Stocks Lower into Final Hour on Profit-taking, More Shorting and Financial Sector Pessimism

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Technology longs, Medical longs and Financial longs. I added to my (IWM)/(QQQQ) hedges, added to my (EEM) short this morning and then covered them, thus leaving the Portfolio 75% net long. The tone of the market is very negative as the advance/decline line is substantially lower, almost every sector is declining and volume is below average. Investor anxiety is high. Today’s overall market action is bearish. The VIX is rising 12.6% and is very high at 46.21. The ISE Sentiment Index is slightly below average at 137.0 and the total put/call is high at 1.17. Finally, the NYSE Arms has been running extraordinarily high most of the day, hitting 8.77 at its intraday peak, and is currently 3.63. The Euro Financial Sector Credit Default Swap Index is rising 5.82% today to 173.33 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is rising 5.65% to 191.73 basis points. This index is still below its Dec. 5^th record high of 285.99. The TED spread is falling .68% to 109 basis points. The TED spread is now down 354 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising .23% to 55.25 basis points. The Libor-OIS spread is rising .82% to 99 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is falling 6 basis points to 1.37%, which is down 127 basis points since July 7th. The 10-year TIPS spread bottomed at .65% in October 1998 during the Asian financial crisis and at 1.24% in October 2001 during the technology bubble-bursting meltdown. The 3-month T-Bill is yielding .13%, which is up 1 basis point today. Volume is below average with high investor angst today, which usually indicates the bears are running low on firepower. As well, some market-leading stocks have diverged from the broad market this afternoon and are cutting losses into the close. If CNBC is any indication, the herd is overweight commodities. I continue to believe that it is too soon to enter the “reflation” trade. I still favor stocks that can grow earnings at a relatively healthy rate notwithstanding weak global economic activity. As, well, the US dollar still trades well, which is a headwind for commodities. The Citi US Economic Surprise Index is up to -6.60, while the European Economic Surprise Index is still -82.70. Nikkei futures indicate a -116 open in Japan and DAX futures indicate a -8 open in Germany tomorrow. I expect US stocks to trade higher into the close from current levels on short-covering, bargain-hunting and lower energy prices.

Today's Headlines

Bloomberg:

- General Motors Corp.(GM) debt tumbled after the Obama administration said bondholders will have to reduce their claims by more than originally proposed and bankruptcy may be the best option for the automaker. GM’s $1.5 billion of 7.2 percent notes due in 2011 fell 4.5 cents to 22 cents on the dollar as of 9:32 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields about 126 percent. “There’s no acceptable way out for most of the stakeholders,” said Sean Egan, president of Egan-Jones Ratings Co. in Haverford, Pennsylvania. “The best forum for resolving differences is in the bankruptcy courts. It’s highly likely that GM will end up there fairly soon.”

- Ireland had its AAA credit rating removed by Standard & Poor’s in the fourth downgrade of a euro- region government this year as the global financial turmoil fueled borrowing costs and swelled the budget deficit. The rating was lowered one step to AA+ with a “negative” outlook, S&P said in a statement today from London, indicating the rating company is more likely to lower the classification again than raise it or leave it unchanged. Ireland received the top rating in October 2001. “The deterioration of Ireland’s public finances will likely require a number of years of sustained effort to repair, on a scale greater than factored into the government’s current plans,” Trevor Cullinan and Frank Gill, analysts at S&P in London, wrote in a report today.

- Barack Obama learns this week whether his rock-star allure for Europeans translates into tangible support for U.S. foreign-policy goals. At an April 3-4 North Atlantic Treaty Organization summit along the French-German border, the president will seek to line up more allied manpower and money from allies reluctant to commit more combat troops for Obama’s new plan to step up the fight against the Taliban and al-Qaeda in Afghanistan. He will also try to forge consensus on deterring Iran’s nuclear ambitions and put relations with Russia on a smoother course.

- Russia’s economy will probably shrink 4.5 percent this year after oil prices slumped and global contagion spread, driving up unemployment and pushing more people into poverty, the World Bank forecast.

- Doctors eased high blood pressure with devices that use electricity to zap nerves around arteries and radio waves to burn off cells in the kidneys, in studies offering hope for millions of people not helped by medication. The research on novel treatments for heart problems was released today at the American College of Cardiology’s conference in Orlando, Florida. In another trial, researchers safely injected a gel made by Jerusalem-based BioLineRx into heart attack victims to help rebuild their heart muscles. In another, doctors sending electrical signals to nerves in the neck improved the pumping power of patients with severe congestive heart failure.

