Stocks Surging into Final Hour on Less Eurozone Debt Angst, Fed Commentary, More Tech Sector Optimism, Short-Covering

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Below Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 17.05 -5.91%
  
• ISE Sentiment Index 110.0 +15.79%
  
• Total Put/Call .84 -7.69%
  
• NYSE Arms .79 -6.54%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 97.93 -1.81%
  
• European Financial Sector CDS Index 247.0 -3.57%
  
• Western Europe Sovereign Debt CDS Index 274.66 -2.55%
  
• Emerging Market CDS Index 258.38 -2.87%
  
• 2-Year Swap Spread 29.0 -2.25 basis points
  
• TED Spread 38.0 -.5 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -44.50 +1.5 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .09% +1 basis point
  
• Yield Curve 171.0 +1 basis point
  
• China Import Iron Ore Spot $146.70/Metric Tonne unch.
  
• Citi US Economic Surprise Index -.1 -4.3 points
  
• 10-Year TIPS Spread 2.27 +1 basis point
  

Overseas Futures:

• Nikkei Futures: Indicating a +58 open in Japan
• DAX Futures: Indicating +7 open in Germany
  

Portfolio:

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

Today's Headlines

Bloomberg:

• Merkel Backs Draghi's Call for Growth to Combat Debt Crisis. Chancellor Angela Merkel backed European Central Bank President Mario Draghi’s call to focus on spurring economic growth, as German officials rejected charges they are fixated on budget austerity to fight the debt crisis. Europe needs growth “in the way that Mario Draghi, the president of the European Central Bank, said it today, that is in the form of structural reforms,” the chancellor told a conference of her Christian Democratic bloc in Berlin today. Hollande called the remarks helpful and said France won’t ratify the fiscal pact in its current form if he is elected. “The main risk at this time is that the European economy remains in a recession because not enough credit is provided to companies,” the Socialist candidate told a news conference in Paris today.
• Hollande Vows Not to Ratify Euro Pact, Auguring Merkel Clash. French Socialist Francois Hollande, the leading presidential candidate, said France won’t ratify the European agreement pushed by Germany to tighten budget rules if he’s elected. “There will be a re-negotiation,” Hollande told journalists today in Paris. “Either there will be a new treaty, or there will be a modification of the existing treaty. It’s about negotiation.” The comments put Hollande on a collision course with German Chancellor Angela Merkel, who has championed debt reduction as the key to ending the region’s fiscal crisis. Hollande, who has also pledged to eliminate France’s budget deficit, is aiming to use popular support at home to strengthen his hand in talks to promote an alternative. Merkel and her ruling party are standing firm on German-led remedies, including the commitment to cut debt that was signed last month by all 17 euro-area leaders, among them Hollande’s opponent, President Nicolas Sarkozy. “If Mr. Hollande were to say that he wants to increase government spending and save less, he’ll lose the confidence of the financial markets,” Peter Altmaier, the parliamentary whip of Merkel’s Christian Democrats, said in an interview in Berlin yesterday. “We will stick to our fundamental principles because there’s really no alternative.”
• Credit Suisse Chief Says April Market Conditions Less Favorable. Credit Suisse Group AG (CSGN) Chief Executive Officer Brady Dougan said market conditions worsened in April from the first quarter, when its investment bank returned to profit after a 2011 loss. “So far in April market conditions haven’t been as favorable as they were in the first quarter,” Dougan said in an interview with Bloomberg Television in Zurich today. “We’re pretty constructive about what we hope we’ll see for the rest of the year. We certainly have to be prepared for volatility in the markets.”
• EAA Confounds Schaeuble's Debt Reduction Plan, Handelsblatt Says. Erste Abwicklungsanstalt, the so- called bad bank formed to wind down assets of German state-owned lender WestLB, will confound Finance Minister Wolfgang Schaeuble’s plan to reduce the country’s debt load, Handelsblatt newspaper said, citing people it didn’t identify. EAA expects WestLB to transfer a portfolio of about 100 billion euros ($132 billion) in the next months, of which about 50 billion euros will be added to the government’s debt, the newspaper said. The amount isn’t included in a debt-reduction plan that Schaeuble sent to European authorities in Brussels and may boost Germany’s debt load to 84 percent from 82 percent of gross domestic product this year, Handelsblatt said.
• Barclays Accused Over Libor Fixing in U.K. Rate Swaps Lawsuit. Barclays Plc (BARC) was accused of undermining the integrity of the London interbank offered rate in a lawsuit filed by a care home company which claims it was sold unfair interest rate swaps linked to the measure.
• Fed Says Economy Will 'Pick Up Gradually'; Policy Unchanged. Federal Reserve policy makers said they expect growth to gradually accelerate, while refraining from new actions to lower borrowing costs. “The committee expects economic growth to remain moderate over coming quarters and then to pick up gradually,” the Federal Open Market Committee said in a statement today at the conclusion of a two-day meeting today in Washington. “Despite some signs of improvement, the housing sector remains depressed.” Policy makers led by Chairman Ben S. Bernanke are holding off on additional steps to boost the economy amid signs the more than two-year expansion is gaining strength. Still, the jobless rate isn’t declining fast enough to satisfy central bankers, who repeated their view today that borrowing costs are likely to remain “exceptionally low” at least through late 2014. “Strains in global financial markets continue to pose significant downside risks to the economic outlook,” according to today’s statement. The Fed has cited the risk from strains in global markets in its previous five meetings. In March it said those strains had “eased.”
• China Auto Scraps IPO After Struggling to Lure Investors.
• Caterpillar(CAT) Revenue Misses Estimates as China, Brazil Sales Slow. Caterpillar Inc., the largest maker of construction and mining equipment, reported a gain in first- quarter revenue that missed analysts' estimates as sales of construction equipment fell in China and Brazil. Revenue climbed 23 percent to $16 billion, the Peoria, Illinois-based company said in a statement today. The average of 13 estimates compiled by Bloomberg was for $16.1 billion. Net income rose to $2.37 a share, beating the $2.13 average of 21 estimates. Caterpillar raised its full-year profit forecast while maintaining its projected 2012 revenue. The shares fell in pre-market trading in New York. "They still reported a big number but lower than expected on near-term softness in China and Brazil," Larry De Maria, a New York-based analyst for William Blair & Co. who recommends buying the shares, said in an interview.
  

