Monday Watch

Weekend Headlines
Bloomberg:

• Libyan Rebels Recapture Ras Lanuf Oil Port, Heat Toward Qaddafi's Hometown. Libyan rebels advanced west toward Muammar Qaddafi’s hometown of Sirte, recapturing the oil port of Ras Lanuf, after U.S. and allied warplanes struck loyalist tanks, artillery and soldiers. Airstrikes hit the capital of Tripoli, the Associated Press reported. The airstrikes on Sirte tonight, the first of the military operation that began eight days ago, coincided with the North Atlantic Treaty Organization assuming command of all aspects of the military operation enforcing a United Nations mandate to ensure the safety of Libyan civilians. Opposition fighters, who last week struggled to move west along the coast from their eastern stronghold of Benghazi, entered Brega early today after retaking Ajdabiya yesterday, the Associated Press reported. The rebels later recaptured Ras Lanuf, the British Broadcasting Corp. and Al Jazeera television reported.
• Fed's Bullard Says 'Pretty Good' U.S. Economy May Allow Early End to QE2. U.S. Federal Reserve policy makers should review whether to complete a second round of quantitative-easing purchasing due to end in June because of strong U.S. economic data, Federal Reserve Bank of St. Louis President James Bullard said. “The economy is looking pretty good,” Bullard told reporters in Marseille, France, today. “It is still reasonable to review QE2 in the coming meetings, especially this April meeting, and see if we want to decide to finish the program or to stop a little bit short.” While the economy is clearly stronger than last summer and fall and QE should be reviewed, uncertainties remain, including Japan, Middle East political tensions, the U.S. fiscal position and the European sovereign debt crisis, Bullard said. U.S. first-quarter gross domestic product may not be as strong as anticipated several weeks ago, and some strengthening may get pushed into the second quarter, he said. “The oil price increases so far is not enough to derail the U.S. recovery at this level,” Bullard said. “If oil prices stabilize where they are, we’ll be fine.” Prices would have to go substantially higher for there to be a “significant and material effect,” he said. “We have to weigh those in the decision” on whether to stop the Fed’s QE2 program earlier than planned, Bullard said. “We’re far away from normal policy,” Bullard said. “I think it’s important to take a few steps back to normality. Even if you make a few small moves, monetary policy will still be accommodative for some time to come.” “If the economy is as strong as I think it is then I think it may be reasonable to send a signal to markets that we’re going to start withdrawing our stimulus, and I’d start by pulling up a little bit short on the QE2 program,” Bullard said. “We can’t be as accommodative as we are today for too long, we’ll create a lot of inflation if we do that.” If the Fed opts to start withdrawing stimulus and tighten policy, it should start with the “balance sheet” by selling bonds first, then changing its wording about keeping interest rates near zero for an “extended period” and then raising interest rates, Bullard said. Philadelphia Fed President Charles Plosser and Richmond Fed President Jeffrey Lacker have also urged a review of the purchases in light of a strengthening economy and concern over future inflation.
  