- Crude oil fell below $50 a barrel as tumbling equity markets signaled that the recession in major energy-consuming countries may deepen, curbing fuel demand. Oil fell as much as 6.2 percent after President Barack Obama said that General Motors Corp. and Chrysler LLC have one last, limited chance to “fundamentally restructure.” The dollar strengthened to its highest level against the euro in more than a week, limiting the appeal of commodities as an alternative investment. U.S. crude oil stockpiles surged 3.3 million barrels to 356.6 million barrels in the week ended March 20, the highest since July 1993 and 13 percent more than average for this time of year, according to an Energy Department report on March 25. Supplies probably rose 3 million barrels last week, according to the median of six responses in a Bloomberg News survey. “It’s hard to be bullish with these extremely high inventories,” Bentz said. “We are testing the $50 breakout area today and will soon know whether it is truly support or that the recent rally was a mirage.” Hedge-fund managers and other large speculators increased their net-long positions in New York crude-oil futures in the week ended March 24, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 17,637 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 4,130 contracts, or 31 percent, from a week earlier.

- Norsk Hydro ASA, Europe’s second-largest aluminum producer, said as much as 70% of the industry is unprofitable at current prices. “No signs” of improvement in demand have emerged, CEO Svein Richard Brandtzaeg said today. Industry demand has dropped 30% on average and has slid as much as 70% for some products, he added.

- The US dollar shouldn’t be allowed to “weaken too much” in the fight against the global recession, an aide to French President Nicolas Sarkozy said.

- The euro may extend its decline against the dollar should the common currency break through a support levels around $1.31, JPMorgan Chase & Co. said in a report citing trading patterns. A level of $1.3097 represents a 50 percent retracement of the euro’s rally versus the greenback begun on March 4, wrote Niall O’Connor, a foreign-exchange analyst at JPMorgan in New York, referring to a percentage that’s part of the Fibonacci sequence. A subsequent support of $1.3070 represents the point before the euro broke into a new range when the Federal Reserve announced on March 18 its plan to start purchasing Treasuries, he said. “It’s a zone of support,” O’Connor said in an interview today. “If it isn’t able to bounce today, then it’s quite telling that the euro is even more vulnerable.”

- For Edinburgh’s money managers, whose $500 billion is minded in and around the eighteenth century Georgian sandstone houses of the Scottish capital, just about everyone is searching for the next bull market. “I’m not in the bear-market rally camp, I’m in the rally camp,” said David Cumming, head of U.K. stocks at Standard Life Investments as the FTSE 100 Index showed the first monthly gain since December. The MSCI World Index of developed markets had gained 9.8 percent in March, the most since May 1990.

- European confidence fell to the lowest on record in March as the Group of 20 nations prepared to discuss this week how best to fight the deepening global recession, which has prompted job cuts across the continent. An index of executive and consumer sentiment in the euro area declined to 64.6, the lowest since the indicator began in 1985, from 65.3 in February, the European Commission in Brussels said today. Gauges for industry, services and consumer sentiment all reached record lows. A separate report showed that Spanish consumer prices fell from a year earlier for the first time ever, indicating deflationary pressure that may spread.

- U.S. farmers are preparing to plant record amounts of soybeans and demand for corn is falling, driving prices to the lowest levels in more than two years. Just a year after record grain costs sparked riots in Egypt and food shortages in Argentina, U.S. farmers will sow crops on a record 163.7 million acres, according to a Bloomberg News survey of 24 analysts and traders last week. Soybean fields will expand by 4.5 percent. While corn acreage will slip 1.5 percent, the recession will force livestock, dairy and ethanol producers to cut purchases, leaving the highest inventories for March in two decades, the survey shows. “The wheels are already in motion to produce more than the world needs, barring any unusual weather,” said Jim Gerlach, president of A/C Trading Inc., a brokerage in Fowler, Indiana. Corn stockpiles at the beginning of March probably totaled 7.012 billion bushels, up 2.2 percent from a year earlier and the highest for that date since 1988, analysts in the survey said.

- Arab leaders welcomed Barack Obama’s overtures toward Middle Eastern countries and expressed hope that he will push forward peace efforts between Arabs and Israelis. “I suggest that we contact the Obama administration and request that it put pressure on Israel for it to agree to a just peace,” Palestinian Authority President Mahmoud Abbas said. “We notice that the extreme hardliners are gaining strength in Israel.”

- Netflix Inc.(NFLX), the largest U.S. mail-order movie service, plans to raise rental fees for Blu-ray discs by about 20 percent at the end of April as members increasingly choose the high-definition format over conventional DVDs.