Wall Street Journal:

• EU Parliament President: Collapse of EU "Realistic Scenario". The collapse of the European Union has become a "realistic scenario," with national governments claiming back more power, xenophobia increasing, calls to reintroduce border controls and concerns about the euro emerging, the president of the European Parliament said Wednesday.
• Gingrich to End GOP Bid, Endorse Romney. Newt Gingrich plans to end his presidential campaign and endorse Mitt Romney next week at an event in Washington, aides to the former House speaker said.
• 5 Cities Where Home Prices Hit New Lows.
  

CNBC.com:

• Lloyd Blankfein: 'We Haven't Gotten Everything Right'. In his first interview in two years, Goldman Sachs CEO Lloyd Blankfein told CNBC Wednesday, "We haven't gotten everything right in how we deal with the public." In the March 14 piece, Greg Smith, head of Goldman's U.S. equity derivatives business in Europe, the Middle East and Africa, said the firm put its own profits ahead of clients, with some executives disparaging some clients as "muppets."
• Investors Face 'Bumpy Journey' as Euro Crisis Grows: El-Erian. "Bimodal" conditions mean that those employing the simple "risk-on" or "risk-off" approaches are missing both opportunities and dangers, El-Erian said during an interview on CNBC's "Squawk Box." "We are on this bumpy journey to this unusual destination, which is three to five years" long, said El-Erian, co-chief investment officer at Pimco, which runs the largest bond fund in the world. "The length depends on policymakers, and policymakers have been postponing the deleveraging, which makes this journey even more uncertain."
• UK Slides Back Into Recession in First Double Dip Since 1970s. Britain's economy slid into its second recession since the financial crisis after official data unexpectedly showed a fall in output in the first three months of 2012, piling pressure on Prime Minister David Cameron's embattled coalition government.

Business Insider:

• Even Liberal Justice Sonia Sotomayor Shredded The Government's Arizona Immigration Arguments Today.
• The Bank Bailout Wasn't "Profitable" - It Will Cost Taxpayers $120 Billion.
• Meet The Man Revealing The Huge Scandals That The Chinese Government doesn't Want You To Know.
• Dylan Grice Warns: Australia's Credit Bubble Is Built On An Even Bigger Chinese Credit Bubble.
• The Radical Implications of America's Dirt-Cheap Natural Gas.
• Yes, You Should Be Astonished By Apple(AAPL)...
  

