Tuesday Watch

Late-Night Headlines
Bloomberg:

- American International Group Inc., the insurer bailed out by the U.S., received an $800 million loan from its money-losing consumer lending unit after pumping $600 million of capital into the business. American General Finance Corp. will charge AIG 0.5 percentage point more than the overnight London interbank offered rate for the loan, the Evansville, Indiana-based unit said today in a filing with the Securities and Exchange Commission.
- Cia. Siderurgica Nacional SA, Brazil’s third-largest steelmaker, said the price of Brazilian iron ore will probably fall 20% in annual contract agreements this year. Prices for iron ore from other countries may fall 30%, CSN Mining Director Jayme Nicolato said.

- United Auto Workers membership fell 7.3 percent to 431,000 at the end of 2008 as union diversification efforts beyond U.S. automakers didn’t keep up with job cuts at those companies. The union peaked at 1.5 million members in 1979.

- Ford Motor Co.(F) bonds gained 38 percent this month on average as the second-biggest U.S. automaker asked investors to swap debt at a premium to trading prices to help it avoid bankruptcy or a government bailout.

- A Cayman Islands court may decide tomorrow to put Dynamic Decisions Capital Management Ltd.’s main hedge fund under the protection of an outside firm after investors accused the manager of “gross mismanagement and misfeasance,” according to people familiar with the case.

- JPMorgan Chase & Co.(JPM) is winning twice as much work as its nearest competitor, Goldman Sachs Group Inc., in the busiest year for European rights offers.

- Neptune Orient Lines Ltd., Southeast Asia’s biggest container carrier, fell in Singapore trading after reporting its second straight drop in rates amid slowing global trade. The shipping line dropped for a third day in a row, slipping as much as 5.2 percent to S$1.09 at 9:50 a.m. Average revenue per 40-foot box fell 16 percent to $2,382 in the four weeks ended March 6, the company said yesterday. The shipping line’s volume fell 21 percent, the fifth straight fall.

- Asian economies will expand at the slowest pace since 1998 as a global recession hurts trade and government stimulus plans take time to revive growth, the Asian Development Bank said. Asia excluding Japan will grow 3.4 percent this year, less than half of a September estimate of 7.2 percent, the Manila- based institution said in a report today. “The short-term outlook for the region is bleak as the full impact of the severe recession in industrialized economies is transmitted to emerging markets,” ADB’s acting chief economist Lee Jong-Wha said in a statement. Exports by developing Asian economies may shrink 10.3 percent this year, after growing 14.7 percent in 2008, the ADB said. Imports will probably contract 11.9 percent. “Across the region, factory closures and job losses are rising, weighing on consumer sentiment and forcing households to cut back on spending,” the ADB said. “Slowing demand and the uncertain economic environment are discouraging investment. As business sentiment continues to degenerate, capital spending will be restrained.” China will expand 7 percent this year, from a September forecast of 9.5 percent and last year’s 9 percent, the ADB predicts. India’s economy will grow 5 percent this year, down 2 percentage points from the earlier estimate, it said. In Southeast Asia, the ADB expects the economies of Thailand, Malaysia and Singapore to shrink this year, dragging growth in the region to 0.7 percent in 2009. The East Asian economies of South Korea, Taiwan and Hong Kong will also contract, it said.

- Australia’s economy will probably contract this year for the first time in almost two decades amid slumping global demand for exports, central bank Deputy Governor Ric Battellino said. “There are limits on how much we can insulate ourselves from what is happening abroad, and therefore there are probably still some difficult times ahead,” Battellino told a conference in Brisbane today. Gross domestic product is “likely to fall in 2009,” he said. In February, the bank tipped 0.5 percent growth.