Wall Street Journal:

- Executives from some of the world's biggest property investment funds said China's real-estate market remains risky and unattractive for foreign investors despite recent signs of improving conditions. The foreign executives, attending a major real-estate conference last week in Shanghai, said that financing for property deals in China remains nearly impossible to obtain, and that building prices need to fall further to justify new activity. Overall, real estate in the country remains too risky, illiquid and poorly developed to expect significant overseas investment at a time when bargains are emerging in more transparent markets elsewhere, the executives said. "International investors are taking their money home," said Richard Price, regional chief executive officer of ING Real Estate Investment Management. He said well-known complications of doing property deals in China "make people pause" about committing money now. Falling property prices and a collapse in transactions were a major cause of the slowdown in China's economic growth last year. Foreign investors have been a relatively tiny force in the property market, but they tend to have a disproportionate influence on the market and on policymaking. Overall, real estate in the country remains too risky, illiquid and poorly developed to expect significant overseas investment at a time when bargains are emerging in more transparent markets elsewhere, the executives said. "International investors are taking their money home," said Richard Price, regional chief executive officer of ING Real Estate Investment Management. He said well-known complications of doing property deals in China "make people pause" about committing money now. Falling property prices and a collapse in transactions were a major cause of the slowdown in China's economic growth last year. Foreign investors have been a relatively tiny force in the property market, but they tend to have a disproportionate influence on the market and on policymaking. Skepticism was abundant at the two-day Real Estate Investment World China conference, which drew about 280 attendees this year, down from last year's record 400. "Maybe we're seeing the bottom of the market but is it the real bottom or is the government supporting it?" said Song Wei, a senior vice president of Chicago-based Equity International. "I haven't seen a lot of bargains yet." Several attendees said prices haven't fallen enough to reflect market oversupply. Beijing, Shanghai and Guangzhou each have at least 10 million square feet, or 930,000 square meters, of office construction underway, according to a report this month from Colliers International. Shanghai's vacancy rate shot to 10.2% by year-end 2008 from 4.7% at midyear, it said.

- Fixed-rate jumbo loans have been harder to get in recent months. Now, Bank of America(BAC) says it wants to make more jumbo mortgages, so-called because they exceed the conforming limits — $417,000 in most parts of the country, though they can rise as high as $729,750 in some metro areas.

- Goldman Sachs Group(GS) banker Byron Trott is leaving the investment bank, according to a person familiar with the matter, and will start his own merchant-banking firm. Mr. Trott gained renown as a close adviser to Warren Buffett, having assisted Mr. Buffett in a series of merger and acquisitions.

- The Obama administration is putting new curbs on private insurance plans that are popular with seniors in Medicare but have been criticized for marketing abuses and high costs to the government. Administration officials said the changes include winnowing the number of versions of a plan that insurers can offer, discouraging insurers from shifting costs to patients with chronic diseases and banning an occasional practice of charging patients more for brand-name drugs. The new policies reflect an administration effort to put its stamp on private plans in Medicare, which flourished under Republicans but are seen by some Democrats as undermining the traditional program. The plans are offered by major insurers such as UnitedHealth Group Inc.(UNH) and Humana Inc.(HUM)

NY Times:

- The Obama administration has made fortifying the I.M.F. one of its primary goals for the meeting of the Group of 20, which includes leading industrial and developing countries and the European Union. But China, India and other rising powers seem to believe that the made-in-America crisis has curtailed the ability of the United States to set the agenda. They view the Western-dominated fund as a place to begin staking their claim to a greater voice in global economic affairs.

- German Chancellor Angela Merkel won’t give in to US pressure to increase economic stimulus spending, stressing that overspending could plan the seeks for a new crisis, she said in an interview. Merkel, who will meet President Barack Obama this week at three summit meetings in Europe, underlined her focus on controlling debt spending to ensure national budgets won’t be burdened in a recovery, she said.

- Sony says it has signed a $315 million deal to install its digital projectors in all AMC Entertainment theaters. The contract will close the gap between Sony and Texas Instruments in the digital projector market. Texas Instruments has equipped 5,476 screens in North American theaters with its digital light processing projectors. The deal with AMC will increase Sony’s presence to about 5,000 screens.

- With a new Web service called MagCloud, Hewlett-Packard(HPQ) hopes to make it easier and cheaper to crank out a magazine than running photocopies at the local copy shop.

Detroit Free Press:

- Mulally says Ford(F) now has competitive edge. CEO believes key concessions will allow automaker to survive industry’s crisis.

Market Folly:

- Late last week, we posted up the Top 25 Hedge Fund managers of 2008 in terms of compensation, and now its time to check out Alpha's 'Biggest Losers' of 2008. And, there are some pretty prominent names on the list. Here it is:

Chicago BreakingNewsCenter:

- Ford's(F) Chicago assembly plant is in line to produce a new version of the Explorer sport-utility vehicle next year, a big boost for a factory battered last fall by cutbacks at the struggling automaker, Crain's reports.

Washington Times:

- An AIG(AIG) executive sought donations for Senator Chris Dodd’s(D-Conn.) re-election campaign. “As he considers running for president in 2008, Senator Dodd has asked us for our support with his re-election campaign and we have offered to be supportive,” Joseph Cassano, then-CEO of AIG Financial Products, wrote in a Nov. 17, 2006, e-mail. AIG-FP employees and their spouses donated $162,100 to the Dodd campaign within six weeks of the e-mail, citing data form the Center for Responsive Politics and the Federal Election Commission. As banking committee chairman, Dodd would have some influence over AIG's dealings. Earlier this year Dodd — at the behest of the Treasury Department — added wording to the bailout legislation that allowed AIG executives to keep lucrative bonuses paid for with taxpayer money. AIG has received more than $170 billion in federal bailout money and paid at least $218 million in bonuses.