• Quake Evacuees Survive on Rice Balls, Bread, Seek to Avoid Flu at Shelters. Relief workers in Japan’s earthquake-stricken region are struggling to provide many residents with just two meals a day, while influenza is spreading at some evacuation centers, local authorities said. In Miyagi, the hardest-hit prefecture, shelters continue to feed people rice balls and bread even after restored utilities allowed many who still have houses to go home. Medical teams are struggling to access some areas in Iwate prefecture to deliver medicine as flu is spreading at some of the 383 local evacuation centers, authorities there said. “Medication for flu is being delivered," said Naoto Wakuishi, a spokesman for Iwate prefecture, in northeast Japan. "But transportation is tough, and even if staff do go in, it’s hard for them to get around."
• Cooling at Two of Japan's Nuclear Reactors Delayed as Radiation Increases. Efforts to repair the cooling systems at the No. 2 and No. 3 reactors at the Fukushima Dai- Ichi nuclear plant are being delayed by the need to drain radioactive water from the floors, Tokyo Electric Power Co. said. Tests found radiation levels at 100,000 times the normal level in the No. 2 reactor at the plant, and the reactor may be leaking water, Vice President Sakae Muto said at a briefing broadcast on the Internet. The company plans to put the radioactive water into condenser tanks. Those tanks are probably already full, so crews must find a way to drain them, company officials said at a briefing today. “I think it is high,” Muto said of the radiation level in the pool of water at the No. 2 unit. The cooling pool at the No. 2 reactor, used to store spent nuclear fuel, appears to be full of water, the company said. The pool at the No. 4 reactor is likely full, the company said. The pools need cooling water to keep the rods from melting and releasing radiation into the air. The radiation level at the No. 2 reactor was measured at 1,000 millisieverts an hour, Japan’s nuclear safety agency said. That’s higher than the dose that would cause vomiting, hair loss and diarrhea, according to the World Nuclear Association. “They’re finding quite high levels of radiation fields, which is impeding their progress dealing with the situation,” said Richard Wakeford, an expert in radiation epidemiology at the U.K.’s Dalton Nuclear Institute in Manchester. At reactor 2, “you’d have a lot of difficulty putting anyone in there.”
• Food Contamination Set to Rise as Japan Fights Radiation Crisis at Reactor. Radioactive contamination in food is likely to increase as Japan enters a third straight week of battling the biggest nuclear-energy crisis since Chernobyl. “The number of radiation-affected foods will likely increase as each prefecture is testing its produce,” Taku Ohhara, an official at the Ministry of Health, Labor and Welfare, said in a phone interview yesterday. Some 99 products, including milk and vegetables, were found to be contaminated in Tokyo and five prefectures to its north and east as of late March 26, according to the health ministry’s statement on its website. Shoppers in Hong Kong, Singapore and Sydney are shunning Japanese food products in supermarkets amid concern about radiation. The plight adds to the drags on economic growth caused by as much as 25 trillion yen ($307 billion) of damage from the March 11 earthquake and tsunami. Japan exported 481 billion yen of food last year, accounting for 0.7 percent of total exports, government figures show.
• Euro Drops Against Dollar, Yen as Leaders Divided on Bailout Fund. The euro fell against the dollar and the yen for a second day after European Union leaders failed to solidify a permanent bailout mechanism during a summit at the end of last week. The 17-nation currency depreciated against 15 of its 16 major counterparts after EU leaders cut the startup capital for the future euro emergency aid mechanism. The euro also declined after German Chancellor Angela Merkel’s coalition was defeated in its southwestern heartland. “It’s a double whammy for the euro,” said Kurt Magnus, executive director of currency sales at Nomura Holdings Inc. in Sydney. “Maybe the euro has a bad week.” The euro slid to $1.4047 as of 7:25 a.m. in Tokyo from $1.4088 on March 25 in New York. The euro declined to 114.41 yen from 114.59. The yen traded at 81.45 per dollar from 81.34.
• German Anti-Nuclear Sentiment Hurts Merkel's CDU Party in State Elections. German Chancellor Angela Merkel’s coalition was defeated in its southwestern heartland and failed to win control of a second state as the anti-nuclear Greens vote surged to a record, forcing her to reassess energy policy. The Greens were poised to enter the regional governments in Baden-Wuerttemberg and Rhineland-Palatinate after state elections yesterday conducted in the shadow of the nuclear disaster in Japan. In Baden-Wuerttemberg, the Greens were set to lead their first state administration, ejecting Merkel’s Christian Democrats from power in Stuttgart after 58 years. The shift would grant the Greens sway over policy affecting a state whose economy is bigger than Belgium and Luxembourg combined, driven by companies such as Porsche AG, SAP AG and Daimler AG. It would also hand them control of Germany’s third- biggest utility, EnBW Energie Baden-Wuerttemberg AG, and its four nuclear plants just as the Japanese crisis fans public fears over reactor safety.
• Saudi Stocks Climb to 5-Week High on Housing Measures; Dar al Arkan Gains. Saudi stocks rose to the highest level in almost five weeks as investors restore confidence in the Arab world’s largest economy after King Abdullah ordered the creation of a ministry for housing. Saudi Basic Industries Corp., the world’s biggest petrochemical maker, added 2.5 percent, and Al Rajhi Bank, the kingdom’s largest lender, advanced 1 percent. The 146-member Tadawul All Share Index rose 2.3 percent, the highest level since Feb. 15, to 6506.01 at the 3:30 p.m. close in Riyadh. “Day after day, Saudi Arabia has been proving immune from the surrounding turmoil,” said Amro Halwani, a senior trader at Shuaa Capital PSC in Riyadh. “With the ongoing, fast-paced initiatives the government is undergoing, investors are feeling more confident to place bets on the table.”
• House Republicans Accuse Democrats of Foot-Dragging on Spending. U.S. House Republicans are accusing Democrats of foot-dragging in negotiations over spending cuts and say they will be responsible for a government shutdown if talks fail. House Majority Leader Eric Cantor, a Virginia Republican, said yesterday that the two sides were far apart on a spending plan to take effect April 8, the expiration date of the latest short-term measure funding the government. Congress has passed a series of stopgap measures, known as continuing resolutions, to keep the government operating while Democrats and Republicans try to agree on a long-term budget for the 2011 fiscal year. Senate Democrats and President Barack Obama’s administration have refused “to offer any sort of serious plan for how to cut spending,” Cantor said in a statement. A government shutdown “would be in their hands” if the talks fail to produce an agreement, he said. Cantor called “completely far-fetched” comments earlier in the day by Senator Charles Schumer of New York, the chamber’s third-ranking Democrat, that lawmakers were making progress toward a plan.
• The rally that drove cotton prices to the highest since America was recovering from the Civil War is ending as farmers from Texas to New South Wales plant record crops and replenish stockpiles for the first time since 2007. Cotton will drop 51% to $1 a pound by Dec. 31, according to the median in a Bloomberg survey of 14 analyst and traders. Hedge funds are already cutting bets on higher prices by the most in three years. Output may rise 11% to 127.5 million bales in the year that starts Aug. 1, three times faster than a 3% gain in demand to 120 million bales, the U.S. Dept. of Agriculture estimates.
  
