. “The incoming data on the U.S. economy has been a bit more upbeat of late, suggesting that the recovery may be getting better established,” Dudley said today in a speech in Melville, New York. “But, while these developments are certainly encouraging, it is far too soon to conclude that we are out of the woods in terms of generating a strong, sustainable recovery.”
• Apple(AAPL) to Pay Dividend, Buy Back Stock to Return Some of Cash. Apple Inc. (AAPL) will pay its first dividend in 17 years and buy back $10 billion in stock, heeding investors who urged it to return part of the $97.6 billion in cash amassed by robust demand for iPhones and iPads. Shareholders will receive a quarterly dividend of $2.65 a share starting in the period beginning July 1, Cupertino, California-based Apple said today in a statement. The buybacks will begin in the fiscal year starting Sept. 30 and happen over three years, the company said.
• China Increases Fuel Prices Second Time in Two Months. China, the world’s largest oil consumer after the U.S., increased gasoline and diesel prices for the second time in less than six weeks after crude had its biggest monthly gain in a year. Prices gain by 600 yuan ($95) a metric ton starting today, after the three crude grades tracked by the National Development and Reform Commission climbed more than 10 percent, according to a statement on the planning agency’s website yesterday evening. Retail gasoline prices will increase as much as 6.6 percent and diesel will be as much as 7.2 percent more expensive, according to data compiled by Bloomberg.

CNBC.com:

• Chinese Copycast Challenge US Small Businesses.
• Oil Rally to Continue, Next Target $125: Charts.
  

Business Insider:

• People are Freaking Out Over An Executive Order That May Give Obama Complete Control Over The Economy.
• Russia is Reportedly Sending 20,000 to 25,000 Troops to its Southern Regions.
• And Now Al Gore Has Been Accused Of Abusing His Apple Board Seat For Personal Gain.

Zero Hedge:

• Goldman(GS) Hikes Apple(AAPL) Price Target from $660 to $700.
• How to Cripple the Real Estate Market in Five Easy Steps.
  

Credit Writedowns:

• On Spain, Spanish Banks and Spanish Local Elections. The Spanish news stream is poor as the media focuses on local bank reliance central bank funding and the 2012 budget that will be unveiled next week. Just like roughly 1 in 3 that are unemployed in the euro zone are in Spain, Spanish banks account for almost half of the borrowing from the ECB in February.

Reuters:

• Home Builder Sentiment Steady in March: NAHB. Homebuilder sentiment was unchanged in March to hold at the highest level since June 2007, while sentiment in February was revised lower, the National Association of Home Builders said on Monday. The NAHB/Wells Fargo Housing Market index held steady at 28, the group said in a statement, shy of economists' expectations for 30. February's reading was revised down to 28 from 29.
• G20 Web Economy Seen at $4.2 Trillion by 2016 - BCG. The Internet economy in the world's G20 nations will grow by more than 10 percent annually for the next four years, surpassing the size of the German economy at $4.2 trillion by 2016, management consultancy the Boston Consulting Group said. As a proliferation of Web-enabled smartphones is expected to help a total of 3 billion people access the Internet by 2016, online retail, banking, advertising, IT services and demand for Internet-related goods will thrive, BCG said on Monday. The G20's Internet economy will nearly double between 2010 and 2016, creating an extra 32 million jobs, according to the BCG report.

AP:

• New Mexico Regulators Scrap Carbon Emissions Rules. New Mexico regulators pulled the plug Friday on the state's effort to reduce greenhouse gas emissions among coal-fired power plants, refineries and other large polluters. The Environmental Improvement Board adopted a repeal petition filed last year by utilities and industry groups that were concerned about rising costs and New Mexico's economic viability. The vote marks the second time in two months that the board has undone regulations passed in the waning weeks of former Democratic Gov. Bill Richardson's administration that were aimed at curbing carbon emissions.