Portfolio.com:

- How the CDS Market is Going to Improve. A Credit Trader has a great post on what he calls "risky annuity risk", an artifact of the CDS market which will go away when all credit default swaps start trading on a fixed coupon. If you like to geek out with the arcana of the CDS market, you'll love this.

Politico:

- A trickle of defections has Democratic House leaders wondering how long they can hold off calls for an investigation into the PMA Group and its ties to Pennsylvania Rep. John P. Murtha.

- The Obama administration's harsh treatment of the auto industry is backfiring with some auto state politicians despite a concerted effort to build support for the federal crackdown on General Motors and Chrysler.

paidContent.org:

- The Walt Disney Company and Google (GOOG) are close to one programming deal for video portal YouTube, and are in discussions about another—also involving YouTube—that would preclude a deal with Hulu, paidContent has learned. Disney (DIS) and YouTube are in the final stages of negotiations to put clips from ESPN, ABC and other Disney assets on YouTube, according to sources familiar with the situation. The two companies would share revenue, with Disney controlling the ad inventory; YouTube and Google could get some inventory to sell. As important, YouTube would refer back to ESPN.com, ABC.com and the other Disney sites.

AP:

- An influential government-appointed medical panel is urging doctors to routinely screen all American teens for depression — a bold step that acknowledges that nearly 2 million teens are affected by this debilitating condition. Most are undiagnosed and untreated, said the panel, the U.S. Preventive Services Task Force, which sets guidelines for doctors on a host of health issues. The task force recommendations appear in April's issue of the journal Pediatrics. And they go farther than the American Academy of Pediatrics' own guidance for teen depression screening.

Reuters:
- Google Inc(GOOG) is hiring to fill about 360 jobs, even after it announced plans this week to lay off almost 200 sales and marketing employees in its third round of job cuts this year. The openings listed on Google's website range from software engineers to sales and marketing positions, to one opening for a Foodservices Supply Chain Manager at Google's Mountain View, California headquarters.

- Mexico will cooperate with the United States in sharing intelligence to fight drug trafficking but does not plan joint patrols with U.S. forces, President Felipe Calderon said Monday. "We do have to work together but that does not imply the joint participation in military operations or even a joint participation of law enforcement agents," Calderon said at a press conference during a state visit to London.

- The world's largest gold-backed exchange-traded fund, the

SPDR Gold Trust (GLD), said holdings rose 2.45 tons to a

record 1,127.44 tons on March 29.

la Repubblica:

- Crude oil may stabilize at between $50 and $55 a barrel this year, former Saudi Arabian Oil Minister Sheikh Ahmad Zaki Yamani said in an interview. “It will settle near current prices and stay there for the year,” he said.

CBC:

- British Columbia and Alberta are on track to post huge drops in car sales for the first two months of 2009 with Canada expected to see auto purchases fall by 16 per cent for the entire year, according to a new report released Monday.

Australian Financial Review:
- Australian Treasurer Wayne Swan said there would be “further slowing” in the nation’s economic growth. Swan said the forecasts contained in the government’s Updated Economic and Fiscal Outlook, which was released in February, will “be updated.” “We’d expect there to be further slowing of growth and a further impact on employment, therefore unemployment will be higher and also further impact on revenue which means that revenue downgrades will get higher.”

Bear Radar

Style Underperformer:
Mid-cap Value (-4.88%)

Sector Underperformers:
Oil Tankers (-9.05%), Coal (-8.56%) and Banks (-8.0%)

Stocks Falling on Unusual Volume:
SJR, PHG, PTR, CTRP, LAYN, ZEUS, DWSN, FSYS, ENER, PGJ, TMB, TGP, NRT, TSL, TKG, RPV, EWD and STP

Stocks With Unusual Put Option Activity:
1) ARNA 2) AZN 3) LNC 4) FST 5) ACH

Bull Radar

Style Outperformer:
Large-cap Growth (-2.89%)

Sector Outperformers:
Education (+.77%), Drugs (-.82%) and Computer Service (-1.61%)

Stocks Rising on Unusual Volume:
SA, BTI, APOL, GXDX, IDCC, TOD and AZN

Stocks With Unusual Call Option Activity:
1) SWKS 2) ARNA 3) MXIM 4) LNC 5) BBBY

Links of Interest

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Monday Watch

Weekend Headlines
Bloomberg:

- The Standard & Poor’s 500 Index gained for a third week, pushing it toward the biggest monthly advance since 1991, after a government plan to rid banks of toxic assets and improving economic reports ignited a rally that sent the U.S. stocks benchmark into a bull market.

