Today's Headlines

Bloomberg:

• ECB's Weidmann Says Rescue Fund Expansion Won't Solve Crisis. European Central Bank Governing Council member Jens Weidmann said boosting Europe’s rescue funds will not solve its debt crisis, days before finance ministers meet to discuss expanding the limit on bailout lending. “Just like the ‘Tower of Babel,’ the ‘Wall of Money’ will never reach heaven,” Weidmann said in a speech at Chatham House in London today. “If we continue to make it higher and higher, we will, in fact, run into more worldly constraints,” which might include setting “incentives that lead to new problems in the future.” “All the money we put on the table will not buy us a lasting solution to the crisis,” Weidmann said, citing Bank of England Governor Mervyn King’s view on the matter that it merely buys time. He said the risks that fiscal austerity will prevent countries returning to growth are “being exaggerated,” and “in any case, there is little alternative.” Weidmann rejected any calls for the ECB to “temporarily ease the pressure” and do more to support the euro-area economy. Weidmann said the ECB had already “undertaken tremendous efforts” and said the reason the central bank’s founding treaty “explicitly prohibits monetizing public debt” is to avoid a situation where “governments have an incentive to accummulate debt.” “If central banks went down this route, they would be redistributing fiscal risks and costs among the taxpayers of the euro area,” he said. That would have “a highly corrosive effect on the credibility of central banks and on their independence,” Weidmann said.
• China’s Stocks Decline to 7-Week Low on Profit Concern. China’s stocks fell the most in four months after Societe Generale SA said Chinese corporate profits won’t grow at all this year and the nation’s largest copper producer reported slumping earnings. Jiangxi Copper Co. (600362) slid 5.5 percent after posting an 18 percent drop in net income and Societe Generale said industrial profit for the first two months signaled overly optimistic estimates for earnings. China Citic Bank Corp. led declines for lenders as Aberdeen Asset Management Plc said it is underweight on China on concern about the nation’s non-performing loans. Air China Ltd. (601111), the biggest international carrier, lost the most since December after saying passenger growth may slow. The Shanghai Composite Index (SHCOMP) fell 62.3 points, or 2.7 percent, to 2,284.88 at the close, its biggest drop since Nov. 30. The Shanghai Composite has dropped 7.1 percent from this year’s high on March 2 on concern the world’s second-biggest economy is stalling as the government’s property curbs and tight monetary policies reduce profits. Industrial companies posted their first January-February profit decline since 2009, as net income dropped 5.2 percent from a year earlier to 606 billion yuan ($96 billion), the National Bureau of Statistics said yesterday. That compared with a 34.3 percent gain in the first two months of 2011. The industrial profit figures suggest 2012 consensus earnings estimates for Hong Kong-listed Chinese companies are “far too optimistic,” Societe Generale strategists Guy Stear and Anthony Lee wrote in a note to clients dated yesterday. A gauge of material producers in the CSI 300 fell 4.3 percent, the most among 10 industry groups. “The economy is bad, demand is weak, and the upstream is particularly in trouble,” said Tao Dong, chief regional economist at Credit Suisse AG in Hong Kong. “Some companies’ earnings, especially those upstream, are probably going to feel a hard landing instead of a soft landing.” Measures of small- and medium-size companies and ChiNext startup firms slumped 4 percent and 5.1 percent respectively in Shenzhen on concern rising share supply will damp valuations.
• Bovespa Declines as Brazil Exports Seen Hurt by China Slowdown. The Bovespa index fell toward the lowest level in six weeks as a drop in commodities prices pushed raw-material producers down amid concern growth will falter in China, Brazil’s biggest trading partner. Mining company Vale SA (VALE5), whose top export market is China, slid as metals prices declined. BM&FBovespa SA (BVMF3), the operator of Latin America’s biggest securities exchange, sank after a court ordered it to pay 8.42 billion reais ($4.62 billion) in a civil case. The Bovespa fell 1.6 percent to 65,014.75 at 1:16 p.m. in Sao Paulo.
• Obama Power-Plant Rule Signals Demise of 'Old King Coal'. “This EPA is fully engaging in a war on coal,” West Virginia Democratic Senator Joe Manchin said in a statement. “This approach relies totally on cheap natural gas and we’ve seen that bubble burst before.” “It might sound good now, but what happens if those prices go up?” Manchin added.
• Oil Falls for First Time in Four Days After Supply Gain. Futures declined as much as 2.5 percent after the government said supplies gained 7.1 million barrels to 353.4 million last week, the largest increase since July 2010. Crude oil for May delivery fell $2.23, or 2.1 percent, to $105.10 a barrel at 12:50 p.m. on the New York Mercantile Exchange. Oil traded at $105.30 before release of the inventory report at 10:30 a.m. The price is up 6.3 percent this year. Brent oil for May settlement dropped $1.55, or 1.2 percent, to $123.99 a barrel on the London-based ICE Futures Europe exchange.
• Zinc Stockpiles Near 17-Year High on Increases in New Orleans. Zinc stockpiles monitored by the LME neared the highest level in 17 years on gains in New Orleans. Inventories rose 9,850 metric tons, or 1.1%, to 898,675 tons, daily LME figures showed today. The was the highest level since May 23, 1995, according to figures compiled by Bloomberg. Stocks in New Orleans warehouses gained 10,100 tons to 581,425 tons, the most metal on record at the location for data going back to December 1998. World supply of refined zinc will exceed demand by 144,000 tons this year, Natixis estimates. Inventories have climbed 14% this year in New Orleans, which holds 65% of global LME stocks of zinc.
• Britons See Disposable Incomes Plunge Most Since 1977: Economy. Britons suffered the biggest drop in disposable income in more than three decades last year in a squeeze that may continue this year as energy prices increase. Real household disposable income fell 1.2 percent, the Office for National Statistics said today in London. That’s the biggest drop since 1977 when the then Labour government sought to cap incomes growth in an attempt to bring down inflation. The report also showed that the economy shrank 0.3 percent in the fourth quarter, more than the 0.2 percent contraction previously estimated.
• Arab Spring Turns to Economic Winter as Unemployment Grows. Amir Mohammed has been sleeping outside the Libyan Embassy in Cairo awaiting a visa for a week, his bed a layer of cardboard on the sidewalk. He has given up on finding a job in Egypt and is looking for a way out. "I'm trying to just eke out an existence in my own country, but I can't," the 30-year-old hairdresser said. "There's no work. Why did we have a revolution? We wanted better living standards, social justice and freedom. Instead, we're suffering."
• Treasury Bull Market Death Knell Premature, Higgins Says. Treasury yields may pare their recent gains after the U.S. government bond market’s worst quarter in more than a year amid continued Federal Reserve market intervention and a slow economic recovery, according to Standish Mellon Asset Management Co.’s Tom Higgins. Talk of the 30-year-old bull market’s end is “premature” because benchmark 10-year note yields may head lower before they settle into a higher trading range of 2.25 percent to 3 percent by the end of 2012, Higgins, global macro strategist in Boston at the firm, said in a phone interview. “The continued weak backdrop in the economy, the deleveraging environment we are still in, regulation that favors less risky assets and the continued presence of the Fed will continue to anchor rates at lower levels,” said Higgins, whose firm oversees $85 billion in fixed-income assets.
• Cheddar-Bunny Maker Annie's(BNNY) Surges in Trading After IPO. Annie’s Inc. (BNNY), the maker of organic and natural foods such as bunny-shaped crackers, surged as much as 77 percent in its trading debut, after raising $95 million in an initial public offering that priced the shares above the range. The shares rose 74 percent to $33.03 at 11:48 a.m. New York time after climbing as high as $33.54. Annie’s and its investors sold 5 million shares for $19 each in the IPO, according to a statement. The company earlier offered them for $16 to $18 apiece.
• Justices Suggest Other Parts of Health Law May Be Thrown Out. U.S. Supreme Court justices indicated they may throw out other parts of President Barack Obama’s health-care law if they strike down its core requirement that Americans obtain insurance. A day after the justices cast doubt on the insurance mandate’s survival, they tangled today over the consequences such a ruling would have. The court is in its third and final day of arguments on Obama’s signature domestic achievement, a law that would extend health coverage to 32 million people. Justices across the ideological spectrum expressed interest in overturning at least provisions that require insurers to cover people with pre-existing conditions. The administration and the insurance industry say those rules are so closely linked to the mandate that they can’t be separated.