Telegraph:

• Italy is Trapped in a Monetary Volkerkirker. Another month, another blow for Italy. Industrial orders fell 7.4pc in January, according to ISTAT. Domestic orders fell 7.6pc. Output fell 4.9pc, as you can see from this chart:

Bear Radar

Style Underperformer:

• Mid-Cap Value +.54%

Sector Underperformers:

• 1) Homebuilders -.58% 2) Telecom -.21% 3) Road & Rail -.18%

Stocks Falling on Unusual Volume:

• KSS, TUDO, JVA, VRA, DNP and KBH
  

Stocks With Unusual Put Option Activity:

• 1) FXA 2) BBT 3) TIF 4) ARNA 5) RDN
  

Stocks With Most Negative News Mentions:

• 1) S 2) VRTX 3) RDC 4) BAC 5) XOM
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.49%

Sector Outperformers:

• 1) I-Banks +1.34% 2) Coal +1.20% 3) Gaming +1.06%

Stocks Rising on Unusual Volume:

• C, FIRE, CPWM, MAPP, CRESY, AFFY, VVUS, DPZ, LGF, X, SXC, ATLS, ETFC and SFY
  

Stocks With Unusual Call Option Activity:

• 1) CTAS 2) LLL 3) FRO 4) MOS 5) ADBE
  

Stocks With Most Positive News Mentions:

• 1) GPS 2) ABVT 3) COF 4) UNH 5) AAPL
  

Charts:

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

Monday Watch

Weekend Headlines
Bloomberg:

• Lagarde Warns Against False Sense of Security. International Monetary Fund Managing Director Christine Lagarde urged policy makers to be vigilant as oil prices, debt levels, and the risk of slowing growth in emerging markets threaten global economic stability. “Optimism should not give us a sense of comfort or lull us into a false sense of security,” Lagarde said today at a speech in Beijing at the China Development Forum. “We cannot go back to business as usual.” The IMF last week approved a 28 billion-euro ($36.6 billion) loan for Greece as part of a 130 billion euro second bailout by the European Union that requires more austerity and an overhaul of its economy. Greece completed the world’s largest sovereign-debt overhaul and agreed to deeper spending cuts to obtain new funds as it faces a fifth year of recession. “The measures that were proposed are ambitious and it will be important to focus on steady rigorous implementation of the situation on the ground,” Lagarde said about Greece. “We have made important steps forward.” Brent crude oil futures have rising 18 percent this year on concern Iran’s standoff with the West over its nuclear program will escalate into military action in a region that holds 54 percent of global petroleum reserves. Increased gasoline prices threaten to slow consumer spending in the U.S., tempering the recovery in the world’s largest economy. Oil prices are “becoming a threat to global growth,” Lagarde said. “I think it’s a major threat.”
• IMF Staff Sees Potential Need for More European Aid to Greece. Greece remains “accident prone” and may require further debt restructuring or additional financing from euro countries if it struggles to implement measures attached to a new 130 billion-euro ($171 billion) bailout, staff at the International Monetary Fund said. The loan package is based “on ambitious fiscal and privatization targets and above all on a reinvigoration of structural reforms,” IMF staff wrote in a report released yesterday. “In the event of slower progress in policy implementation, or failure of the economy to respond rapidly enough to reforms, completion of reviews may require additional support from Greece’s European partners on yet more concessional terms than currently envisaged, and-or another restructuring of bonded debt,” according to the report. The Washington-based IMF, which is already lending to Portugal and Ireland, has reduced its share in the second Greek bailout as it sees its exposure to the euro region posing what the staff called “unprecedented financial risks” to its finances. It has also pushed European governments to boost their own bailout fund in an effort to protect Spain and Italy from contagion.
• Monti to Meet Labor Unions Amid Warning of Continued Euro Crisis. Italy’s Prime Minister Mario Monti will press ahead with efforts to revise labor laws this week, amid fresh warnings that the three-year-old European debt crisis is far from over. Monti will lead talks with unions and employers in a final round of negotiations beginning tomorrow. Decision makers meanwhile warned against complacency after delivery of the final element of Greece’s 130 billion-euro ($171 billion) bailout package and the completion of the world’s largest sovereign-debt restructuring last week.
• Greece Auction to Settle $3.2 Billion of Credit-Default Swaps. Credit-default swaps dealers will hold an auction today to settle as much as $3.2 billion of Greek bond insurance triggered by the nation’s debt restructuring. The auction will be held under the rules of the International Swaps & Derivatives Association and will determine the amount that sellers of protection must pay by setting a recovery price for Greek bonds. An initial rate will be set at 11 a.m. London time with a final value determined at 3:30 p.m.
• Federal Reserve Stress Tests Make Us All Muppets. The Fed has an imperfect view of the future, as do we all. It has repeatedly demonstrated a limited ability to control economic outcomes. In light of this, the Fed could have required banks to build up shareholder capital on their balance sheets in case their aggressive risk-taking again becomes reckless and creates enormous losses. Instead, the Fed is allowing big banks to reduce capital levels, increasing the likelihood of another financial and fiscal crisis and endangering the broader U.S. economy. We are all muppets now.
• Japan May Ship More Copper to Make Up for Dwindling Local Demand. Japan’s copper producers may increase exports in coming years to make up for shrinking domestic demand as manufacturers head overseas to avoid higher costs and the impact on sales of a stronger yen, according to Pan Pacific Copper Co. Exports are expected to rise 16 percent to 505,000 metric tons this year, after slumping 17 percent to 437,000 tons in 2011 following the March 11 earthquake and tsunami, said Akira Miura, executive officer of the marketing department at Pan Pacific, Japan’s top producer.