- U.S. Treasury Secretary Timothy Geithner said some financial institutions will need substantial government aid, while warning against any attempt to tax investors who join a federal program to buy tainted assets from banks. “Some banks are going to need some large amounts of assistance,” Geithner said today on the ABC News program “This Week.” The terms of a $500 billion public-private program to aid banks “cannot change” for investors or they’ll lose confidence in the plan, he said on NBC’s “Meet the Press.”

- Bank executives indicated they are willing to hold onto U.S. government aid to help stabilize the financial system and pull the economy out of recession. “No one has an interest in having capital returned prematurely at the expense of banks’ ability to participate in this stimulus,” Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc., said in an interview with Bloomberg Television. Officials at his firm have discussed returning the $10 billion it received from the Treasury’s Troubled Asset Relief Program.

- General Motors Corp.(GM) Chief Executive Officer Rick Wagoner will step down after more than eight years running the largest U.S. automaker, people familiar with the situation said. The Obama administration asked Wagoner, 56, to leave the company and he agreed, an administration official said. Wagoner said March 19 that he didn’t plan to resign. The likely replacement, unless the government hires from outside the company, would be Chief Operating Officer Fritz Henderson, said John Casesa, managing partner at New York-based consulting firm Casesa Shapiro Group.

- Federal Reserve Chairman Ben S. Bernanke’s plan to buy $300 billion of Treasuries is driving the world’s biggest bond investors away from government debt and may already be helping him lower consumer borrowing rates. Mortgage and corporate securities are outperforming Treasuries this quarter for the first time since the period ended in June, before the collapse of Lehman Brothers Holdings Inc. drove investors to the safest debt and froze credit markets, Merrill Lynch & Co. index data show. A March 23 Ried, Thunberg & Co. survey said fund managers overseeing $1.19 trillion cut their government securities holdings to the least this year while they increased mortgage assets.

- OPEC members Kuwait and Qatar are comfortable with current oil prices of about $50 a barrel as the global recession saps energy demand. “Of course, yes,” Kuwait’s Oil Minister Sheikh Ahmed al- Abdullah al-Sabah told reporters today when asked if he was happy with current crude prices, which rose above $50 a barrel last week. “It goes with the economic situation.”

- Crude oil fell for a second day in New York on speculation high global stockpiles will persist as the world economy remains in recession. Global demand remains weak and oil is unlikely to reach $60 this year, Qatar’s Oil Minister Abdullah Bin Hamad Al-Attiyah said yesterday. Recent oil price gains were driven by the dollar, not improved supply and demand, Al-Attiyah said in an interview in Kuwait yesterday. “The international economy is still very weak,” he said. “The crisis has not reached the bottom so we have to be very careful.” Current prices are “reasonably fair” and there is no indication the market is expecting another round of output cuts by the Organization of Petroleum Exporting Countries, Commodity Warrants’ Hassall said.

- Japanese makers of cars and electronics slashed production a fifth month in February, the longest losing streak since 2001, adding to evidence that the recession is deepening. Factory output fell 9.4 percent from January, when it plummeted a record 10.2 percent, the Trade Ministry said today in Tokyo. The median estimate of 26 economists surveyed by Bloomberg News was for a 9.1 percent drop.

- Goldman Sachs Group Inc.’s(GS) top 10 executives received $49.6 million from their investments in hedge funds and private equity funds during 2008, more than most of them earned in compensation after agreeing to forgo bonuses. Chief Executive Officer Lloyd Blankfein’s $1.1 million in total compensation was dwarfed by the $11.3 million he received in profits and other income from his fund investments, the New York-based company’s proxy filing showed. Co-President Gary Cohn’s $3.7 million in pay contrasts with $7.4 million in fund income, the filing showed. While the payouts pale in comparison with Blankfein’s record-setting $67.9 million bonus for 2007, they illustrate that top executives had other sources of income at the sixth- biggest U.S. bank by assets. Two of the executives, Co-President Jon Winkelried and Co-General Counsel Gregory Palm, sold fund stakes back to the firm to raise money in the last four months of the year rather than sell stock in a rocky market.

- The Obama administration plans to give General Motors Corp.(GM) enough government aid to restructure over the next 60 days, while Chrysler LLC is being told it must complete a deal with Italian automaker Fiat SpA, according to a government official.

- The Monetary Authority of Singapore may devalue the city’s currency and allow it to drop 4 percent against the U.S. dollar by June 30 to aid exporters and lift the economy out of the worst recession since independence in 1965.

- Bank of America Corp.(BAC) plans to increase some investment bankers’ salaries by as much as 70 percent following the takeover earlier this year of Merrill Lynch & Co., people familiar with the proposal said.

- Boston Scientific Corp.’s(BSX) heart stent eased patients’ pain and physical limitations at less cost than bypass surgery, a finding that may increase use of the devices as politicians look to cut U.S. health-care spending.