Wall Street Journal:

• Copper Slumps on Disappointing Economic Data. Copper futures fell on weaker-than-expected economic data from the U.K. and the U.S., as well as pressure from a stronger dollar. The most actively traded contract, for May delivery, was down 7.70 cents, or 2%, at $3.8030 a pound in morning trade on the Comex division of the New York Mercantile Exchange.
• Justices Spar Over Health Law. Justices in the Supreme Court's conservative majority said Wednesday that it would be difficult to figure out which parts of the Obama health-care law should survive if one part of it is judged unconstitutional. Wednesday morning's 90 minutes of argument involved a scenario in which the court decides to strike down the law's provision requiring Americans to carry health insurance or pay a penalty. Whether that scenario becomes reality is still uncertain—at Tuesday's arguments, swing vote Justice Anthony Kennedy seemed to waver—but if it does, the justices must decide what happens to the rest of the law. On Wednesday, the court's four liberals moved to protect the law, arguing that most of it should be kept even if the mandate falls. Justice Ruth Bader Ginsburg, the court's senior liberal, said that if the justices must choose between "a wrecking operation" or a "salvage job," the "more conservative approach would be salvage." But conservative justices repeatedly raised the difficulty of such an operation for a law that has hundreds of provisions. Justice Antonin Scalia said it would be "totally unrealistic" to expect the Supreme Court to "go through this enormous bill item by item and decide each one."
• Poll: Santorum's Pennsylvania Lead Vanishes.
  