- Morgan Stanley(MS) Chief Executive Officer John Mack told employees at Morgan Stanley and Citigroup Inc.’s Smith Barney unit that 2009 will be a “difficult year” and that profitability isn’t near the bank’s long-term targets. This year, “even though flows of business are good, is nowhere near what we need on a long-term basis,” Mack, 64, said on an internal conference call today with the brokers. The year “will be a difficult year for all of our firms, mainly because of some of the legacy positions that we continue to have, and they drag on all of us.” “As much as we’d like to give the money back and just focus on not having government involvement, being totally a public entity, we think and I think that it’s the wrong time to do it now,” he said on the call. “The Treasury’s plan to help banks get rid of bad assets is promising,” Mack said. The firm is “talking about how can we participate as one of the firms that can buy these assets and package them where your clients will have access to them. Simply say we’re all over it.” Mack told employees the American people are upset about the loss of jobs and homes, and that their anger is being directed at Wall Street. He said some anger is justified and “we’ve all made mistakes.” At the same time, he said, Obama, Treasury Secretary Timothy Geithner and Lawrence Summers, Obama’s senior economic adviser, recognize that efforts to tax or otherwise curb Wall Street compensation is a concern for employees. “I know there’s been a lot of talk about compensation and taxes, I just want to assure you we’re all over that,” Mack said. “The president and his financial team and Larry Summers and Secretary Geithner understand it.” Morgan Stanley’s brokerage joint venture with Smith Barney, announced in January, is making progress and “there is a chance we can close this sooner than later,” Mack said on the call. He also said the venture should benefit from Morgan Stanley’s recently agreed venture with Mitsubishi UFJ Financial Group Inc.

Wall Street Journal:

- Airline executives have little more to go on than a feeling, but based on very preliminary numbers, they're expecting ticket sales to climb as the summer travel season approaches. That could mean that after several months of fare declines, prices will reverse and begin rising for the summer months as newly confident consumers book summer trips. From mid-February on, bookings have improved, said Scott Kirby, president of US Airways Group Inc. Sales are still worse than a year ago, "but things seemed to bottom in February, at least in the near term," Mr. Kirby said. "Hopefully we've seen the worst of it."

- Procter & Gamble Co.(PG) Chief Executive A.G. Lafley has publicly criticized an Obama administration proposal that would increase taxes on the foreign profits of U.S. multinationals, saying it would hurt corporate profits and job creation in the U.S.

- The Obama's administration's leading plan to fix General Motors Corp.(GM) and Chrysler LLC would use bankruptcy filings to purge the ailing companies of their biggest problems, including bondholder debt and retiree health-care costs, according to people familiar with the matter. The move would in essence split both companies into their "good" and "bad" components. The government would like to see the "good" GM to be a standalone company, according to an administration official. The "good" Chrysler would be sold to Fiat SpA, assuming that deal is completed, this person said.

- Inside a windowless, ornate room Thursday just across from the Oval Office, President Barack Obama and a group of senior economic advisers began the job of remaking the American automobile industry. The first order of business: Oust General Motors Corp.(GM) Chief Executive Rick Wagoner.

- Abbott Laboratories(ABT) held preliminary discussions with Wyeth(WYE) in mid-December about acquiring the company but decided not to pursue a deal amid concerns over price and other issues, according to people familiar with the matter.

- The federal government is proposing to forgive disaster loans made to coastal communities that have faced budget problems in the years after hurricanes Katrina and Rita. Rules proposed Monday would let local governments avoid repaying some or all of their loans if revenue for three fiscal years since the disasters hasn't met operating costs.

MarketWatch.com:
- Intel Corp.(INTC) on Monday introduced its much-anticipated new microprocessor for business computers, a new chip that analysts say highlights the industry-wide bid to build more power-efficient data centers.

NY Times:

- A concept embraced by President Obama on Monday as part his effort to save General Motors and Chrysler from collapse would provide cash to buyers of new fuel-efficient cars — if they traded in a clunker. Similar incentive programs overseas have lifted automobile sales despite the awful economy.

- A quintessential General Motors(GM) man, the former head of a military contractor, the Fiat chief executive, and a supporter of Barack Obama’s presidential campaign are to play significant roles in the bailout of GM and Chrysler.