• UnitedHealth(UNH) Wins $21 Billion U.S. Military Health Contract. UnitedHealth (UNH) Group Inc. wrested a military health contract valued at as much as $20.5 billion from TriWest Healthcare Alliance Corp. (1893Q), a closely held company that has had the work since 2003. UnitedHealth, the nation’s biggest health insurer by revenue, in April persuaded the Pentagon to reconsider a 2009 decision to award the five-year contract for the western region to TriWest. The U.S. Defense Department announced the decision in favor of UnitedHealth after markets closed yesterday, sending the company’s shares higher in after-market trading. The win gives UnitedHealth, based in Minnetonka, Minnesota, access to the military health-care market, which the company has aggressively pursued.
• Fukushima Farmers Face Decades of Tainted Crops as Fears Linger. Farmers in Japan’s Fukushima face years of additional losses as consumers continue to doubt the safety of produce from the region devastated a year ago by the tsunami and nuclear fallout, which may taint crops for decades.
• China Home Prices Post Worst Performance in a Year on Curbs. China's February home prices posted the worst performance in a year with almost half of the cities monitored by the government falling from a year ago as the country maintained curbs on the property market. New home prices fell in 27 of 70 cities last month from a year earlier and prices were unchanged in six cities, the national statistics bureau said in a statement on its website yesterday. That is the worst since the government began at the start of 2011 releasing individual data for 70 cities instead of a national average. Premier Wen Jiabao said last week housing prices remain far from a reasonable level and called on the government not to slacken efforts to regulate the home sector. Relaxing the curbs could cause "chaos" in the market, Wen said. "China's home prices fell further, but it doesn't mean there will be a policy loosening any time soon," said Qu Hongbin, a Hong Kong-based economist at HSBC Holdings Plc in a phone interview. Home prices will need to see a "meaningful correction" by falling 20 percent to 30 percent from last year's peak before the government relaxes policies on property, Qu said. Among major cities, home prices in both Beijing and the financial center of Shanghai fell 0.4 percent last month from a year ago. In the south, Shenzhen declined 0.2 percent, while Guangzhou rose by 0.3 percent from 2011.
• Oil Trades Near One-Week High in New York as Saudi Output Climbs. Oil for April delivery was at $107.36 a barrel, up 30 cents, in electronic trading on the New York Mercantile Exchange at 11:47 a.m. Sydney time. The contract, which expires tomorrow, climbed 1.9 percent to $107.06 a barrel on March 16, the highest close since March 9. The more active May future rose 32 cents to $107.90 a barrel today. Prices are up 8.6 percent this year. Brent oil for May settlement was at $125.98 a barrel, up 17 cents, on the London-based ICE Futures Europe exchange.
• Oprah Helps Obama to Raise $5 Million. President Barack Obama, turning full attention to his re-election campaign, aimed to raise more than $5 million today with fundraisers in his adopted hometown of Chicago and then Atlanta, where Oprah Winfrey joined with other wealthy donors.
• Goldman Sachs(GS) Board Must Act on Smith Op-Ed, Ex-Partner Writes. Goldman Sachs Group Inc.'s directors must investigate a former employee's allegations about a change in the firm's culture, Jacki Zehner, who was a partner when she left the firm in 2002, wrote on her blog. Zehner said she doesn't know Greg Smith, the derivatives salesman whose New York Times op-ed piece blamed Chief Executive Officer Lloyd C. Blankfein and President Gary D. Cohn for fostering a "toxic and destructive" environment, causing Smith to quit last week. Zehner, who worked at Goldman Sachs for 14 years, wrote that she's heard from "many people" in the past few years that the firm is emphasizing profits over character. "These are very serious accusations from a credible person in my view and I hope it does indeed provide a 'wake-up' call to the board of directors," wrote Zehner, who was the first female trader promoted to partner and is married to a former partner. She is now CEO and president of Women Moving Millions, a non- profit supporting the advancement of women and girls worldwide. "It is the board that is accountable to shareholders and before they take another paycheck I hope they ask a heck of a lot of questions and get honest answers," Zehner, 47, wrote in her March 16 commentary.
• Latin American Nations in Worse Shape for Crisis, IDB Says. Most Latin American nations, in the event of another global crisis, are in worse shape to implement stimulus than in 2007 as a result of lower budget surpluses before interest payments, the Inter-American Development Bank said. Mexico, Chile, Colombia and the Dominican Republic are among nations less prepared to face a potential crisis, the IDB said in a report released at the bank’s annual meetings in Montevideo, Uruguay, today. Brazil and Argentina are in positions similar to those in 2007, while Uruguay and Jamaica are better prepared, the Washington-based lender said. “The main reason for the deterioration is the widespread reduction in structural primary balances,” the report said.