MarketWatch:

• Apple(AAPL) Products Show Up In More Than Half of U.S. Homes: Study.

CNBC.com:

• Job Growth Expected From Cheap Natural Gas. The nation's fast-growing supply of cheap natural gas is setting off a manufacturing revival that's expected to create hundreds of thousands of jobs as companies build or expand plants to take advantage of the low prices.

Business Insider:

• Legal Analyst: Obamacare Goes From 'Train Wreck' to 'Plane Wreck'.
• A Democratic Congressman Was Just Tossed Out Of The House For Wearing A Hoodie.
• Analyst Visits China and Comes Back With Some Bad News. The slowdown is real.
• 78% of Americans Still Expect Their Home to Decline in Price Over Next Year.
• Jack Welch Makes Some Worrisome Comments On The State Of The Economy.
• Obama Has Hired An Army Of Debt Collectors To Go After Student Loan Deadbeats.
• There Are 2 Factions at War in the Chinese Communist Party.
  

Zero Hedge:

• Mark Grant Explains The Latest European Con.
• Goldman(GS) on Europe: "Risk Of 'Financial Fires' Is Spreading.
• MF Global Hearing Live.
• Europe Leaks It Will Fix Crushing Debt Problem With €940 Billion Of More EFSFESM Debt.

ForexLive:

• EuroView: Focus On Spain's Deficit Has Obscured Its Debt. The problem for Madrid is that the official figures are seen as increasingly less reliable. With the bill to clean up the country’s faltering banks expected to rise well above the E52 billion that Prime Minister Mariano Rajoy has planned, markets worry that Spain’s debt may suddenly explode the way Greece’s deficit seemed to in 2009. According to some analysts, the signs are already there.

NY Post:

• Bidding War For Book By Former Goldman Sachs(GS) Exec Greg Smith Could Hit $1 Million. Former Goldman Sachs executive Greg Smith, who resigned this month via a scathing op-ed in the New York Times, has triggered a media bidding war for his memoir of life inside the belly of the Wall Street beast. One top editor said he believed the auction was already nearing the magic $1 million mark.
  

Charleston Daily Mail:

• Coal Executive Predicts More Layoffs Due To Weak Market. The head of Alpha Natural Resources(ANR), the largest coal producer in West Virginia, said the mine closures and layoffs the company announced last month probably won't be the last this year. Kevin Crutchfield, Alpha's chief executive officer, also said he is concerned that the United States is following a regulatory path that will eventually turn the nation irrevocably away from coal and raise prices. Alpha is the nation's largest supplier of metallurgical coal, which is used in steel making, and the company is a major supplier of steam coal used by utilities to generate electricity. Coal markets have weakened in recent months. Metallurgical coal demand has softened because of slower growth in China and India and ongoing financial uncertainty in Europe. "It's an uphill battle," Crutchfield said of the coal business. "We have ample coal reserves. It's reliable, affordable and abundant. But for some, coal is viewed as a past fuel -- which is unfortunate because we're getting in a situation where decisions being made now will be irreversible and we may live to regret it." "Regulating carbon dioxide as part of the Clean Air Act, I think it has the potential of being devastating to coal," Crutchfield said. "It hasn't manifested itself yet but there's a clear intent there. It could be hugely problematic for our nation. There already have been announcements of coal plants being closed. "We're throwing our eggs in the natural gas basket and making decisions that will become irrevocable. If natural gas prices spike back to $10, $11 or $12, people will be raising Cain."

Emerging Money:

• Quantitative Easing Will Punish The Shipping Industry. The shipping industry has suffered greatly from the previous rounds of quantitative easing by the Federal Reserve. The stimulative measures devalued the U.S. dollar. As a result, commodity prices for oil, gold, and silver soared as investors and traders sought alternative assets. The increasing price of fuel was devastating for shippers, and it looks like it’s happening again.

Telegraph:

• ECB's LTRO Plan Flops as Banks Cut Lending. European banks cut lending lines to companies last month, defying the central bank's grand plan to stem the crisis with a flood of more than €1 trillion (£838bn) of cheap loans. The European Central Bank (ECB) said loans to the real economy fell in February, scotching claims that radical long-term refinancing operation (LTRO) would stem the crisis. Open Europe's Raoul Ruparel said: "The LTRO has succeeded in avoiding a severe funding crunch...[But] it does not tackle the underlying lending risks which the banks are still keen to avoid, particularly with the looming recession in Europe."