• Automakers May Lose 600,000 Vehicles as Japan's Quake Halts Assembly Lines. Global automakers may lose production of 600,000 vehicles by the end of the month as the earthquake in Japan halts assembly lines and work at suppliers including the maker of a paint pigment. About 320,000 vehicles may have been lost worldwide as of March 24, and manufacturing at plants in North America may be affected when parts supplies start running out as soon as early April, said Michael Robinet, vice president of Lexington, Massachusetts-based IHS Automotive. “The next surge of shutdowns comes when the pipeline of parts that were already built dries up,” Robinet said yesterday in a telephone interview. “The rate of lost production will accelerate once North American plants join in.”
• London Shops Attacked as 250,000 Protest Public Spending Cuts. Protesters clashed with police in London as hundreds of thousands of people, including public- sector workers and students, demonstrated against Britain’s deepest public spending cuts since World War II. Demonstrators in the Oxford Street shopping area threw paint and light bulbs filled with ammonia, said a Metropolitan Police Service spokesman, who declined to be identified in line with policy. Windows were smashed and nine people were arrested, according to the police. Footage broadcast by Sky News showed a branch of HSBC Holdings Plc, Europe’s largest bank, splashed with paint as protesters broke in. The Oxford Street rally coincided with a march to Hyde Park organized by the Trades Union Congress. The TUC said more than 250,000 people took part in the demonstrations, which “way exceeded” its expectations. The police spokesman declined to give an estimate of size of the crowd.
• Assad's Promise Fails to Halt Syria Unrest as Scores Die During Protests. Syrian President Bashar Al-Assad’s security forces clashed with protesters in several cities after his promises of freedoms and pay increases failed to prevent dissent from spreading across the country. The protests that started earlier this month in the southern province of Daraa may have resulted in the deaths of 55 people, London-based Amnesty International said in a statement on its website. Security forces opened fire on protesters in the town of al-Sanamein in Daraa and carried out arrests in the capital, Damascus, it said. Al Arabiya and Al Jazeera reported a military presence in the city of Latakia on the Mediterranean. “Security elements are firing live bullets on protesters,” a man who identified himself as Omar al-Masri told BBC Arabic television in a telephone interview from Daraa. “We are not gangs. We are peaceful protesters.”
• Wen's Hometown Reveals Losses as Debt Sales Double: China Credit. For the first time, China's local governments are showing how dependent their investment companies are on land sales to repay debt. Leshan State-Owned Asset Management Co., a developer of city infrastructure and roads, said during its debut bond offering this month that debt was 12 times 2010 earnings before interest and taxes, according to China International Capital Corp. Chongqing Water Conservancy Investment Group Co.'s debt was 88 times higher than pretax earnings, CICC said, citing bond sale documents. In Premier Wen Jiabao's hometown, Tianjin Binhai New Area Construction & Investment Group reported a $620 million operating loss for three years before selling notes, according to its prospectus. Local governments are accepting higher borrowing costs and greater transparency to obtain bond-market funding after Wen squeezed their bank financing by increasing interest rates three times since October.
• Israel Deploys Iron Dome Anti-Rocket System After Gaza Violence Escalates. Israel will begin setting up its Iron Dome missile defense system in the south of the country after an upsurge in attacks from the Gaza Strip. “I don’t want to create an illusion that Iron Dome, which we’re deploying today, will give a complete or comprehensive answer” to rockets from Gaza, Prime Minister Benjamin Netanyahu said at a Cabinet meeting, according to an e-mail from his office. “The real answer to the missile threat is a mix of offensive measures, deterrence and defensive measures.” An Israeli airstrike on the Gaza Strip today killed two Palestinians, according to Adham Abu Selmeya, chief of emergency medical services in Gaza. The Israeli air force was targeting a group attempting to launch rockets, the army said. Palestinians have fired more than 85 rockets and shells into Israel.
• Yemen is 'Time Bomb' Nearing Tribal Civil War, Four-Way Split, Saleh Says. Yemen’s President Ali Abdullah Saleh warned today that his nation faces growing chaos as a senior military official and former ally of the embattled president called for his resignation. “Yemen is a time bomb,” Saleh said in an interview with Al Arabiya television, according to a transcript published by the state-run Saba news agency. “Everyone will side with his tribe, and we will then end up with a destructive civil war.” Saleh said the country may split into four sections if the unrest doesn’t end.

Wall Street Journal:

• Crisis-Era Props Are Falling Away. Bit by bit, Uncle Sam is preparing to remove the training wheels from the economy and financial markets. In recent days, U.S. policy makers have taken a series of small steps to remove their extraordinary, crisis-era support.
• Stocks Shining as Bonds Lose Luster. The U.S. stock market has powered back in the face of major global uncertainty. It may have bond investors to thank for that. Money managers and advisers say there has been a steady undercurrent of cash heading out of bonds and into equities. While there remains unease about U.S. fiscal policy, with the Federal Reserve having pinned interest rates essentially at zero for so long, investors are capitulating and moving into stocks. "We're in the early innings of a big asset allocation shift," says Jason DeSena Trennert, chief investment strategist at Strategas Research Partners.
• Nasdaq(NDAQ), ICE(ICE) Weigh a Price for NYSE. Nasdaq OMX Group Inc. and IntercontinentalExchange Inc. have continued talks in recent days about a possible joint bid for NYSE Euronext, but the two companies still are working to overcome hurdles, according to people familiar with the matter. One of the biggest sticking points is how much to bid for NYSE Euronext, which announced in February an agreement to be acquired by Frankfurt's Deutsche Börse AG. Both ICE and Nasdaq have tentatively agreed that they would need to pay more than $40 a share.
• Google(GOOG) Sets Role in Mobile Payment. Google Inc. is teaming up with MasterCard Inc. and Citigroup Inc. to embed technology in Android mobile devices that would allow consumers to make purchases by waving their smartphones in front of a small reader at the checkout counter, according to people familiar with the matter.
• Netflix(NFLX), Miramax Near Streaming Deal. Miramax, the studio behind some of the most iconic independent movies of recent decades, and Netflix Inc. are finalizing a five-year deal worth more than $100 million to stream its library of more than 700 titles, according to people familiar with the situation.
• Harry & David Nears Chapter 11. Harry & David Holdings Inc., the specialty gourmet fruit retailer known for its gift baskets, is preparing to file for Chapter 11 bankruptcy protection as soon as Monday morning, people familiar with the matter said.
• The Senate's EPA Showdown. Democrats face a moment of truth on regulatory cap and trade. The Environmental Protection Agency debate lands in the Senate this week, amid the makings of a left-right coalition to mitigate the agency's abuses. Few other votes this year could do more to help the private economy—but only if enough Democrats are willing to buck the White House. This moment arrived unexpectedly, with Majority Leader Harry Reid opening a small business bill to amendments. Republican leader Mitch McConnell promptly introduced a rider to strip the EPA of the carbon regulation authority that the Obama Administration has given itself. Two weeks ago, Mr. Reid pulled the bill from the floor once it became clear Mr. McConnell might have the 13 Democrats he needs to clear 60. The votes are now due as soon as tomorrow, and Mr. Reid is trying to attract 41 Democrats with a rival amendment from Senate Finance Chairman Max Baucus.