The Washington Post:

- Key House Democrats will unveil legislation Tuesday that aims to cut the nation's greenhouse gas emissions 20 percent from 2005 levels by 2020, according to sources familiar with the bill who asked not to be identified. The measure, co-sponsored by House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) and Edward J. Markey (D-Mass.), who chairs the panel's Energy and Environment Subcommittee, will serve as the main vehicle in the House for climate legislation. It would establish a cap-and-trade system for carbon dioxide that would allow cleaner facilities to sell their pollution permits to dirtier operations. While the bill remains silent on some key issues, such as what portion of pollution allowances would be auctioned off and how the money raised through such an auction would be spent, sources said, it would establish both a national renewable energy standard as well as an energy-efficiency-resource standard that would reduce electricity demand by 15 percent by 2020. By 2050, the bill would cut national greenhouse gas emissions by 80 percent compared to 2005 levels.

DCexaminer.com:
- Two American journalists detained at North Korea's border with China two weeks ago will be indicted and tried, "their suspected hostile acts" already confirmed, Pyongyang's state-run news agency said Tuesday. "The illegal entry of U.S. reporters into the DPRK and their suspected hostile acts have been confirmed by evidence and their statements," the report said, referring to the country by its official name, the Democratic People's Republic of Korea. Euna Lee and Laura Ling, reporters for former Vice President Al Gore's San Francisco-based Current TV media venture, were detained by North Korean border guards March 17.

Editor & Publisher:

- U.S. Internet advertising revenue climbed in the fourth quarter in spite of the poor economy, but the growth rate was sluggish compared to previous years, according to an analysis released Monday. In the most recent quarter, revenue from search ads, which make up the largest segment of the online advertising market, rose 13 percent to $2.8 billion. Revenue from graphical "display ads," the second-largest segment, fell 4 percent to $2 billion. David Silverman, a partner at PricewaterhouseCoopers, called the year-over-year growth "remarkable." For the full year, online ad revenue totaled $23.4 billion -- up $2.2 billion, or a bit less than 11 percent, from 2007.The report said revenue from search advertisements rose 20 percent in 2008 to almost $10.6 billion. Display ad revenue rose 8 percent to $7.6 billion. Though still a small segment within the category, digital video ads -- such as those you might see when watching a TV show on Hulu -- were a bright spot, more than doubling in 2008 to $734 million from $324 million in 2007. About 10 percent of all money spent on advertising in 2008 went toward ads on the Internet, according to U.K.-based advertising company ZenithOptimedia. While that is still a small portion of the total, it rose from 8.6 percent in 2007, while the money spent on newspaper and magazine ads declined over the same period.

Theday.com:

- The Obama administration has agreed to release another Guantanamo detainee, but officials aren't saying yet where he'll go.

Chicago Tribune:

- The head of Citadel Investment Group's equities market-making division is leaving the Chicago-based hedge fund operator, the company said Monday. Matt Andresen was president of Citadel Execution Services, a business that under his responsibility grew to represent as much as 9 percent of the stock and 30 percent of the option volume trading daily in America.

IBD:

- Anyone looking for a single clue to both the success and high cost of U.S. health care need look no further than Alexion Pharmaceuticals (ALXN).

Politico:

- Tim Kaine, the Virginia governor and President Barack Obama's hand-picked choice as the head of the Democratic National Committee, infuriated abortion-rights groups Monday by signing legislation that gives abortion foes a long-sought victory. Kaine brushed off intense lobbying by abortion rights supporters in Richmond to sign a bill that allows Virginia motorists to advertise their anti-abortion views by sporting "Choose Life" specialty license plates.

TheAdvocate:

- Super-chemo targets cancer spreading to the liver.

Forbes.com:

- Shares of the world's three big iron-ore miners slumped on Monday after a Chinese official claimed steel mills in his country have wrested a 40.0% price cut from them. One of the miners denied the assertion, while the other two would not comment, but shares of the trio fell more sharply than the overall market.

- 10 Cities Where Americans are Relocating.

CNNMoney.com:

- At Wireless 2009, it’s all about the apps.

- Amazon(AMZN): thinking beyond the Kindle.

Reuters:

- Malaysia's stock exchange plans to launch a platform to facilitate regulated Islamic short-selling and hedge fund activities towards the end of the year, the bourse's head said on Monday. Short-selling -- the sale of borrowed stock with a view to buying it back more cheaply later -- is controversial among Islamic scholar, as some believe that sharia does not permit selling what one does not own.