Bild:

• German real gross wages have dropped 2.9% since 2000, citing the Hans Boeckler Foundation.
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth -1.60%

Sector Underperformers:

• 1) Coal -4.05% 2) Construction -2.83% 3) Alt Energy -2.76%

Stocks Falling on Unusual Volume:

• FCX, PUK, SNX, CRZO, GPOR, WIN, PTR, IVN, IMO, ELP, JOSB, AFFY, ALXN, CLNE, MDCA, MGAM, ALLT, FMCN, IACI, UBNT, EXPE, WPRT, ARUN, AIXG, PRGS, GTLS, BECN, FSLR, TEA, DRC, JOY, AIR, SDT, MWE, SABA, BTU, SWI, EPAM, CQP, INVN and JOSB
  

Stocks With Unusual Put Option Activity:

• 1) AMLN 2) LEAP 3) XLB 4) FXA 5) EWJ
  

Stocks With Most Negative News Mentions:

• 1) WFT 2) FFIV 3) GOOG 4) BAC 5) CAT
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growthy +.19%

Sector Outperformers:

• 1) Airlines +1.31% 2) Homebuilders +1.09% 3) Banks +.59%

Stocks Rising on Unusual Volume:

• PNR, UAL, TYC, DAL, AMLN, ZOLT, KIOR, ALKS, CALL, BVSN, PRXL, RBN, YELP and HII
  

Stocks With Unusual Call Option Activity:

• 1) AMLN 2) HTZ 3) YELP 4) INVN 5) NVDA
  

Stocks With Most Positive News Mentions:

• 1) ZZ 2) KKD 3) RBN 4) OSG 5) MKL
  

Charts:

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

Wednesday Watch

Evening Headlines
Bloomberg:

• Europe's Austerity Push Breaks Mother's Promise of Social Model. Across Europe, parents who assumed the social model built by governments since World War II would make each generation better off than the last are watching the sovereign debt crisis sweep away the promises they made to their children. Greek teachers and state workers are witnessing the end of the job for life and English students face U.S.-style tuition fees, while the French have been forced to join other Europeans in retiring later. In the background, politicians across the 27 European Union members are implementing austerity measures to the tune of about 450 billion euros ($600 billion), according to government announcements.
  
• Fisher Says Fed Has Done Its Job While U.S. Congress Hasn't. Federal Reserve Bank of Dallas President Richard Fisher said the U.S. central bank has “done its job” to provide liquidity when it was needed and that the economy now needs Congress to indicate a clearer plan for taxes and spending. “We have had generations of congressmen, congresswomen and senators who have not done their job,” Fisher said in a speech in Choudrant, Louisiana today. Businesses “are not going to hire until we have an outlook for what it’s going to take to run their business.”
• Subprime Bulls Trim Bets as Rally Raises 2011 Specter: Mortgages. A rally in the mortgage securities that blew up in the crash of 2008 is leading firms to trim bets in the $1.1 trillion market for home-loan bonds without government backing after similar gains a year ago evaporated. Some of the securities are up 12 percent this year, and have been outperforming the Standard & Poor’s 500 stock index, corporate bonds and gold. Western Asset Management Co. and Pine River Capital Management LP have sold after starting 2012 among the most bullish on the debt. In last year’s rally, the notes gained the same amount to peak in February before crashing as Europe’s fiscal crisis curbed risk-taking across markets.
• Bats CEO Cedes Chairman Role as Board Said to Delay IPO. Directors at Bats Global Markets Inc. won’t consider redoing the exchange operator’s initial public offering for at least a quarter, according to a person with direct knowledge of the matter. The decision was made during a board meeting yesterday, according to the person, who declined to be identified because the talks were private. Bats said in a statement that Chief Executive Officer Joe Ratterman will give up his chairman role after the company withdrew the IPO on March 23 because its computers couldn’t get the shares trading.
• China's Stocks Decline to 7-Week Low on Profit, Growth Concerns. China’s stocks fell to a seven-week low after some of the nation’s largest metals producers reported slumping earnings, boosting concern slowing economic growth and tight monetary policies are hurting profits. Jiangxi Copper Co. (600362), the nation’s biggest producer of the metal, declined 3 percent after reporting an 18 percent slide in net income. Angang Steel Co. dropped to the lowest in two months after posting a wider second-half loss on waning demand and high raw-material costs. Anhui Conch Cement Co Ltd., the largest cement producer, lost 1.2 percent after the Hong Kong-traded stock was cut to hold at Citic Securities Co. “Investors had expected earnings to be weak but they are still below expectations so stocks are falling,” said Larry Wan, Beijing-based head of investment at Union Life Asset Management Co., which manages the equivalent of $2.2 billion. “Moreover, shares have already risen quite a bit this year on monetary easing expectations.” The Shanghai Composite Index (SHCOMP) fell 14 points, or 0.6 percent, to 2,333.24 at 9:43 a.m. local time. Chinese corporate profits won’t grow at all this year, according to Societe Generale SA. The industrial profit figures suggest 2012 consensus earnings estimates for Hong Kong-listed Chinese companies are “far too optimistic,” Societe Generale strategists Guy Stear and Anthony Lee wrote in a note to clients dated yesterday. Aberdeen Asset Management Plc is underweight on China on concern about the nation’s non-performing loans, Assistant Investment Manager Pruksa Iamthongthong said in an interview. Aberdeen doesn’t own any shares in the four largest banks in China, according to Iamthongthong. Chinese residential developers may face a survival test this year, especially smaller players that leveraged to buy land and would now need to cut prices in order to replenish balance sheets, Iamthongthong said.
• Goldman(GS) Says Commodities Stance Reduced to Neutral in Near Term. Goldman Sachs Group Inc. (GS) reduced its so-called near-term recommendation on commodities to neutral from overweight, according to an e-mailed report today.