NY Times:

• The United Nations' nuclear watchdog said Japan was "far from the end of the accident" at the earthquake-damaged power plant in Fukushima, citing the agency's chief. Yukiya Amano, director general of the IAEA, said measures taken so far were only stopgaps and that the nuclear emergency could go on for weeks or months, given the extent of damage at the plant, citing an interview yesterday with Amano. Amano said he was uncertain that efforts to spray seawater into pools containing used nuclear-fuel rods had been successful. "The temperature will go up," unless cooling systems are repaired, raising the threat of new radioactive releases, he said.
• Note to Banks: It's Not 2006 Anymore. NOSTALGIA is running high on Wall Street for the days when junk mortgage underwriting and opaque derivatives trading juiced bank profits. As regulators continue to devise the machinery of the Dodd-Frank regulatory reform law, major financial institutions are working overtime in Washington to bring the good times back again. Unfortunately for taxpayers, some of these efforts are gaining traction, particularly regarding the regulation of derivatives and mortgages.

CNNMoney:

• iPad 2: Out of Stock by Saturday. Reports are still drifting in, but it seems likely that most of the 25 countries where Apple (AAPL) launched the iPad 2 on Friday had run out of product by Saturday afternoon. Pocket-lint reports that the two flagship Apple Stores in London -- Regent Street and Covent Garden -- are completely out of stock and won't be getting more before Monday. Checks by Electronista and The Province with several Canadian Apple Stores found the same. A shopper at Apple's Opera Store in Paris reported that the outlet sold more than 3,000 iPad 2s between 5 p.m. and 10 p.m. Friday, and although the store was still selling iPads Saturday morning, by 4 p.m. its shelves were bare. Most third-party resellers -- Carphone Warehouse, Currys, PC World, and Phones4U in London, for example, and Best Buy, Future Shop and London Drugs in Canada -- had limited supplies and ran out quickly. It look like Apple moved nearly its entire stockpile of iPad 2s by midnight Saturday, which happened to mark the last day of its second fiscal quarter.

Forbes:

• Iraq's Oil Minister Claims It Can Be Globe's Largest Oil Producer. Iraq’s oil minister believes his nation can produce 10-12 million barrels of oil a day sometime in the next 5 to 10 years. That would be 5 times the 2.2 million barrels Iraq is producing at present. Those 10-12 million barrels represent more oil than either of the two largest oil producers today– Russia and Saudi Arabia.– can accomplish. This prognosis would have global ramifications for the price of oil, for the rate of inflation, and potential profits for the oil producers like the Chinese and French who may have the inside track.
• America's Remarkably Wrong-Headed Innovation and Jobs Policies.
  

Business Insider:

• The Craziest 15 Ways Women Say They Were Harassed At Goldman Sachs(GS).

Zero Hedge:

• Sun Setting on Greece and Eurozone?
• On The Ground Reports From Japan. (video)
• The Most Shocking Tsunami Video Yet.
  

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 23% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Thirty-nine percent (39%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -16 (see trends).

Politico:

• Geraldine Ferraro Dies at 75.
• Media Matters' War Against Fox. The liberal group Media Matters has quietly transformed itself in preparation for what its founder, David Brock, described in an interview as an all-out campaign of “guerrilla warfare and sabotage” aimed at the Fox News Channel. The group, launched as a more traditional media critic, has all but abandoned its monitoring of newspapers and other television networks and is narrowing its focus to Fox and a handful of conservative websites.
• Rivlin: U.S. Debt Crisis 'Definitely' Possible. Former President Bill Clinton's budget chief, Alice Rivlin, said Sunday that if Congress does not act to reign in spending or raise revenues, she could easily foresee the possibility of a wider economic crisis. According to Rivlin, a sovereign debt crisis would result in a large interest rate spike, a fall in the global value of the dollar and a period of economic decline much worse than the recession that began in 2008. "When that happens, things go south very fast," she said.
• Obama Stands by GE's(GE) Immelt. No Taxes, No Problem. President Obama still believes GE CEO Jeffrey Immelt should lead his jobs council, even while the company profits from the very practice the president has said he opposes, White House press secretary Jay Carney said Friday. Carney said Obama is “bothered” by companies that take advantage of loopholes to pay fewer taxes, although Carney said he wouldn’t address GE’s case specifically. Obama made it clear that he believes GE is a “model” for American companies when he appointed Immelt to lead his jobs council, a position that effectively brings him in closer contact with the president than other panel members.

Daily Caller:

• Gas prices are up 67 percent since President Obama took office a little more than two years ago. Lest you think this analysis one-sided, during the same period in President Bush’s tenure gas prices increased by only seven percent. Yet that doesn’t seem to bother President Obama much. Earlier this month, he said that we can’t drill our way out of our energy problems. That is like suggesting you can’t medicate yourself out of an illness. Opening up America’s vast domestic resources is literally the only realistic way to ease the pressure. It can lower prices at the pump, curb our reliance on foreign energy producers, and create new jobs right here on our soil. In short, it can do all the things that alternative energy claims to do but simply cannot despite billions of taxpayer dollars.

Reuters:

• Caterpillar(CAT) CEO Warns of Discomfort With Illinois. The chief executive of Caterpillar Inc has warned the governor of Illinois that state spending and an unfavorable business climate could undermine the competitiveness of Illinois-based companies. Doug Oberhelman sent the letter last week to Gov. Pat Quinn, noting that four states have invited the Peoria-based heavy equipment maker to relocate since Illinois raised personal and corporate income taxes in January. "I want to stay here. But as the leader of this business, I have to do what's right for Caterpillar when making decisions about where to invest," Oberhelman wrote in the letter obtained Friday by the Springfield news bureau of Lee Enterprises.