Wall Street Journal:

• The U.S. Cruises Toward a 2013 Fiscal Cliff by Alan S. Blinder. As tax cuts expire and spending falls, the economy will be hit with a 3.5% decline in gross domestic demand. At some point, the spectacle America is now calling a presidential campaign will turn away from comedy and start focusing on things that really matter—such as the "fiscal cliff" our federal government is rapidly approaching. The what? A cliff is something from which you don't want to fall. But as I'll explain shortly, a number of decisions to kick the budgetary can down the road have conspired to place a remarkably large fiscal contraction on the calendar for January 2013—unless Congress takes action to avoid it.
• Ex-China Central Bank Adviser Calls for Interest-Rate Reform. China needs to push ahead with interest-rate reform and it no longer needs to protect big state banks that are now like "dinosaurs," a former adviser to the country's central bank said Saturday.
• Japan Premier Warns About Chinese Military. Japan's prime minister issued a new warning about Beijing's military build-up Sunday, two days after his government made a fresh protest over a Chinese ship's entering waters near a chain of islands claimed by both countries. In an address to graduating cadets of the Self Defense Forces, Prime Minister Yoshiko Noda cited China and North Korea as the main military challenges Japan faces in Asia.
• Iraq Unveils Contingency-Plan Details In Case Hormuz Shut - Spokesman. The Iraqi government Sunday revealed details of a contingency plan, including reopening a pipeline that connects to the Red Sea through Saudi Arabia, in case current political tensions with Iran lead to the closure of the strategic Strait of Hormuz, an Iraqi government spokesman said Sunday. Eighty percent of Iraq's crude-oil exports pass through the strait.
• Survey Shows Dollar Optimism, Less Euro Fear. A majority of investors believe another euro-zone member will follow Greece and restructure its debt in the next year, according to a Barclays Capital survey, and many expect relatively strong U.S. economic growth to boost the dollar against the euro in the next quarter. While concerns about a country leaving the 17-nation euro bloc have ebbed since last fall, when Greece appeared at risk for a messy default, four in 10 still see at least one country splintering off, the Barclays survey found. But that is down from nearly 50% in the bank's November survey.
• Karzai Call for U.S. Pullout From Villages Is Tempered. The Afghan government qualified President Hamid Karzai's demand for an immediate withdrawal of U.S.-led coalition forces from Afghan villages, saying it will be the subject of negotiations that could take months. Mr. Karzai stunned the U.S. and its coalition allies last week by demanding that foreign forces pull out from villages and into bases, a move that would cripple U.S. military strategy.
• U.S. Readies for Spring Clash With Taliban. In Afghan War's Last Fighting Season, Strategy Is Aimed at Protecting Kabul.
• Insurers Set Plans in Case Mandate Is Quashed. The insurance industry and advocates of the health-care overhaul are sketching out contingency plans in case the Supreme Court strikes down a central part of the law in the coming months.
• With Gas Prices Rising, Smog Rules May Stall. The Obama administration, facing political heat over high gasoline prices, may delay new rules that would cut pollution from cars but also could bring higher prices at the pump, environmental and industry leaders said. The rules would require refiners to make cleaner-burning gasoline and auto makers to build cars that emit fewer smog-forming pollutants. The Environmental Protection Agency was scheduled to roll out the rules before April, but it hasn't yet submitted them for White House review.
• Wall Street Keys On Landlord Business. Some of the biggest names on Wall Street are lining up to become landlords to cash-strapped Americans by bidding on pools of foreclosed properties being sold by Fannie Mae. The idea is that the new owners would rent out the homes at first rather than reselling—potentially aiding a housing-market recovery by reducing the number of properties clogging the market.
• Biotech Funding Gets Harder to Find. Biotechnology firms are coming around to a harsh reality: The gravy days are over. These small, innovative drug companies were once an investment darling, able to secure millions of dollars from venture capitalists and even more later through public offerings. But in recent years, venture financing for biotech has been in decline, due to the tough economic environment and poor returns from stock offerings.
• Greek Deal Highlights Flaws in Default Swaps. A group of financial-market players on Monday will determine that holders of $3.2 billion in Greek credit-default swaps will receive around $2.5 billion in compensation for Greece's debt restructuring—a payout that mirrors the loss that creditors suffered. But the happy outcome owes much to mere chance. It masks flaws in the contracts, say some market participants and legal experts, that have rattled investors and are leading to calls to revamp how the swaps are handled for defaulting sovereign nations. Credit-default swaps, or CDS, are insurance-like contracts designed to pay off when creditors aren't paid back. The issue arises because Greece used so-called collective-action clauses to force a debt exchange on the vast bulk of its bondholders. It gave a package of new securities to its creditors and then tore up the old bonds.

Business Insider:

• Two Significant Shifts In The Currency Futures Market. There were two significant shifts in net speculative positioning it the week ending March 13, according to the latest Commitment of Traders report. The first is an acceleration of the short covering in the euro. The second is the extension of short yen positions.
• Look Who's REALLY Footing The Bill In The $25 Billion Mortgage Settlement With The Mega-Banks. Surprise! The banks win again.
• Romney Dominates in Puerto Rico's Republican Caucuses.
• The TSA Strikes Again: Now They Are Harassing a Child With a Broken Leg. (video)
• Cartoons: American is Losing Control in the Middle East.
• 10 Fascinating Insights From Wall Street's Sharpest Minds.
  