Wall Street Journal:

• Greece's Fringe Parties Surge Amid Bailout Ire. Weeks after agreeing to an agonizing bailout deal with Europe, Greece is splintering politically ahead of national elections, raising the risk that it won't be able to make the economic sacrifices still needed to keep it in the euro. The election, not yet scheduled but expected in April or May, is shaping up as a public revolt against Greece's political establishment, which has backed the austerity policies that are the price of financial life support from Europe and the International Monetary Fund.
• Justices Question Health Law. The Supreme Court's conservative justices sharply challenged the Obama administration's health-care overhaul Tuesday, raising clearly the prospect that the president's signature domestic achievement could be struck down. The court's liberal and conservative wings seemed inclined to split evenly over the question of whether the "individual mandate" requiring Americans to carry health insurance or pay a fine is constitutional. Justice Anthony Kennedy—nearly always the court's deciding vote—at times appeared to back the administration's position but also offered one of the toughest tests to the mandate, suggesting the government faced "a very heavy burden" on the requirement.
• Solyndra Kept Government Informed, Report Says. Solyndra LLC, whose abrupt bankruptcy filing last summer put the Obama administration's solar-power efforts in the spotlight, kept the government well informed of its finances and business prospects, according to a report by the company's chief restructuring officer. The report—whose author was hired by Solyndra's board—is based on a four-month investigation and was filed in bankruptcy court on Tuesday. It concludes that the Department of Energy, which had guaranteed a $535 million loan to Solyndra, was fully aware of the risks and kept up to date on the solar-power company's deteriorating finances.
• Applied Materials(AMAT) CEO: Solar Overcapacity To Last About Year. The solar industry will likely suffer from overcapacity for about a year, the chief executive of Applied Materials Inc. (AMAT) said, forcing the equipment maker to cut additional costs from its business.
• Goldman(GS) Bows to Pressure on Board. Goldman Sachs Group Inc. agreed to change its board structure in order to persuade a union pension fund to drop a shareholder proposal that could have cost Chief Executive Lloyd C. Blankfein his job as chairman. The deal between the New York securities firm and the American Federation of State, County and Municipal Employees means Goldman will appoint a "lead" director, but shareholders won't get a chance to vote at the firm's annual meeting in May on the proposal to replace Mr. Blankfein with an independent chairman.
• U.S. Outgunned in Hacker War. The Federal Bureau of Investigation's top cyber cop offered a grim appraisal of the nation's efforts to keep computer hackers from plundering corporate data networks: "We're not winning," he said. Shawn Henry, who is preparing to leave the FBI after more than two decades with the bureau, said in an interview that the current public and private approach to fending off hackers is "unsustainable.'' Computer criminals are simply too talented and defensive measures too weak to stop them, he said.
• Top MF Global Witness Talks Deal With Justice. The star witness in a congressional hearing about MF Global Holdings Ltd.'s collapse has told Justice Department representatives through her lawyers details about transactions that ended up dipping into customer funds, people familiar with the matter said. But Edith O'Brien, the assistant treasurer at MF Global, isn't expected to reveal those details when she appears at Wednesday's hearing of the House Financial Services Committee's oversight and investigations subcommittee. Ms. O'Brien plans to invoke her constitutional right against self-incrimination and to decline to answer questions, people familiar with the matter said.
• Demand for U.S. Debt Is Not Limitless. In 2011, the Fed purchased a stunning 61% of Treasury issuance. That can't last.
• The Open-Mic Second Term. Parsing President Obama's private chat with Dmitry Medvedev.

MarketWatch:

• Beijing Receives Criticism For Market Intervention. Scholars and company heads attending an economic forum on March 25 blamed excessive government involvement in economic affairs for structural problems in the world’s second-largest economy. China’s economy is retreating to a crude growth model due to government market intervention and price controls, producing rent-seeking and corruption, said Wu Jinglian, a senior researcher at the State Council’s Development and Research Center. He was speaking at the Lingnan Forum sponsored by Sun Yat-Sen University’s Lingnan College and Caixin.

Business Insider:

• Here Is The Moment When Justice Alito Shredded Verrilli At The Obamacare Hearings. (video)
• Sweeping Layoffs Hit TheStreet.com(TST).
• Video: JetBlue(JBLU) Captain's Meltdown Forces Emergency Landing.
  

Zero Hedge:

• On Europe's 'Stealth' Money Printing.
• This Is The World's Balance Sheet.
• SkyNet Wars: How A Nasdaq Algo Destroyed BATS.
  