Sunday Times:

• Europe's biggest banks are selling their holdings of Portuguese bonds, reducing risk as they prepare for financial stress testing, citing people familiar with the lenders' behavior. The selling is adding to pressure on Portugal to accept a bailout from the European Union and the IMF.
• BP Plc(BP) may have to spend $15 billion to buy out its partners in TNK-BP after they blocked its attempted share swap with OAO Rosneft, citing unnamed analysts and bankers.
  

Sunday Business Post:

• Ireland's lenders need an additional $28.2 billion in capital. The country's central bank will publish stress tests on the lenders on March 31. The government is also continuing to push for European agreement on sharing losses with holders of senior bank bonds.
  

Welt am Sonntag:

• Germany may have to pay as much as $49 billion in the coming years to bail out some European countries via the future euro emergency aid mechanism and existing rescue funds, citing a survey by the DIW economic research institute.

Globe and Mail:

• Felix Chee: Building An Economic Bridge to China. China Investment Corp. is looking to invest in Canadian resource, infrastructure and real estate companies, citing the director of the Beijing-based sovereign wealth fund's Canadian office. "There is a perception and concern about China and the controlling of resources," Chee said, adding that the fund "does not seek control" of any Canadian company.
  

Efe:

• The Bank of Spain will tomorrow receive plans from savings banks, known as "cajas," to boost their capital in order to meet new solvency criteria. Lenders are considering requesting public funds as part of the plan.

Korea Economic Daily:

• Posco plans to raise steel product prices by as much as 20% from April to cope with higher material costs, citing an official at Posco.

Nikkei:

• Elpida Memory Inc. has enough materials to meet shipment schedules through July.

Commercial Times:

• China Airlines Ltd. expects profit in the first six months of this year to decline from the $217 million posted in the same period of 2010, citing the company's chairman.

Xinhua:

• Beijing raised the rate of the city's land value-added tax to a range of 2% to 5% from an earlier range of 1% to 2%. The increase was effective from March 26.

People's Daily:

• China should effectively manage liquidity as part of measures to control over-rapid growth of consumer prices, citing Ba Shusong, a researcher at the State Council's Development Research Center.

Eastmoney.com:

• China shouldn't use its foreign-currency reserves to buy commodities such as oil, iron ore or gold because such purchases would push up prices and hurt China, the largest buyer of the goods, citing People's Bank of China Deputy Governor Yi Gang who wrote in an article published in Century Weekly magazine.

Mehr News Agency:

• OPEC won't increase oil production, citing Iranian Oil Minister Mas'ud Mirkazemi. Iran sees no need for an emergency meeting of OPEC, citing Mirkazemi.

Weekend Recommendations
Barron's:

• Made positive comments on (HON) and (LINTA).

Citigroup:

• Reiterated Buy on (WMT), target $63.
• Reiterated Buy on (MRO), target $59.

Night Trading

• Asian indices are -.50% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 109.50 -3.5 basis points.
• Asia Pacific Sovereign CDS Index 117.0 unch.
  
• S&P 500 futures -.06%.
• NASDAQ 100 futures +.11%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CALM)/1.02
• (PVH)/.82
• (PRGS)/.42

Economic Releases
8:30 am EST

• The PCE Core for February is estimated to rise +.2% versus a +.1% gain in January.
• Personal Spending for February is estimated to rise +.5% versus a gain of +.2% in January.
• Personal Income for February is estimated to rise +.4% versus a +1.0% gain in January.

10:00 am EST

• Pending Home Sales for February are estimated unch. versus a -2.8% decline in January.

10:30 am EST

• Dallas Fed Manufacturing Activity for March is estimated to rise to 17.6 versus a reading of 17.5 in February.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Evans speaking, Fed's Bullard speaking, UBS Healthcare Supply Channel Conference and the JPMorgan Gaming/Lodging/Restaurant/Leisure Conference could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as Japan concerns, Mideast unrest, emerging market inflation worries and more hawkish Fed commentary offset buyout speculation, short-covering and mostly positive economic data. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 1,313.80 +2.70%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,313.80 +2.70%
  
• DJIA 12,220.50 +3.05%
  
• NASDAQ 2,743.06 +3.76%
  
• Russell 2000 823.85 +3.67%
  
• Wilshire 5000 13,752.50 +2.83%
  
• Russell 1000 Growth 600.68 +3.35%
  
• Russell 1000 Value 670.29 +2.18%
  
• Morgan Stanley Consumer 750.80 +1.81%
  
• Morgan Stanley Cyclical 1,094.16 +2.93%
• Morgan Stanley Technology 677.56 +3.61%
  
• Transports 5,207.57 +3.0%
  
• Utilities 408.07 +1.97%
  
• MSCI Emerging Markets 47.22 +4.07%
  
• Lyxor L/S Equity Long Bias Index 1,038.55 +1.19%
  
• Lyxor L/S Equity Variable Bias Index 875.75 +1.52%
  
• Lyxor L/S Equity Short Bias Index 660.35 -2.23%
  

Sentiment/Internals

• NYSE Cumulative A/D Line +121,211 +3.43%
  
• Bloomberg New Highs-Lows Index +160 +129
  
• Bloomberg Crude Oil % Bulls 33.0 -41.1%
  
• CFTC Oil Net Speculative Position +253,728 -.33%
  
• CFTC Oil Total Open Interest 1,503,614 -4.87%
  
• Total Put/Call .84 -14.29%
  
• OEX Put/Call 1.13 -1.74%
  
• ISE Sentiment 109.0 +23.86%
  
• NYSE Arms 1.03 -3.74%
  
• Volatility(VIX) 17.91 -26.72%
• G7 Currency Volatility (VXY) 10.72 -7.43%
  
• Smart Money Flow Index 10,108.86 +.53%
  
• Money Mkt Mutual Fund Assets $2.732 Trillion -.30%
  
• AAII % Bulls 37.76 +32.54%
  
• AAII % Bears 34.97 -12.84%

Futures Spot Prices

• CRB Index 359.57 +2.40%
  
• Crude Oil 105.40 +3.13%
  
• Reformulated Gasoline 304.45 +2.98%
  
• Natural Gas 4.40 +6.20%
  
• Heating Oil 305.48 +.78%
  
• Gold 1,427.60 +.65%
  
• Bloomberg Base Metals 269.46 +2.69%
  
• Copper 441.90 +1.48%
  
• US No. 1 Heavy Melt Scrap Steel 414.0 USD/Ton +.16%
• China Hot Rolled Domestic Steel Sheet 4,725 Yuan/Ton -.23%
  