Zero Hedge:

• "We Are This Far From A Turnkey Totalitarian State" - Big Brother Goes Live September 2013. In its April cover story, Wired has an exclusive report on the NSA's Utah Data Center, which is a must read for anyone who believes any privacy is still a possibility in the United States: "A project of immense secrecy, it is the final piece in a complex puzzle assembled over the past decade. Its purpose: to intercept, decipher, analyze, and store vast swaths of the world’s communications as they zap down from satellites and zip through the underground and undersea cables of international, foreign, and domestic networks....Flowing through its servers and routers and stored in near-bottomless databases will be all forms of communication, including the complete contents of private emails, cell phone calls, and Google searches, as well as all sorts of personal data trails—parking receipts, travel itineraries, bookstore purchases, and other digital “pocket litter.”
• Morgan Stanley(MS), Italy, Swaps and Misplaced Outrage. In this case, don’t blame Morgan Stanley, blame Italy, and be very afraid of what else Italy has done.
• The Rebirth of the Actively Managed U.S. Stock Fund.
  

CNBC:

• Chinese Writers' Group Sues Apple(AAPL), Reports State Media. A group of 22 Chinese authors have filed a claim against U.S. technology group Apple, alleging its App Store sells unlicensed copies of their books, Chinese state media reported on Sunday.
• China Cannot Delay Tough Reforms: Vice Premier. China cannot delay tough economic reforms, Vice Premier Li Keqiang said on Sunday, underscoring the top leadership's push for market-based change after the sacking last week of an ambitious provincial leader who wanted a bigger state role in the economy.
• Apple(AAPL) Likely to Declare 2.5% Annual Dividend on Monday Call: Analysts, Investors. It seems investors will finally get the answer to one of the biggest questions that had been the talk of Wall Street this year: What is Apple going to do with all that cash? The company, in an announcement released Sunday evening, said that it will be holding a conference call Monday at 9 am EDT to “announce the outcome of the company’s discussions concerning its cash balance.”

Wall Street All-Stars:

• Indicator Update: Desperately Seeking Safety.
  

Seeking Alpha:

• Bank and Broker Default Risk Still Elevated. (graph)

IBD:

• After Timberland Buyout, VF(VFC) Looks For Next Big Deal.

Forbes:

• Chinese Leader: Cultural Revolution Coming to China.

CNN:

• More Pain at the Pump. Gas Prices Rise for 9th Straight Day.
• Obama's Budget Will Add $6.4 Trillion to Debt - CBO. Lawmakers on Friday were handed the official score card on President Obama's proposed budget for 2013. The president's budget would add $6.4 trillion in deficits between 2013 and 2022, the CBO said. Under the so-called alternative fiscal scenario, where Congress simply extends a number of favored policies, cumulative deficits would reach nearly $11 trillion. The president's proposals would bring debt held by the public to 76% of GDP at the end of the period measured, up from 68% last year. Debt held by the public includes U.S. bonds bought by investors, but excludes money owed to government trust funds, such as Social Security and Medicare. Independent deficit watchdogs have been urging lawmakers to put in place a debt-reduction plan to lower public debt to at least 60% by the end of the decade.

Washington Post:

• US Prepares to Approve Aid to Egypt Despite Democracy, Rights Concerns. The Obama administration is preparing to approve the release of at least a portion of $1.5 billion in aid to Egypt despite concerns that Cairo is not complying with conditions to receive the assistance, U.S. officials said Friday. Secretary of State Hillary Rodham Clinton must soon determine if Egypt is meeting the criteria by supporting the country’s transition to democracy and upholding human rights. The State Department said Friday that could happen as early as the middle of next week. But instead of certifying to Congress that Egypt’s military rulers are in compliance, officials said Clinton is likely to waive the criteria in the interest of national security, which would free up all of the aid at stake.
  

US News:

• Why President Obama's Approval Ratings Are Going Down. The people I've spoken with lately—both Republicans and Democrats—about the 2012 election have stopped talking about the president's re-election chances, the horserace on the right, or even the latest primaries. They talk about being worried. They're worried about the massive expansion and sprawling reach of the federal government over the last four years.
  