CNBC:

• John Paulson Lowers the Bar to Pay Employees. Still suffering the repercussions of a huge downswing, hedge-fund manager John Paulson has told employees he’ll pay bonuses for this year out of his own pocket, according to someone familiar with the matter. Paulson’s flagship fund, Advantage Plus, fell a whopping 53 percent last year – prompting an apology to investors and a media drubbing. The decline also meant that it could be years before Advantage Plus and other fallen Paulson funds are able to return to their high-water mark, or the returns level at which John Paulson and his colleagues can begin to collect a significant percentage of their annual gains as performance fees. In an acknowledgement of that problem, Paulson recently told some employees he would reset the firm’s internal high-water mark to zero as of Jan. 1, said the person familiar with the matter, effectively meaning that if the company’s funds are in the black for 2012, those employees can collect bonuses pegged to this year’s returns and not be dragged down by last year’s losses. Paulson will pay for those bonuses himself, this person added.
• Organic Food Maker Annie’s Kicks Off Busy Week for IPOs. The initial offering of the company, best known for its organic mac n’ cheese and ubiquitous bunny logo priced at $19 a share late Tuesday. The expected range had been $14 to $16 but was raised to $16 to $18 on Monday — and wound up exceeding even that higher range.
• Obamacare Will Bankrupt US: Rep. Paul Ryan. (video) “It vastly underestimates how many employers will actually drop their employer health insurance and dump people into the government exchange,” Ryan said. In fact, he said private sector actuaries have told him that within a couple of years, about two-thirds of employers will “wash their hands” of offering health insurance to employees. “Just about everybody will be in the [government] exchange,” Ryan said. The result, he said, will be the "implosion of the health care system and an explosion of our public debt."

MSN Money:

• The Perils of Quantitative Easing. There are worries that one of the biggest consequences of more easing is inflation.

CNN:

• U.S. Corporate Tax Rate: No. 1 In The World. On Sunday, the United States gets a distinction no nation wants -- the world's highest corporate tax rate. Japan, which currently has the highest rate in the world -- a 39.8% rate on business income between national and local taxes -- cuts its rate to 36.8% as of April 1. The U.S. rate stands at 39.2% when both federal and state rates are included.

VentureBeat:

• Report: Number of U.S. Mobile Gamers Reaches 100 Million. A new report from international market research firm Newzoo is highlighting the ever-increasing popularity of mobile gaming. According to the Mobile Games Trend Report, the number of Americans who play video games on their smartphone, tablet, or iPod Touch has surpassed 100 million. Newzoo says 69 percent of U.S. mobile gamers play on a smartphone, while 21 percent play on a tablet, and 18 percent play on an iPod Touch. The firm’s latest trend report claims 13 percent of all time spent on games worldwide in 2011 was on a mobile device, totaling more than 130 million hours a day.

Reuters:

• Exclusive: Goldman's(GS) European Derivatives Revenue Soars. Goldman Sachs Group Inc's first-quarter earnings are expected to benefit from the increased use of derivatives by European clients seeking ways to hedge risk, according to an internal report seen by Reuters. Revenue at Goldman's investment bank in Europe increased by 8 percent from the year-ago period to $476 million, the report said. A big driver was derivatives that clients, corporations and financial institutions used to hedge bets in the stock and fixed-income markets. Overall client-driven derivatives revenue was up 142 percent year-to-date in Goldman's Europe division, helping to offset declines in more traditional investment banking businesses, like mergers and acquisitions.
  
• Volcker Rule Could Raise Energy Prices, Study Says. The proposed Volcker rule crackdown on trading and investing by banks could cause gasoline, electricity and natural gas prices to rise, according to a new report. The report, released on Wednesday by business information provider IHS Inc, seeks to gauge the rule's impact on energy companies and markets, including oil refineries, natural gas producers and electricity providers.
• Wells Fargo(WFC) to Face Lending Program Class-Action Suit. Wells Fargo & Co was ordered to face a class-action lawsuit in Minnesota federal court by investors who accuse the bank of improperly touting a lending program as safe when in fact it was risky.

Telegraph:

• Spain to Slash Spending as Economy Slumps Back into Recession. Spain’s fragile economy has fallen back into recession and the country faces a year of grinding economic decline as premier Mariano Rajoy slashes spending yet further to meet EU demands.
• Eurozone Needs 'mother of all firewalls', Says OECD. The eurozone needs "the mother of all firewalls" if it is to protect the EU's single currency from debt contagion, the Organisation for Economic Co-operation and Development (OECD) has warned.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -1.0% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 150.50 +3.0 basis points.
  
• Asia Pacific Sovereign CDS Index 128.0 -.5 basis point.
• FTSE-100 futures -.23%.
  
• S&P 500 futures +.14%.
  