• UBS-Bloomberg Agriculture 1,676.45 +.72%
  

Economy

• ECRI Weekly Leading Economic Index 129.30 -.77%
• S&P 500 EPS Estimates 1 Year Mean 94.34 unch.
  
• Citi US Economic Surprise Index +54.20 -9.1 points
  
• Fed Fund Futures imply 56.0% chance of no change, 44.0% chance of 25 basis point cut on 4/27
• US Dollar Index 76.15 +.61%
  
• Yield Curve 271.0 +3 basis points
  
• 10-Year US Treasury Yield 3.44% +17 basis points
  
• Federal Reserve's Balance Sheet $2.585 Trillion +.72%
  
• U.S. Sovereign Debt Credit Default Swap 43.14 +2.71%
• California Municipal Debt Credit Default Swap 206.12 -.18%
  
• Western Europe Sovereign Debt Credit Default Swap Index 169.26 +1.76%
• Emerging Markets Sovereign Debt CDS Index 162.20 -10.0%
• Saudi Sovereign Debt Credit Default Swap 125.23 -1.14%
• Iraqi 2028 Government Bonds 91.68 +1.35%
• 10-Year TIPS Spread 2.44% unch.
  
• TED Spread 23.0 -2 basis points
  
• N. America Investment Grade Credit Default Swap Index 94.74 +9.31%
  
• Euro Financial Sector Credit Default Swap Index 98.65 -2.19%
  
• Emerging Markets Credit Default Swap Index 208.32 -4.17%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 202.0 -9 basis points
  
• M1 Money Supply $1.865 Trillion -.17%
  
• Business Loans 619.10 -.15%
  
• 4-Week Moving Average of Jobless Claims 385,300 -.40%
  
• Continuing Claims Unemployment Rate 3.0% unch.
  
• Average 30-Year Mortgage Rate 4.81% +5 basis points
  
• Weekly Mortgage Applications 524,400 +2.68%
  
• Bloomberg Consumer Comfort -48.9 -.4 point
  
• Weekly Retail Sales +2.20% +20 basis points
  
• Nationwide Gas $3.56/gallon +.02/gallon
  
• U.S. Heating Demand Next 7 Days 19.0% above normal
• Baltic Dry Index 1,583 +3.26%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 40.0 -5.88%
  
• Rail Freight Carloads 222,788 +2.75%
  

Best Performing Style

• Small-Cap Growth +4.27%

Worst Performing Style

• Large-Cap Value +2.18%

Leading Sectors

• Disk Drives +6.54%
• Gaming +5.74%
  
• Education +5.34%
• Computer Hardware +5.07%
• Semis +5.06%

Lagging Sectors

• Drugs +1.46%
• Homebuilders +1.15%
• REITs +.57%
  
• Insurance unch.
• Banks -.52%

Weekly High-Volume Stock Gainers (14)

• OXPS, GLPW, RHT, LO, MEDH, CTCT, SFLY, EPL, SSI, FDML, PBY, EXPR, SAIA and ACO
  

Weekly High-Volume Stock Losers (9)

• AGNC, SCHL, IVR, SBAC, FFIV, FRP, RURL, NKE and EBIX
  

Weekly Charts
ETFs

• High-Volume Gainers
• High-Volume Losers

Stocks

• High-Volume Gainers
• High-Volume Losers
  

*5-Day Change

Stocks Rising into Final Hour on More Economic Optimism, Bargain-Hunting, Short-Covering, Stable Energy Prices

Broad Market Tone:

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

Equity Investor Angst:

• VIX 17.81 -1.06%
  
• ISE Sentiment Index 120.0 -30.64%
  
• Total Put/Call .81 -8.99%
  
• NYSE Arms .94 +71.76%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 94.74 -.57%
  
• European Financial Sector CDS Index 100.42 -1.96%
  
• Western Europe Sovereign Debt CDS Index 169.26 bps +.15%
  
• Emerging Market CDS Index 209.02 -2.38%
  
• 2-Year Swap Spread 19.0 -2 bps
  
• TED Spread 23.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .08% unch.
  
• Yield Curve 270.0 -2 bps
  
• China Import Iron Ore Spot $166.40/Metric Tonne unch.
  