- A thumb-sized screen implanted in the heart to stop blood clots from triggering strokes may offer a safer alternative to the blood thinner warfarin for six million people with irregular heartbeats, researchers said. The experimental device, made by closely held Atritech Inc. of Plymouth, Minnesota, cut the risk of stroke and heart failure by a third compared with warfarin, according to a study presented at a medical conference in Florida today.

- Barclays Plc won’t seek government asset guarantees after regulators said the U.K.’s third-biggest bank doesn’t need capital and as the lender plans to sell its iShares unit, said a person familiar with the situation. London-based Barclays will inform the Treasury of its decision by tomorrow’s deadline, said the person, who declined to be identified because the discussions are confidential. The bank’s board hasn’t made a final decision, the person said.

Wall Street Journal:

- U.S. officials preparing for the Group of 20 economic summit on Thursday in London are playing down fiscal-stimulus targets and focusing on objectives such as new rules for tax havens and coordination of financial regulation. Multiple issues will face President Barack Obama on his first trip away from North America: seeking more civil support from European nations for his "surge" in Afghanistan and Pakistan; confronting Iranian nuclear ambitions; maintaining Chinese support for buying U.S. government debt; and easing tensions with Russia over energy and missile defense. Meanwhile, tens of thousands of people marched in capital cities across Europe over the weekend to protest the economic crisis and urge world leaders to act on poverty, jobs and climate change at the summit. On Saturday, protesters marched through London, waving banners and chanting, "Tax the rich, make them pay." European opposition to additional spending to stimulate economies has grown sharper over the past weeks. Obama administration officials have opted to back off the public spat.

- Welcome, Businessmen, to Government Oversight. Just wait until bureaucrats get their hands on your expense accounts.

- The regulator of Fannie Mae and Freddie Mac is considering giving the government-backed mortgage companies another role: helping to finance small mortgage banks.

- Consumer-lending activity has increased in numerous midsize cities in the U.S., a sign they are riding out the recession better than big cities and rural towns, an analysis of credit data shows.

- Some 200 prominent, moderate followers of anti-American Shiite cleric Moqtada al-Sadr have broken from his movement, forming a splinter group and further weakening his hold on what was once one of Iraq's most influential factions.

- VF Corp.(VFC), the largest apparel company in the world by revenue, is still committed to expanding its retail network and seeking to snap up brands in the "contemporary" apparel space, said Chief Executive Eric Wiseman in an interview. While many of its rivals are retrenching in the economic downturn, VF plans to open 70 stores this year–for a total of 759 stores worldwide–and may add more if conditions improve, Mr. Wiseman said.

- After struggling for years, Boeing Co.'s(BA) commercial-satellite manufacturing business appears poised for a lift by snaring what is likely to be a multisatellite order valued at more than $400 million from Intelsat Ltd., according to people familiar with the matter.

- Defense Secretary Robert Gates on Sunday said only economic sanctions, and not diplomacy, hold any promise of getting North Korea and Iran to back off their nuclear aspirations. The Obama administration has in particular sought to use overtures of openness and dialogue to persuade Iran off the nuclear course. But Mr. Gates, speaking on "Fox News Sunday," said "the opportunity for success is probably more in economic sanctions" in both Iran's and North Korea's cases "than it is in diplomacy. … What gets them to the table is economic sanctions."

MarketWatch.com:

- The Ford(F) Fiesta fell one vote shy of being named Europe's Car of the Year. If it is that successful in the U.S. next year, Ford's future will indeed be a Fiesta.

IBD:
- You won't find the crew at Panera Bread (PNRA) digging up old recipes to tantalize customers.

NY Times:

- Dylan Ratigan, the longtime host of the CNBC program “Fast Money,” abruptly left the cable channel and the show on Friday after a discussion with the network’s general manager, Mark Hoffman. Several CNBC executives suggested Friday that Mr. Ratigan, while talented, was easy to anger and difficult to work with and that he had told people that at some point he envisioned himself heading an entertainment show like David Letterman’s. Mr. Ratigan dismissed the comments about his personality as the kind of thing that always gets leaked when someone leaves a television job. As for wanting to emulate Mr. Letterman, he said, “That’s an idea from two years ago.” He said he was now dedicated to covering the economy, “the story that is affecting every American in every setting.”

- Gov. David A. Paterson and leaders of the Legislature have reached a deal to raise taxes on New York’s highest earners in order to close the state’s yawning budget deficit, lawmakers and officials involved in the talks said on Saturday. The new plan, which would expire after three years, would represent the largest state income tax increase in recent history, significantly larger than the surcharges imposed from 2003 to 2005, when the state last faced a major recession. The plan would raise $4 billion a year by creating two new tax brackets, the highest one affecting those who earn $500,000 or more. If approved by rank-and-file lawmakers in the Assembly and State Senate, the tax increases would be a major victory for unions and liberal advocacy groups and a signal of the new balance of power in Albany, where Democrats won control of both houses of the Legislature and the governor’s office in last year’s election. Although the proposed tax has been called a “millionaires’ tax,” it would affect those with incomes starting at $300,000, who would be taxed at a rate of 7.85 percent. The highest bracket would carry a tax rate of 8.97 percent — the same as New Jersey’s current highest rate.