Zero Hedge:

• Has America Been Crippled by Intellectual Idiots?

Reuters:

• Plunge in Durable Goods Orders Clouds U.S. Outlook. Demand for long-lasting manufactured goods tumbled by the most in three years in March and businesses cut back on spending plans, suggesting the economy slowed as the first quarter drew to a close. Durable goods orders dropped 4.2 percent, the largest decline since January 2009 when the economy was nose-diving, Commerce Department data showed on Wednesday. Economists had expected a drop of just 1.7 percent.February orders were revised to show only a 1.9 percent increase instead of the previously reported 2.4 percent rise."This adds to the evidence that momentum in the economy sort of fell flat in March," said Ellen Zentner, a senior U.S. economist at Nomura Securities in New York. Although non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 0.8 percent in March, the prior month's figure was revised up to show a 2.8 percent gain from a 1.7 percent increase. In addition, shipments of non-defense, non-aircraft capital goods orders, which go into the calculation of gross domestic product, rose 2.6 percent after increasing 1.4 percent in February. "Unexpected weakness in core orders in March suggests less growth of equipment and software spending in the second quarter, and more first-quarter inventory investment suggests a larger decline in inventory investment in the second quarter," said Ben Herzon, an economist at Macroeconomic Advisers in St. Louis. The drop in orders for durable goods and an expected rise in inventories in the first quarter could set the economy up for a soft patch heading into the middle of the year. Orders for durable goods last month were dragged down by a 12.5 percent plunge in bookings for transportation equipment - the most since November 2010 - as aircraft orders tumbled. Boeing received only 53 orders for aircraft, according to the plane maker's website, down from 237 in February. Orders for motor vehicles barely rose last month. Excluding transportation, orders fell 1.1 percent after a 1.9 percent rise in February.

Xinhua:

• The capital sufficiency levels of China Guangdong's property developers in the 1Q are at their lowest since 2009, citing a report by the province's real estate industry association.

Shanghai Daily:

• Slower Expansion Seen Through 2015. HAVING experienced an economic slowdown for the past five quarters, China may lag the growth rate of the global commercial vehicle industry through 2015, an industry study shows. The revenue of medium and heavy-duty commercial vehicle sector, which is affected by a country's business circle, may grow 3.2 percent within three years in China against the estimated 4.3 percent for the world, according to a study by consulting firm AlixPartners. China's commercial vehicle sector posted an explosive revenue growth of 45 percent in 2010 after the government introduced a 4 trillion yuan (US$634 billion) stimulus package in 2009 .
  

Bear Radar

Style Underperformer:

• Large-Cap Value +.29%

Sector Underperformers:

• 1) Steel -.52% 2) Energy -.34% 3) Coal +.09%

Stocks Falling on Unusual Volume:

• CAT, CHRW, JOY, ZIP, BVSN, SLAB, ATMI, IVN, ICON, SCHL, CRDN, WIRE, FMBI, BIDU, CTCT, NFLX, IRBT, LIFE, ANGI, ASTE, HSTM, HIT, JNY, HES, OC, GD, FTI, AXE, JNPR, LO and AH
  

Stocks With Unusual Put Option Activity:

• 1) HES 2) NOV 3) ALL 4) AKAM 5) PNRA
  

Stocks With Most Negative News Mentions:

• 1) ACI 2) CRDN 3) HOG 4) DPS 5) XOM
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +2.19%

Sector Outperformers:

• 1) Hospitals +2.73% 2) Computer Hardware +2.09% 3) Agriculture +1.89%

Stocks Rising on Unusual Volume:

• MANH, AAPL, BSFT, ROC, GRA, ONXX, GEOI, PNRA, BWLD, FTNT, CRUS, AVGO, OPTR, BRCM, WCRX, KND, PHG, UIS, RHI, EW, TKR, DBD, GNC, HK, AFL, EGN, GLW, SWKS, LL, MSI, MOS, HOG, JBL, SPPI, TMO, WHR and WYN
  