Reuters:

• UPS(UPS) Reaches Deal to Buy TNT Express - Sources. United Parcel Service (UPS) has agreed to pay 5.1 billion euros ($6.7 billion) to buy Dutch rival TNT Express, with the deal set to be announced on Monday, two people familiar with the talks said.

The Telegraph:

• China Angers the World as Battle for Rare Earth Metals Escalates. Last week, the EU, US and Japan formally asked the World Trade Organisation (WTO) to look at China’s export restriction on rare earth metals. Lawyers believe the case will run and run.
• PIMCO Chief Mohamed El-Erian Expects 'Second Greece' in Portugal. Mohamed El-Erian, PIMCO’s chief executive, said Portugal will need a second rescue as the original package of €78bn (£65bn) falls short, setting off a political storm over EU rescue costs. “Unfortunately, that is how it will be. It will make the financial markets nervous because they are worried about a participation of the private sector,” he told Der Spiegel over the weekend.
  

El Pais:

• Spain's ruling People's Party is studying scrapping some tax deducting and accelerating payments in preparation for the 2012 budget to be presented March 30, citing unnamed officials the Budget Ministry.
  

Kathimerini:

• Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of euro-area finance ministers, said Germany and the Netherlands wanted the IMF to provide financial support to Greece, citing an interview. "The Dutch and German parliaments would be very reluctant to provide Greece with assistance if there were no support from the IMF," Juncker said. Juncker also said Greece's partners insisted primarily on fiscal consolidation and didn't put enough emphasis on promoting the nation's growth.

Dong-A Ilbo:

• North Korea may launch "a more vicious attack" on the Korean peninsula's east or rear areas after drawing attention to the Yellow Sea on the peninsula's west, citing an interview with South Korea's navy chief. South Korea is seeing a lot of North Korean activity and is preparing for provocation, Admiral Choi Yoon Hee said.
  

The Australian:

• Japan May Shoot Down North Korean Rocket. JAPAN is considering shooting down the rocket North Korea has threatened it will launch next month if the missile, or parts of it, falls into Japanese territory. The move comes as the US all but declared the recent food-for-denuclearisation dead if the North went ahead with the launch. Even China, the north's sole significant political and economic supporter, said it was concerned by the plan. Japanese Defence Minister Naoki Tanaka revealed on the weekend that his ministry was considering deploying ground-based Patriot missiles and Japan's Aegis-equipped destroyers to activate its missile shield.

Xinhua:

• China asks senior management of financial firms under the central government to strengthen risk controls, citing a document from the CPC Central Committee.
• Chinese Vice Premier Li Keqiang said the sovereign debt crisis for some countries will be "hard to resolve" in the short term. The global economic and financial markets face more risks and challenges, Li said.
  

WAM:

• About 8,000 companies owned by Iranians operate in the United Arab Emirates, citing a statement from the Iranian Business Council in Dubai. UAE Economy Minister Sultan Bin Saeed Al-Mansouri and his Iranian counterpart Shamsddin Hosseini discussed ways to promote economic relations at a meeting yesterday in Abu Dhabi.
  

Weekend Recommendations

Barron's:

• Made positive comments on (QCOM) and (BATS).
• Made negative comments on (THC).
  

Night Trading

• Asian indices are -.50% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 132.0 -7.0 basis points.
• Asia Pacific Sovereign CDS Index 113.50 -5.5 basis points.
• FTSE-100 futures +.15%.
  
• S&P 500 futures +.21%.
• NASDAQ 100 futures +.37%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ADBE)/.57

Economic Releases
10:00 am EST

• The NAHB Housing Market Index for March is estimated to rise to 30 versus a reading of 29 in February.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Dudley speaking, EFSF Investor Conference Call, Sidoti Emerging Growth Forum, JPMorgan Gaming/Lodging/Restaurant/Leisure Forum and the Goldman Luxury Goods Conference could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by energy 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 week.