- When Facebook signed up its 100 millionth member last August, its employees spread out in two parks in Palo Alto, Calif., for a huge barbecue. Sometime this week, this five-year-old start-up, born in a dorm room at Harvard, expects to register its 200 millionth user.

- Some Online Shows Could Go Subscription-Only.

Washington Post:
- It is high time Americans heard an argument that might turn a vague national uneasiness into a vivid awareness of something going very wrong. The argument is that the Emergency Economic Stabilization Act of 2008 (EESA) is unconstitutional. By enacting it, Congress did not in any meaningful sense make a law. Rather, it made executive branch officials into legislators. Congress said to the executive branch, in effect: "Here is $700 billion. You say you will use some of it to buy up banks' 'troubled assets.' But if you prefer to do anything else with the money -- even, say, subsidize automobile companies -- well, whatever."

CNNMoney.com:

- The startup Tuck co-founded with entrepreneur Tim Enwall, called Tendril, has spent four years and $20 million developing a computerized system that helps consumers track their electricity use.

Kansas City Star:

- Obama’s big government express losing steam. President Obama is a man in a hurry. He knows that time is not on his side. He will never be as powerful as he is now, and his opposition — the leaderless GOP — will never be as weak. So he pushes hard to win acceptance of as much of his agenda as possible, but the inevitable erosion has already begun. Last month, his approval rating was in the mid-60s. Now it’s in the high 50s. Last week a Zogby poll had him at 50 percent.

San Francisco Chronicle:

- Amid growing community concern over the future of The Chronicle, San Francisco financier Warren Hellman gathered a group of local powerbrokers this week, including Mayor Gavin Newsom, to discuss the idea of restructuring the newspaper as a primarily philanthropic venture. Hearst Corp., the private New York company that owns the publication, said late last month that it would be forced to sell or close the 144-year-old paper if it couldn't quickly achieve significant savings.

Pension & Investments:

- CalPERS today announced that it intends to restructure terms, information flow and kinds of investment vehicles used with the hedge fund managers in its $5.9 billion Risk Managed Absolute Returns Strategies program. The $167.3 billion California Public Employees’ Retirement System, Sacramento, said it will focus on creating separately managed accounts with hedge funds or customized investment vehicles to replace current commingled fund arrangements to have more control over the assets. The fund also will insist on more timely and deeper transparency about investment portfolios from its hedge fund managers, according to the release. CalPERS also intends to reduce hedge fund fees and change investment terms as part of the portfolio makeover. CalPERS maintained in a news release that “performance fees should be based on long-term performance,” rather than the typical hedge fund’s annual 2% management fee and 20% performance fee model. The fund also said that “mechanisms such as delayed realizations and clawbacks can better align long-term interests of managers and investors. Management fees should better reflect the cost associated with generating performance and not be an invitation for asset-gathering,” the release said.

AP:

- President Barack Obama said that violence from Mexico’s fight against drug cartels poses a threat to US border communities. Obama said the US needs to reduce its demand for drugs, and limit the flow of guns and money with Mexico, citing Obama.

Reuters:

- Latin America faces probably its "worst shock" ever in the global credit crisis, but is better positioned to recover than in past economic meltdowns because of improved fiscal preparation, a top IMF official said on Saturday. The region will slump into negative growth this year, but its recovery depends heavily on industrialized nations unclogging capital, fixing their banks and adequately maintaining stimulus for growth, said Nicolas Eyzaguirre, director for the IMF's Western Hemisphere Department.

- Skype will start service on Apple’s(AAPL) iPhone on Tuesday and on Research in Motion’s(RIMM) Blackberry in May, citing Skype COO Scott Durchslag.

- The United States plans to deploy two missile-interceptor ships from South Korea on Monday, a military spokesman said, days ahead of a North Korean rocket launch seen by many as a test of its longest-range missile. The launch presents the first significant challenge by the prickly state to U.S. President Barack Obama, who makes his first major international appearance this week at the G-20 summit where he will discuss Pyongyang's intentions with global leaders including Chinese President Hu Jintao. The United States, however, has no plans to shoot down the rocket in a test seen by Washington as part of Pyongyang's goal to eventually develop an intercontinental ballistic missile, U.S. Defense Secretary Robert Gates said on Sunday.

Financial Times:

- General Electric(GE) has started to see the first “glimmers of hope” in the world economy, according to a senior executive at the US conglomerate. Nani Beccalli, who as chief executive of GE International is in charge of all its business outside the US, said he saw several encouraging bits of economic data from round the world. These included “signs of life” in the US and European retail sectors and improving profits among European banks as foreign competitors leave the market. Mr Beccalli said: “The first glimmers of hope are there. This is the inversion of trends, which for a long period have been going down. The glimmers weren’t there two months ago”. His comments are among the first from a bellwether company about signs of stabilization in the economy.