Stocks With Unusual Call Option Activity:

• 1) QLD 2) ITMN 3) TTWO 4) HES 5) MIPS
  

Stocks With Most Positive News Mentions:

• 1) NSC 2) T 3) ETH 4) AFL 5) BCR
  

Charts:

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

Wednesday Watch

Evening Headlines
Bloomberg:

• Rising Italy-to-Spain Yields Keep Banks on Life Support. European lenders, more reliant than ever on emergency aid after borrowing $1.3 trillion from their central bank, may need additional cash infusions until policy makers stem the crisis engulfing Spain and Italy. After more than 30 bond sales in the first quarter, no bank has sold unsecured debt this month, and the cost of insuring against default has soared to levels last seen in January. Financial stocks, which rallied 20 percent following the European Central Bank’s December decision to provide unlimited three-year loans, are now 2 percent lower since then. Investors are balking after some lenders used the ECB cash to boost holdings of sovereign debt and governments struggled to rein in deficits. Because banks post collateral in exchange for the ECB loans, the amount unsecured bondholders would get back in a default has shrunk. That has raised funding costs for what Morgan Stanley estimates is about 700 billion euros ($924 billion) of debt lenders must refinance by the end of 2013.
• Spain Lowers Central Budget Deficit as Montoro Threatens Regions. Spain’s central-government budget deficit narrowed in the first quarter, Budget Minister Cristobal Montoro said, as he threatened to intervene in regional governments that fail to cut spending. In comparable terms, the central government budget shortfall was 0.83 percent of gross domestic product, compared with 0.93 percent last year, the Budget Ministry said yesterday. Including the impact of transfers to regions that were paid early this year, the deficit was 1.85 percent, compared with 1.06 percent a year earlier.
• German Shipping Funds Die as Investors See Losses Rise: Freight. When Germany’s Container Flotten- Fonds filed for insolvency last year, more than 1,000 investors who had been promised annual returns of as much as 15 percent instead lost 37.5 million euros ($49 million). The collapse of the fund, which was raised in 2005 and used a mix of private capital and bank loans to finance four vessels, is just one of at least 10 shipping funds that have become insolvent in Germany in the past two years, according to the Association of Non-Tradable Closed-End Funds, as the maritime industry was beset by rising fuel prices, excess capacity and falling freight rates.
• Solar Silicon Falling 9% Widens Slump That Hit Solyndra. Polysilicon, the raw material used to make most solar panels, is forecast to fall another 9 percent from its lowest in a decade as a supply glut narrows margins throughout the industry. The average spot price of the material will finish this year at about $22.10 a kilogram, according to the median of seven analysts surveyed by Bloomberg News. The price, which four years ago topped $475, tumbled about 70 percent in the 12 months to $24.27 on April 16, the lowest since at least 2002.
• South Korea Halts Customs Clearance of U.S. Beef. South Korea will halt customs clearance of U.S. beef imports after the first U.S. case of mad cow disease in six years was found in a dairy cow in central California, an agriculture ministry official said. The government will release details of inspections “soon,” Park Sang Ho, an official at South Korea’s agricultural ministry, said by phone. The agriculture office shortly after issued a statement saying it will take the “necessary measures.”
• Syrian Army Presses Attack Amid UN Cease-Fire Monitoring. Syrian security forces attacked anti-government neighborhoods with sniper fire and heavy machine guns yesterday, as United Nations special envoy Kofi Annan said the regime has “severely” tested the UN’s patience.

Wall Street Journal:

• Moody's Hears It From Banks on Potential Downgrades. In the latest sign that U.S. banks are bridling at tighter oversight that began after the financial crisis, a handful of big lenders have been jawboning Moody's Investors Service ahead of potential downgrades expected this spring. Bank of America Corp.(BAC) Chief Executive Brian Moynihan and Citigroup Inc.(C) CEO Vikram Pandit have argued against downgrades in person, people familiar with the talks said. An executive at Goldman Sachs Group Inc.(GS) last week publicly questioned Moody's methods on a conference call with analysts and investors.
• China Escalates Crackdown On Internet Amid Scandal. China has stepped up its campaign to clamp down on the Internet, which has emerged as a virtual town square for exchanging information about the Bo Xilai scandal and the nation's biggest political upheaval in years.
• Apple(AAPL) Rides iPhone Frenzy. Apple Inc.'s AAPL -2.00% quarterly profit nearly doubled as iPhones and iPads continued to fly off shelves, putting to rest recent worries that the company can't maintain its momentum. Shares gained more than 7%, or $40.55, to $600.83 in after-hours trading Tuesday—after falling in 10 of the past 11 regular trading sessions amid concerns about a potential iPhone slowdown. Instead, iPhone shipments jumped 88% in the quarter, as Apple continued to penetrate new markets like China.
• Romney Marches Toward GOP Nomination. Mitt Romney claimed victory in the Republican presidential nominating contest Tuesday after decisively sweeping five East Coast primaries, saying his triumph marked "the beginning of the end of the disappointments of the Obama years.'' Mr. Romney gave what amounted to an acceptance speech for the nomination after sweeping to primary victories in New York, Pennsylvania, Connecticut, Delaware and Rhode Island.
• Head of Bundesbank: No Apologies. Germany's central-bank chief rejected calls for the European Central Bank to back off from its push for fiscal austerity, batting down mounting concern that the strategy is causing deep economic pain and escalating political upheaval across Europe. In an interview with The Wall Street Journal, Bundesbank President Jens Weidmann also made no apologies for his repeated warnings that some ECB anticrisis policies, including government-bond buying and looser collateral rules, threaten financial stability and may generate inflation. "The crisis can only be solved by embarking on often-painful structural reforms and following up on fiscal consolidation," Mr. Weidmann said.
• Europe's Phony Growth Debate. Growth or austerity? That's the choice facing Europe these days—or so the Keynesian consensus keeps saying. According to this view, which has dominated world economic councils since the 2008 crisis began, "growth" is mainly a function of government spending. Spend more and you're for growth, even if a country raises taxes to pay for the spending. But dare to cut spending as the Germans suggest, and you're for austerity and thus opposed to growth. This is a nonsense debate that misconstrues the real sources of economic prosperity and helps explain Europe's current mess. The real debate ought to be over which policies best produce growth.

Business Insider:

• Here Are The Slimy New Details About John Edwards' Affair.

Zero Hedge:

• Steve Keen On Europe's Delusion And Why The Entire World Is Turning Japanese.

CNBC:

• Apple(AAPL) Earnings Surprise: Why Was Wall Street So Wrong? Apple posted quarterly results that blew past expectations Tuesday, silencing numerous skeptics and making investors wonder how Wall Street could have been so wrong on the tech giant.
• Bank Stocks to Have 'Long, Hot Summer': Bove. Though he has been telling investors to buy bank stocks with all their might, analyst Dick Bove says this summer could require a strong stomach for those who followed the advice.
  

Rasmussen Reports:

• Daily Presidential Tracking Poll. (graph) The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that Mitt Romney earns 48% of the vote, while President Obama attracts support from 44%. Four percent (4%) would vote for a third party candidate, while another 4% are undecided.

Reuters:

• Exclusive: SEC Probes Movie Studios Over Dealings in China. U.S. regulators are investigating major U.S. movie studios' dealings with China as the entertainment companies try to get a greater foothold in one of the fastest-growing movie markets in the world. The letters ask for information about potential inappropriate payments and how the companies dealt with certain government officials in China, said the person, who was not authorized to speak publicly about the letters. The Chinese film market is seen as one of the largest potential markets for Hollywood, but it has also historically been tightly controlled by the state-owned China Film Group.
• FINRA to propose fee hike due to "significant loss". The Financial Industry Regulatory Authority plans to increase certain fees it charges to brokerages due to a "significant loss" it suffered last year, the regulator's chief wrote in an email to brokerages. A "broader economic downturn" continues to affect the securities industry's trading volumes revenues, which "has led to a decrease in FINRA's revenues and resulted in a significant loss for fiscal year 2011," Richard Ketchum, FINRA's chairman and chief executive, wrote in an email on Monday that was also posted on the regulator's website.
• Baidu(BIDU) Revenue Forecast at Low-End of Street View. Baidu Inc shares slid more than 10 percent on Tuesday after the Chinese Internet search company forecast a second-quarter revenue range at the low end of Wall Street expectations. The disappointing guidance raised questions about whether Baidu's business is being affected by economic conditions in China or whether company-specific issues are to blame, analysts said. Baidu shares fell more than 10 percent in after-hours trading to $121.50 from a close on the Nasdaq of $135.83.