• Citi US Economic Surprise Index +54.2 +.4 point
  
• 10-Year TIPS Spread 2.45% -3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -81 open in Japan
• DAX Futures: Indicating +23 open in Germany

Portfolio:

• Higher: On gains in my Biotech, Tech and Medical longs
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 builds on recent gains, despite high energy prices, growing Mideast unrest, more hawkish Fed commentary and Japan concerns. On the positive side, Road & Rail, Homebuilding, Hospital, Computer Service, Disk Drive, Computer, Paper, Ag, Energy, Oil Tanker and Coal shares are especially strong, rising 1.25%+. (IYR) has traded well throughout the day. Small-cap shares are strongly outperforming. The Transports are also relatively strong again today. Lumber is rising another +1.79%. Shanghai copper inventories have dropped -14.4% in 5 days. The Hungary sovereign cds is falling -1.53% to 257.93 bps, the Portugal sovereign cds is falling -2.5% to 547.15 bps and the Russia sovereign cds is declining -3.5% to 126.32 bps. On the negative side, I-Banking, Wireless, Networking, Internet and Oil Service shares are lower on the day. Tech shares have weakened into the afternoon, however sector leader (AAPL) trades very well. US price for a gallon of gas is +.01/gallon today to $3.56/gallon. It is up .44/gallon in 38 days. The Spain sovereign cds is climbing +4.02% to 226.87 bps and the Ireland sovereign cds is rising +2.1% to 618.57 bps. Volume remains poor given the extent of the recent rally, however leadership and breadth are improving. The US dollar has likely begun a tradable rally, which could crimp further commodity price gains and help boost the broad equity market back to its recent highs, barring significant deterioration in Mideast unrest or the Japan nuclear situation. The fact that the bears were unable to gain any traction this afternoon despite negative headlines from Japan, hawkish Fed rhetoric and rising worries over Spanish debt, is a large positive. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, stable energy prices, more economic optimism and bargain-hunting.

Today's Headlines

Bloomberg:

• VIX Heads for Biggest Seven-Day Drop on Record as Stocks Rally Worldwide. The benchmark measure of U.S. stock options headed for its biggest seven-day drop ever as the economy grew faster than previously reported and concern that the record Japanese earthquake will curb growth eased. The VIX, as the Chicago Board Options Exchange Volatility Index is known, fell 3.8 percent to 17.31 at 12:37 p.m. New York time, extending its retreat since March 16 to 41 percent. That’s the biggest drop over the same number of days for the VIX, which has averaged 20.38 in its two-decade history. Stocks have rallied seven consecutive days, driving the MSCI All-Country World Index of shares in 45 nations up 5.1 percent. The VIX, which measures the cost of using options as protection from losses in the Standard & Poor’s 500 Index, had jumped to 29.40 after the magnitude-9 quake in Japan on March 11 and resulting tsunami and crisis at a nuclear plant 135 miles (217 kilometers) north of Tokyo. “I’ve never seen such a change in tone,” said Christopher Rich, head options strategist at JonesTrading Institutional Services LLC in Chicago, who has been trading options for more than 30 years.
• Obama Under Pressure to Clear 'Ambiguity' From Libya, Middle East Strategy. Almost a week after U.S. warplanes began dropping bombs on Libya, House Speaker John Boehner fired off a letter to President Barack Obama that posed a basic question: What are we fighting for? “The Obama administration does not have a simple tale to tell, and the tale it has told it has told poorly,” said James Lindsay, a former national security staff member in President Bill Clinton’s administration. “If you don’t tell your story well, you start off with less support.”
• Japanese Swap Fish for Burgers, Soy Milk on Radiation Contamination Fears. Namiko Murata no longer gives her three children their favorite salmon, saury and mackerel for dinner. “I’m really paying attention to food because of the radiation problems,” said Murata as she waited in line at a Tokyo supermarket. “We gave up eating fish even though my family likes it very much. Now, for protein, we drink three cups of soy milk a day.” The detection of cobalt, iodine and cesium in the sea near the stricken Fukushima Dai-Ichi nuclear plant north of Tokyo this week hurt fish sales in the world’s second-biggest seafood market. Shoppers ignored reassurances their food and water were safe and countries from Australia to the U.S. restricted Japan food imports.
• Company bond sales in the U.S. soared to a record this week as confidence grows that the economic recovery will withstand the tumult in Libya and a nuclear crisis in Japan. Verizon(VZ) and DuPont(DD) led at least $51.9 billion of offerings, more than a 400% rise from the period ended March 18, according to Bloomberg data.
  
• U.S. Economy Grew 3.1% in Fourth Quarter, Revised From 2.8%. The U.S. economy grew at a 3.1 percent annual rate in the fourth quarter, led by a jump in consumer spending that will be hard to match early in the year as energy prices surge. The revised increase in gross domestic product compares with a 2.8 percent estimate issued last month, figures from the Commerce Department showed today in Washington. Earnings at financial firms led a 2.3 percent increase in corporate profits from October to December that capped the biggest annual gain in six decades. Another report showed consumer sentiment this month declined more than forecast as surging fuel prices squeezed household budgets. The Thomson Reuters/University of Michigan final index of consumer sentiment for March fell to 67.5 from 77.5 in February, the group reported. Company earnings adjusted for the value of inventories and depreciation of capital expenditures, known as profits from current production, rose by $38.2 billion from the third quarter. Domestic profits at financial corporations increased by $57.7 billion, while earnings at non-financial businesses fell by $10.1 billion. Earnings from operations overseas dropped by $9.4 billion. For the first time since before the recession began in December 2007, profits for the quarter reached a record, at $1.68 trillion at an annualized rate. For all of 2010, profits climbed 29 percent, the biggest annual gain since 1948.
• Washington, D.C.'s Population Growth With Biggest White Influx Since FDR's Time. The District of Columbia’s population gained 5 percent, to 601,723, from 2000 to 2010, driven by the biggest jump in white residents since the 1930s, data released by the U.S. Census Bureau yesterday showed. The capital’s white population rose by 50,286, or 32 percent, to 209,464. The black population slid by 39,035 to 301,053 -- dropping to 50 percent of the city, the smallest share since the 1950s.
• Kocherlakota Would Need 'Materially' Worse Data to Extend QE. “I am not one who would say that I would remove all possibility of further easing, but that would require conditions to worsen materially from what I forecast,” Kocherlakota told reporters today at an event in Marseille, France. “If the economy evolves the way I forecast, I would not foresee us doing further accommodation.”
• Lockhart Supports Fed's Monetary Policy, Would Tighten to Curb Inflation. “I am prepared to support a change of policy if evidence accumulates that the low and stable inflation objective is at risk,” Lockhart said today in a speech in Fort Myers, Florida. “For now, however, I remain satisfied that the current stance of monetary policy is appropriately calibrated to the current and projected state of the economy and supportive of both the employment and price stability objectives.”
• Unemployment Fell in 27 U.S. States in February, Labor Says. Unemployment decreased in 27 U.S. states in February, suggesting a strengthening labor market. The jobless rate fell the most in Nevada, where it reached 13.6 percent, figures from the Labor Department showed today in Washington.
• 3M(MMM) Expands in Touch-Screen Films Amid 'Exploding' Market. 3M Co. (MMM), whose electronics unit supplies components to Apple Inc. (AAPL), is raising a 4-year-old bet on rapid smartphone growth by expanding in touch-screen films, which are also used on tablet computers and e-book readers. “The market is just exploding, and we are ahead of it,” Tony DeRose, business manager for 3M’s electronics markets materials unit, said in an interview. 3M values the global market for touch-screen materials at $2 billion and is boosting production capacity for optically clear adhesives, as the films are known, in South Korea, China, Taiwan and Singapore.
• Chicago Fed's Evans Sees Less Need for More Accommodation. The Federal Reserve has less need to support an improving economy beyond the $600 billion Treasury purchase plan already in place, and any changes to the central bank’s stimulative policies should be considered some time after the program ends, said Charles Evans, president of the Fed’s regional bank in Chicago. “The economy definitely continues to improve each month,” Evans, 53, said today in a meeting with reporters at the bank. “It would be natural to expect that there would be some period of time between when the $600 billion is completed and an assessment of a change” in the trajectory of policy.