- Walt Disney and Google's(GOOG) YouTube said on Monday they have reached a pact to offer sports highlights, clips of television shows and other short-form content on the hugely popular video-sharing site. The deal will see videos from sports network ESPN from April and the Disney/ABC Television networks such as ABC Entertainment and SoapNet become available on YouTube from May. Disney Media Networks will have the option to sell its own advertising inventory within those channels. While the deal does not entail full-length programing, analysts said it represents an important validation for YouTube as it seeks to present itself as an outlet for professionally-made, premium video content.

Financial Times:
- The US and Europe are united in their desire for far-reaching regulatory reform to strengthen the global financial system, Tim Geithner, the US Treasury secretary, has told the Financial Times. Mr Geithner said ahead of the G20 summit that the “US has a huge interest in acting quickly and comprehensively to use this opportunity to develop an international consensus on how to make the system more robust and stable”. He rejected the notion that the US is only interested in fiscal stimulus while continental Europeans want regulatory reform. He said all G20 nations agreed on the need for a strong regulatory response to the crisis and on the broad shape it should take. “Relative to where we were in 1998 during the Asian crisis, there is a much stronger degree of consensus,” he said. “The gap between where the French are, where the Germans are, where the Americans are, where the Chinese are – it is a very small gap.” The Treasury secretary said regulation would remain a sovereign issue. “We are not going to give anyone else the responsibility for deciding what balance between stability and efficiency is right for our markets.” But national reforms “will not work unless we are able to bring others along with us”. Mr Geithner said the “philosophy is to make both the core institutions and the markets more robust”. The US is focused above all on strengthening capital requirements and market infrastructure. Mr Geithner favors what some call a “systemic risk surcharge” – tougher requirements for the most systemically important companies. The “crucial test of a financial system” is its ability to withstand failure. “That requires core institutions to hold more capital against risk. It also means market infrastructure in all these markets – in derivative markets, in securities lending, in the repo market – has to be able to absorb failure and contagion.” Mr Geithner said there would be no global systemic risk regulator. “The home country authority has to have responsibility for consolidated supervision of its institutions.”

- The head of Germany’s powerful BDI industry federation launched a vitriolic attack on the US fiscal stimulus on Monday, saying aid to the motor industry amounted to a “car war” that could distort competition to the detriment of Europe. “What the US is doing right now is highly problematic in terms of competition. One day we in Europe will wake up with a big headache because of it,” Hans-Peter Keitel told the Financial Times in an interview.

Australian Financial Review:

- Australian company profits will drop 10% in fiscal 2010 as the global slump deepens and unemployment rises. Profits will return the worst result in 30 years, citing UBS Australia Ltd. chief economist Scott Haslem

Late Buy/Sell Recommendations
Citigroup:

- We are adjusting our estimates for fertilizer producers (POT), (MOS) and (AGU) to reflect weaker expected 1H volumes for Potash, partially offset by more robust Nitrogen volumes and pricing. We believe 1Q ’09 potash volumes could be down 70% y/y as farmers sit on the sidelines and inventories build at the retailer and producer level. For the fertilizer year ending June 30, we now estimate Potash volumes could be down 35%, Phosphate volumes could be down 30%, and Nitrogen could fall 10%. We maintain our Hold ratings on POT and MOS, as we believe there is downside risk to potash prices, and our Sell rating on AGU, given its less attractive retail exposure.

Deutsche Bank:

- Cut (FCX) to Sell.

Night Trading
Asian Indices are -.75% to +1.75% on average.
S&P 500 futures +.83%.
NASDAQ 100 futures +.90%.

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Company/EPS Estimate
- (LEN)/-.64

- (APOL)/.65

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9:45 am EST

- The Chicago PMI for March is estimated to rise to 34.4 versus 34.2 in February.

10:00 am EST

- Consumer Confidence for March is estimated to rise to 28.0 versus 25.0 in February.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Stern speaking, Fed’s Plosser speaking, (CPN) analyst meeting, (KMT) analyst meeting, S&P/CaseShiller Home Price Index, weekly retail sales reports and the NAPM-Milwaukee report could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by financial and technology stocks in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Stocks Finish Lower, Weighed Down by Commodity, Financial, REIT and Homebuilding Shares

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In Play

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