• NASDAQ 100 futures +.12%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (FDO)/1.13
• (CMC)/.09
• (PAYX)/.37
• (PRGS)/.25
• (FUL)/.37
• (RHT)/.27
• (TXI)/-.82
• (MOS)/.69
• (VRNT)/.68
  

Economic Releases
8:30 am EST

• Durable Goods Orders for February are estimated to rise +3.0% versus a -4.0% decline in January.
• Durables Ex Transports for February are estimated to rise +1.7% versus a -3.2% decline in January.
• Cap Goods Orders Non-Defense Ex Air for February are estimated to rise +1.5% versus a -4.5% decline in January.
• Cap Goods Shipments Non-Defense Ex Air for February are estimated to rise +.9% versus a -3.1% decline in January.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,550,000 barrels versus a -1,1162,000 barrel decline the prior week. Distillate inventories are estimated to fall by -500,000 barrels versus a +1,763,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,550,000 barrels versus a -1,214,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise +.3% versus a -.5% decline the prior week.
  

Upcoming Splits

• (CPRT) 2-for-1
  

Other Potential Market Movers

• The Fed's Bernanke speaking, Fed's Bullard speaking, Fed's Fisher speaking, Fed's Rosengren speaking, ECB's Weidmann speaking, ECB's Constancio speaking, Italian bond auction, 5Y T-Note auction, weekly MBA mortgage applications report, (AMAT) analyst meeting, (ARUN) analyst day, BB&T Commercial/Industrial Conference and the CIBC Retail/Consumer Conference could also impact trading today.
  

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

Stocks Slightly Lower into Final Hour on Global Growth Fears, Profit-Taking, Euro Weakness, Less Financial Sector Optimism

Broad Market Tone:

• Advance/Decline Line: Slightly Lower
  
• Sector Performance: Mixed
  
• Volume: Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 15.07 +5.68%
  
• ISE Sentiment Index 119.0 -34.62%
  
• Total Put/Call .96 -4.95%
  
• NYSE Arms 1.39 +154.96%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 89.06 +.22%
  
• European Financial Sector CDS Index 202.39 -1.14%
  
• Western Europe Sovereign Debt CDS Index 266.55 -3.32%
  
• Emerging Market CDS Index 239.92 +1.64%
  
• 2-Year Swap Spread 24.50 -.5 basis point
  
• TED Spread 39.0 -1.25 basis points
  
• 3-Month EUR/USD Cross-Currency Basis Swap -49.50 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .08% +1 basis point
  
• Yield Curve 186.0 -3 basis points
  
• China Import Iron Ore Spot $147.10/Metric Tonne +1.1%
  
• Citi US Economic Surprise Index 23.60 -.6 point
  
• 10-Year TIPS Spread 2.33 -1 basis point
  

Overseas Futures:

• Nikkei Futures: Indicating a -85 open in Japan
• DAX Futures: Indicating a +4 open in Germany

Portfolio:

• Slightly Higher: On gains in my Tech and Medical sector longs
  
• Disclosed Trades: None
  
• Market Exposure: 75% Net Long

Today's Headlines

Bloomberg:

• Merkel Said to Say She Sees German Yields Rising as Crisis Ebbs. Chancellor Angela Merkel told lawmakers that she expects German borrowing costs to rise as the debt crisis ebbs and the country’s status as a haven wanes, according to two party officials who took part in the meeting. Merkel made her comments to lawmakers of her Christian Democratic Union at a regular meeting in parliament in Berlin today, according to the officials, who spoke on condition of anonymity because the briefing was private.
• Corporate Bond Risk Falls in Europe on Recovery Support Bets. The cost of insuring against default on European corporate debt fell for a second day on speculation policy makers will bolster support for the economic recovery. The Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings dropped 16 basis points to 574.5, according to JPMorgan Chase & Co. at 10:30 a.m. in London. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 2.75 basis points to 115. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers fell 3.5 basis points to 200 and the subordinated index declined seven to 316.
• Libor Flatlines as Europe-Wary See Stress: Credit Markets. Stresses in the global financial system have stopped easing as European policy makers signal they’re unlikely to extend a third round of unlimited loans to the region’s banks and as bond yields in Spain and Portugal begin to rise again. The three-month London interbank offered rate has held at about 0.47 percent every day in March, after sliding from this year’s high of 0.58 percent on Jan. 3. Measures from interest- rate swap spreads to the relative yields on short-term bonds sold by the world’s biggest banks also show the health of the financial system isn’t improving.
• Barclays Gas ETN(GAZ) Plummets as Credit Suisse VIX Note(TVIX) Crashes. A Barclays Plc (BARC) exchange-traded note that traded 134 percent above the value of the natural-gas index it’s tied to lost 42 percent of the premium in three days as investors exit funds that diverge from underlying assets. The iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN has plunged 30 percent since March 21 as its benchmark index decreased 7.1 percent, according to data compiled by Bloomberg.
• Egypt Parties Quit Constitution Panel Citing Islamist Dominance. Some of Egypt’s leading secular parties and politicians quit a panel to draft a constitution, adding to tensions over the country’s political transition that have weakened the economy. Among those who pulled out were the Free Egyptians, founded by billionaire Naguib Sawiris, the Egyptian Social Democrats, and prominent lawmakers including Mohamed Abu Hamed and Amr Hamzawy, the state-run Middle East News Agency reported today. They criticized what they said were attempts by the Muslim Brotherhood to monopolize selection of members, MENA said. The withdrawal, a day before the committee was to meet for the first time, adds to turmoil surrounding Egypt’s transition to democracy which has set back the economy’s recovery after last year’s uprising against Hosni Mubarak.
• Consumer Confidence Falls in March. The Conference Board’s index was 70.2 this month, in line with the median forecast in a Bloomberg News survey, down from a revised 71.6 reading in February, according to the New York- based research group.