Telegraph:

• Nightmare Week for Angela Merkel as Austerity Bloc Crumbles. Europe's political centre is starting to crumble, replicating the pattern of the early 1930s as the crisis ground into its third year under a similar mix of fiscal and monetary contraction.
• German Chancellor Angela Merkel defends austerity in face of open rebellion in Europe. Angela Merkel launched a staunch defence of Europe's fiscal pact as politicians from the Netherlands, Spain and Greece scrambled to keep their own austerity measures on track.

The Independent:

• Hamish McRae: 'Austerity fatigue' is spreading from Europe's fringes to its very core. Can the centre hold? We are used to worrying about the fringe of Europe, but now "austerity fatigue" seems to be striking the core. The Netherlands retains its AAA credit rating, but its government has just fallen because it could not agree on its budget programme. And France, recently downgraded by Standard & Poor's, has had an election with a massive protest vote and the prospect of a new president who has promised to fight the financial markets. What I find interesting about both countries is that they are seeing a push-back against austerity before it has really been imposed, or at least while it is still in the early stages. So re-establishing fiscal discipline is no longer just a political problem for the fringe; it has moved closer to the core. Only Germany remains committed to reaching fiscal balance and also has the political support to achieve it.

Sueddeutsche Zeitung:

• The budgetary committee of Germany's parliament asked Bundesbank President Jens Weidmann to explain the role of his institute in the IMF's planned trillion-dollar rescue fund, citing an invitation letter.

Financial Times Deutschland:

• The European Banking Authority is asking individual euro-zone banks to show how they plan to refinance themselves without access to additional funds from central banks, citing a person familiar with the process.

Economic Information Daily:

• China will improve measures to curb the expansion of industries with overcapacity. Punitive power prices and restricted energy use will be among the measures.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 166.0 -3.0 basis points.
  
• Asia Pacific Sovereign CDS Index 135.75 +.25 basis point.
  
• FTSE-100 futures +.09%.
  
• S&P 500 futures +.39%.
  
• NASDAQ 100 futures +1.38%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (HES)/1.54
• (NOC)/1.59
• (AN)/.53
• (PX)/1.36
• (GD)/1.69
• (GLW)/1.28
• (LCC)/-.23
• (DAL)/-.04
• (OC)/.30
• (DPS)/.48
• (DBD)/.34
• (WLP)/2.29
• (LLY)/.78
• (WYN)/.55
• (HOG)/.71
• (CAT)/2.13
• (BA)/.93
• (AKAM)/.38
• (CAKE)/.36
• (XLNX)/.41
• (WMB)/.36
• (EQR)/.62
• (TSCO)/.52
• (LVS)/.60
• (CLF)/1.12
• (OI)/.67
• (VAR)/.96
• (RYL)/-.09
• (SLG)/1.08
• (JNY)/.15

Economic Releases
8:30 am EST

• Durable Goods Orders for March are estimated to fall -1.7% versus a +2.2% gain in February.
• Durables Ex Transports for March are estimated to rise +.5% versus a +1.6% gain in February.
• Cap Goods Orders Non-def Ex Air for March are estimated to rise +1.0% versus a +1.2% gain in February.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,800,000 barrels versus a +3,856,000 barrel gain the prior week. Distillate inventories are estimated to rise by +500,000 barrels versus a -2,908,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,500,000 barrels versus a -3,671,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.5% versus a +.8% gain the prior week.
  

12:30 pm EST

• The FOMC is expected to leave the benchmark fed funds rate at .25%.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bernanke speaking, German 3Bln EUR 30Y Bund Auction, 5Y T-Note Auction and the weekly MBA mortgage applications report could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by financial and technology shares in the region. I expect US stocks to open higher and to weaken into the afternoon, finishing modestly higher. The Portfolio is 50% net long heading into the day.