- Citigroup(C) is inviting bids for Nikko Cordial, Japan’s third-largest brokerage, in a move that could raise more than $5bn for the troubled US bank and undo one of its most ambitious overseas forays. People close to the situation said that, after holding informal talks with potential bidders, including Japan’s three largest banks, Citi had begun soliciting formal offers for Nikko Cordial and wanted to select a buyer as early as the end of April.

Telegraph:

- As the G20 prepares to regulate the hedge fund industry, London's leading managers have decided to fight back. In a rare show of unity 12 top hedge funds came to The Sunday Telegraph to argue why they must survive. For many of the "anti-capitalist warriors" descending on the G20 summit in London, the excesses of the boom years are epitomized by hedge fund managers. Aggressive, arrogant and seemingly all-powerful, these secretive financiers became known for both for their sporadic attacks on public companies and an opulence that surpassed toffs, bankers and even footballers' wives. Some London-based hedge funds have threatened to move abroad should regulation become too strict and taxes too high, with Switzerland among the options, citing 12 fund managers.

Sonntag:

- UBS AG may cut 8,000 jobs and “write down billions.” UBS may write down about 2 billion in credit redemptions because risk premiums have increased and a “single-digit billion amount” in the “area of credit linked obligations,” citing “insiders.” The bank may announce the writedowns on April 1. The job cuts may be announced “soon” and will also include private banking employees.

Folha de S. Paulo:
- Brazil’s central bank will offer loans in US dollars at auctions next week, citing bank president Henrique Meirelles.

- A third of Brazil’s business leaders plan to reduce their investments in the second half compared to the year-earlier period, citing a study by Serasa Experian. In an earlier study, 14% of those surveyed said they would reduce investments in the first half.

China Securities Journal:
- China’s new loans in March were about 800 billion yuan, citing bankers. New loans in January were 1.62 trillion yuan and were 1.07 trillion yuan in February.

Australian Financial Review:

- Australian Prime Minister Kevin Rudd’s government is preparing its federal budget on the assumption the economy will contract by at least 1% next year. Falling revenue also means the deficit will be larger than the government’s February forecast of A$22.5 billion in fiscal 2009 and A$35.5 billion in the 12 months through June 2010. Figures collected by the Treasury department show business investment is plummeting, the report said.

Sankei:

- North Korea is preparing to launch a short- to medium-range missile in addition to a long-range one the government has said it will launch next month, citing Japanese government officials.

Khaleej Times:

- Dubai - The UAE economy will shrink by 1.7 per cent this year, with an expected steep decline in population leading to more pain for the property sector, a report by EFG Hermes said on Saturday. The outlook contrasts sharply with the 7.4 per cent growth that the UAE achieved in 2008 period. EFG Hermes had originally forecast in January that the UAE economy would contract by only 0.04 per cent. As global economic conditions worsen, droves of expatriates, who make up about 80 per cent of the UAE’s population, are being sent home as companies downsize or close shop altogether. EFG-Hermes, the largest investment bank based in the Middle East, said it estimates the country’s population to fall by 5.5 per cent this year, led by a 17 per cent drop in the population of Dubai alone. The bank predicts that the UAE’s population will shrink to 1.49 million this year from 1.79 million in 2008. It said there will be a sharp 30 per cent contraction in the number of employees in the construction, real estate and financial services sectors. The outflow of non-construction workers, which have a far greater impact on the economy, will curb private consumption by 13 per cent this year, EFG-Hermes said. As a result, the bank expects a price deflation of 2 per cent this year, with housing and rental prices sliding further. Tougher days lie ahead for the property industry, with rents seen falling by as much as 50 per cent in Dubai compared to last year’s increase of 21 per cent. EFG-Hermes forecasts that the downward spiral in Dubai property prices will also continue, with prices in 2009 sliding by as much as 60 per cent from their peak levels last year.

Weekend Recommendations
Barron's:
- Made positive comments on (RIG), (MA), (INTC), (AMZN), (V) and (DO).

- Made negative comments on (FSLR) and (ENER).

Citigroup:

- Reiterated Buy on (GILD), target $56.

- Reiterated Buy on (INTC), target $18.

Night Trading
Asian indices are -2.0% to -1.0% on avg.
S&P 500 futures -1.10%.
NASDAQ 100 futures -1.11%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Global Commentary
WSJ Intl Markets Performance
Commodity Futures
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?
Upgrades/Downgrades
Rasmussen Business/Economy Polling

Earnings of Note
Company/Estimate
- (CALM)/1.70

Upcoming Splits

- None of note

Economic Releases

- None of note

Other Potential Market Movers
- The Dallas Fed Manufacturing Index and the Platts Wind Power Development Conference could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by financial and commodity 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 week.