Wall Street Journal:

• Incremental Progress Stokes Nuclear Fears in Japan. Japanese workers failed to restore power to parts of a crippled nuclear power plant but managed Friday to begin dousing fuel rods with fresh water, a development suggesting that the two-week effort to control the disaster continues to inch ahead. With the crisis at the Fukushima Daiichi power plant entering its third week, almost every day brings some incremental progress along with reminders that the process is painfully slow and fraught with danger. Workers at the six-reactor Fukushima Daiichi power plant, operated by Tokyo Electric Power Co., had hoped to connect the control room of the No. 2 unit to outside power and start cooling systems at the Nos. 1, 3 and 4 reactors by the end of Friday. Those efforts failed as workers battled a highly radioactive environment that put three employees in the hospital for possible burns. On Friday, Japan's Nuclear and Industrial Safety Agency said there was a suspected breach at reactor No. 3—possibly a crack or a hole in the stainless steel chamber of the reactor core, or in the spent fuel pool lined with several feet of reinforced concrete, according to the Associated Press. That could have contributed to injuries sustained by two workers Thursday when they stepped in a puddle that contained radiation levels 10,000 times higher than normal.
• Spain's Bank Rescue Hits Headwinds. Spain's plan to rescue its regional banks is running into headwinds as private investors, who are being asked to pour in cash, and ratings firms raise questions about whether the lenders have admitted to all of their real-estate losses. Raising private capital to bail out Spain's private savings banks, or cajas, is an increasingly important test of confidence in Spain, especially since the market became convinced that neighboring Portugal would need a bailout.
• Cisco(CSCO) CEO Chambers: U.S. Corporate Tax System's a "Dinosaur." While Congress considers an overhaul of the corporate tax system, CEOs are trying to get out front of criticism that multi-nationals aren’t paying a fair share. Cisco Systems Inc. CEO John Chambers will make the multinationals’ case to CBS’s Leslie Stahl during a CBS “60 Minutes” segment set to air Sunday.
• Hedge Funds, Pimco Weigh Bid for AIG(AIG) Bonds.
• Fed Official Hoenig to Retire. Federal Reserve Bank of Kansas City President Thomas Hoenig will retire on Oct. 1, marking nearly four decades of central bank service. The announcement by his bank Friday wasn't unexpected, as the official was widely known to be approaching the central bank's mandatory retirement age of 65. Mr. Hoenig is the longest served leader in the Federal Reserve system, having taken office in 1991.
• China Seen as Buyer in Corn Sale. The U.S. reported a corn sale that traders see as proof of China's re-entry into the global market for the grain. The U.S. Department of Agriculture on Friday said private exporters struck deals to sell 1.25 million metric tons of corn, but didn't disclose the destination. Corn futures have surged 14% in the last week on expectations China had inked a deal for U.S. supplies.

Business Insider:

• If Your Goal is Permanent "Full Employment" Your Result Will Be Hyperinflation.
• Gold Dives After Fed's Plosser Says Rates Should Hit 2.5% in 12 Months.
• Friday of Rage: Syrian Police Kill 20 As Unrest Spreads Around The Country.
• The World is Going Absolutely Crazy for iPads - Apple(AAPL) Could Sell More Than 6 Million This Quarter.
  

Zero Hedge:

• On GE's(GE) Pathological Aversion to Paying Taxes.

Boy Genius Report:

• Apple(AAPL) 'Smart TV' in the Works, Analyst Suggests. Apple may be expanding its portfolio beyond just Apple TV to an actual “Smart TV,” according to Morgan Stanley analyst Katy Huberty. “Checks in Asia suggest Apple is working on a Smart TV prototype,” Huberty said in a note to investors on Friday. She also suggested that such a TV could help create a whole new Smart TV category. While there are already connected TVs that some manufacturer’s advertise as being “smart,” Huberty thinks Apple’s could include “TV/Video content, gaming, DVR as well as other features like apps and FaceTime.” By 2013, such a device could earn Apple roughly $4 billion for every 1% of the TV market it grabs, Huberty said.

Nikkei:

• Japan is considering easing radiation guidelines for food and water.