Stocks Rising Slightly into Final Hour on Euro Bounce, More Financial Sector Optimism, Short-Covering, Bargain-Hunting

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Mixed
  
• Volume: Below Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 18.55 -2.21%
  
• ISE Sentiment Index 106.0 +29.27%
  
• Total Put/Call .90 +9.76%
  
• NYSE Arms .95 -52.06%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 99.85 -1.09%
  
• European Financial Sector CDS Index 256.28 +1.84%
  
• Western Europe Sovereign Debt CDS Index 280.35 -1.35%
  
• Emerging Market CDS Index 265.59 -.32%
  
• 2-Year Swap Spread 31.25 -.25 basis point
  
• TED Spread 38.50 -1.0 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -46.0 +1.5 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .08% +1 basis point
  
• Yield Curve 170.0 +2 basis points
  
• China Import Iron Ore Spot $146.70/Metric Tonne -.95%
  
• Citi US Economic Surprise Index 4.20 -.1 point
  
• 10-Year TIPS Spread 2.26 +2 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating a +47 open in Japan
• DAX Futures: Indicating -21 open in Germany
  

Portfolio:

• Slightly Lower: On losses in my Tech and Retail sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite Eurozone debt angst, less tech sector optimism, high energy prices, rising global growth fears and less US economic optimism. On the positive side, Oil Tanker, Oil Service, Telecom, Homebuilding, Road & Rail, Airline and REIT shares are especially strong, rising more than +1.0%. The Transports and Financials have traded well throughout the day. Lumber is rising +1.97% and Copper is gaining +1.2%. The 10Y Yld is rising +3 bps to 1.96%. Major European indices rose around +1.75%, led by a +2.5% gain in Italy. The Bloomberg European Bank/Financial Services Index rose +2.0%. The Germany sovereign cds is down -3.0% to 87.50 bps, the France sovereign cds is down -3.5% to 198.0 bps, the Spain sovereign cds is down -3.8% to 490.66 bps and the Italy sovereign cds is down -3.0% to 454.42 bps. Moreover, the European Investment Grade CDS Index is down -2.7% to 145.31 bps. On the negative side, Software, Semi, HMO, Retail, Restaurant, Education and Internet shares are under pressure, falling more than -.75%. Tech shares have traded poorly throughout the day again. Oil is rising +.4% and the UBS-Bloomberg Ag Spot Index is rising +.4%. Major Asian indices were mixed overnight as a +.65% gain in India was offset by a -.78% decline in Japan. The Portugal sovereign cds is gaining +.4% to 1,023.19 bps. US Rail Traffic continues to soften. The Philly Fed ADS Real-Time Business Conditions Index continues to trend lower from its late-December peak despite investor perceptions that the US economy is accelerating. Moreover, the Citi US Economic Surprise Index has fallen back to mid-Oct. levels. Lumber is -6.0% since its Dec. 29th high despite the better US economic data, improving sentiment towards homebuilders and the broad equity rally. Moreover, the weekly MBA Home Purchase Applications Index has been around the same level since May 2010 despite expectations for a strong spring home selling season. The Baltic Dry Index has plunged around -50.0% from its Oct. 14th high and is now down around -35.0% ytd. China Iron Ore Spot has plunged -19.2% since Sept. 7th of last year. Shanghai Copper Inventories are still near their recent all-time high and have risen +668.0% ytd. China's March refined-copper imports fell -8.0% on the month. Singapore Electronics exports decelerated to a gain of +2.8% in March from a +23.3% gain in February. The recent weak/erratic technical action in shares of (AAPL), a market-leader and the largest company in the world, remains a concern. Long AAPL. Bonds still trade too well, copper continues to trade poorly and the euro currency can't sustain a bounce. Comments from German officials today lead me to conclude that a new French president would clash greatly with Merkel, which will become a major problem during the next escalation phase of the region's debt crisis. There remains a fairly high level of complacency among US investors regarding the rapidly deteriorating situation in Europe, in my opinion. I still believe more European bank/sovereign downgrades are likely on the horizon. Overall, the major averages are not responding well to a better-than-expected earnings season so far. (TXN) gappped higher after-hours yesterday on a "good report" only to fall throughout the day and finish near session lows, down -1.7%. For the recent equity advance to regain traction, I would expect to see further European credit gauge improvement, a further subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade mixed-to-lower into the close from current levels on Eurozone debt angst, less US economic optimism, high energy prices, rising global growth fears, weakness in some key market leaders and less tech sector optimism.