Wall Street Journal:

• Justices Challenge Government Over Health Law. The Supreme Court's five conservative justices on Tuesday sharply challenged the Obama administration's arguments for the health-care law, with Justice Anthony Kennedy saying the government has a "very heavy burden of justification" for the measure's requirement that people carry health insurance or pay a penalty. But Justice Kennedy, a perennial swing vote on the court, also asked some skeptical questions of the law's challengers, leaving the fate of President Barack Obama's signature legislation in doubt
  

CNBC.com:

• ObamaCare Will Bankrupt States. If the U.S. Supreme Court finds the Obama health insurance law constitutional "it's going to basically bankrupt the states," Texas Gov. Rick Perry told CNBC Tuesday. The former Republican presidential candidate said his state is considering its options if the constitutionality is upheld. Perry claimed the Obama administration "misrepresented the cost of this bill" for the program when President Barack Obama said Texas would pay $27 billion over the next 10 years. "Those numbers are going to escalate," Perry predicted. "The cost of the bill to the states is going to be absolutely stunning."

Business Insider:

• A Bunch of the Prop Traders That Left Goldman(GS) to Start Hedge Funds Are Getting Smoked.
• Read These Questions, And You'll See Why Today Was A Disaster For Obamacare.
• Chesapeake Energy(CHK) CEO: In a Few Years, We'll Be Able to Say 'To Hell With OPEC'.
• How Canada Became One Of The World's Largest Oil Players In Just 10 Years.
• House Dems Have Proposed Raising Taxes By 40%.
  

Zero Hedge:

• Case Shiller Finds Home Prices Declined For 9th Consecutive Month In January. (graphs)
• Germany: The Final Frontier... Whose True Debt/GDP Is Now 140%.
• Italian Debt - Not Kicking The Can Too Far.
  

Seeking Alpha:

• Housing Bottoms And The Elusive Recovery.

CNN:

• Goldman(GS) Losing Private Equity Exec. Gene Yoon is leaving Goldman Sachs (GS) to manage a new $500 million private equity fund, Fortune has learned. Sources say that the new effort will officially launch in May, and that it will be bankrolled by a European family office.

market folly:

• 2012 Hedge Fund Compensation Report. Here's some key takeaways from 2012:
  

The Hill:

• Toobin: Obama Healthcare Reform Law 'in grave, grave trouble'. A top legal analyst predicted Tuesday that the Obama administration's healthcare reform legislation seemed likely to be struck down by the Supreme Court. Jeffrey Toobin, a lawyer and legal analyst, who writes about law related topics for The New Yorker said the law looked to be in serious "trouble." "This law looks like it's going to be struck down," Toobin said Tuesday on CNN. "I think this law is in grave, grave trouble."

Reuters:

• Higher Gasoline Prices Could Stem Travel Plans - Survey. Rising gasoline prices in the United States could lead business and leisure travelers to cut back on travel plans, which in turn could have implications for airlines, hotels and retailers, a survey found. A survey of some 2,500 people by the U.S. Travel Association earlier this month found that higher gas prices would affect the summer travel plans of 54 percent of vacationers who planned to go by car. Among business people, 26.8 percent said rising fuel prices would alter their summer travels.
• Harbinger Capital II Down 29.6% in February - Sources. Philip Falcone's Harbinger Capital Partners Fund II lost more money in February, due largely to the fund's big investment in ailing telecom company LightSquared, two sources familiar with the numbers said. The fund declined 29.6 percent in February, leaving it down 26.7 percent for the first two months of the year.

AP:

• Egypt's Brotherhood Considering Presidential Run. Egypt's Muslim Brotherhood was debating Tuesday whether to field a candidate in upcoming presidential elections, a much-anticipated decision that would signal whether the fundamentalist group intends to escalate or defuse rising tensions with the nation's other political players. The Brotherhood has emerged as the most powerful political group since Hosni Mubarak was ousted last year, capturing nearly 50 percent of the seats in Egypt's first post-uprising parliamentary elections. It's increasing grip on power has fueled concerns among liberals and secularists of the Islamist group's intentions and whether it aims to govern alone, controlling both the parliament and the presidency. More than 100 members of the Brotherhood's senior legislative council were meeting Tuesday to decide on fielding a presidential candidate, according to a statement on the group's website. For months, the Brotherhood pledged not to contest the presidency, but recently officials from the group have reconsidered, opening the door to a possible presidential run.