Today's Headlines

Bloomberg:

- UBS AG led a decline in the cost of protecting European bank bonds from default after Switzerland’s biggest lender offered to buy back 1 billion euros ($1.3 billion) of its subordinated debt to boost capital. Credit-default swaps on the Zurich-based bank’s junior bonds dropped 56.5 basis points to 365, according to CMA Datavision prices at 4:45 p.m. in London. The Markit iTraxx Financial index tied to the subordinated debt of 25 banks and insurers fell 36 to 360, JPMorgan Chase & Co. prices show. “As events in 2008 have shown, certain peers of UBS were able to raise capital faster and with greater flexibility in their choice of instruments than UBS due to the availability of existing authorized capital,” the UBS statement said. The bank’s plan triggered a decline in the cost of credit- default swaps on Credit Suisse Group Inc.’s junior debt, which fell 35.5 to 300, CMA prices show. The Markit iTraxx Financial index of credit-default swaps on senior financial company debt declined 13 basis points to 173, JPMorgan prices show. Contracts on UniCredit SpA, Italy’s second biggest bank, dropped 29 basis points to 176, CMA prices show. Frankfurt-based Commerzbank AG decreased 20 to 135, Banco Santander SA slid 18 to 136 and BNP Paribas SA fell 14 to 108.5.

- U.S. mortgage rates may fall to the lowest since World War II on the Federal Reserve’s plan to buy up to $300 billion of Treasuries and increase purchases of mortgage-backed bonds. Rates for 30-year fixed home loans dropped to 4.98 percent this week, Freddie Mac said today. They may reach 4.5 percent as the Fed’s purchases progress, said Mike Larson, real estate analyst at Weiss Research in Jupiter, Florida. “It’s a big bullet the Fed’s firing here,” he said. “The Fed is kind of going all in.”

- The biggest bankruptcy in history might have been avoided if Wall Street had been prevented from practicing one of its darkest arts. As Lehman Brothers Holdings Inc. struggled to survive last year, as many as 32.8 million shares in the company were sold and not delivered to buyers on time as of Sept. 11, according to data compiled by the Securities and Exchange Commission and Bloomberg. That was a more than 57-fold increase over the prior year’s peak of 567,518 failed trades on July 30. The SEC has linked such so-called fails-to-deliver to naked short selling, a strategy that can be used to manipulate markets. A fail-to-deliver is a trade that doesn’t settle within three days. “We had another word for this in Brooklyn,” said Harvey Pitt, a former SEC chairman. “The word was ‘fraud.’”

- The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars fell by the most since Jan. 13 after the Federal Reserve said it will start buying Treasuries. The rate dropped six basis points to 1.23 percent, its seventh decline, according to the British Bankers’ Association. The Libor-OIS spread, a gauge of bank reluctance to lend, fell seven basis points to 100 basis points. “We would expect money-market pressures to ease going forward,” said Matteo Regesta, an interest-rate strategist in London at BNP Paribas SA, France’s biggest bank. “After the Bank of England started quantitative easing, the pace of descent of Libor increased.”

- Retail sales of prescription drugs rose the slowest in the U.S. in at least 47 years, as cheaper pills and the recession cut spending. Sales for 2008 grew 1.3 percent to $291 billion, said IMS Health Inc., which compiled the data, in a statement today.

- The Standard & Poor’s 500 Index’s 17 percent ascent from March 9 through yesterday exceeded any advance by the main benchmark for American equities over a seven-day period since 1939.

- Commodities surged, led by precious metals and energy, on speculation that the Federal Reserve’s steps to revive the U.S. economy will spur demand for raw materials as a hedge against inflation. Silver headed for the biggest gain since 1979. Gold jumped the most since September, and crude oil topped $52 a barrel. Every commodity in the Reuters/Jefferies CRB Index of 19 prices climbed, while the dollar tumbled.

- General Electric Co.(GE) said its GE Capital finance unit won’t need more outside funding and at worst will break even under scenarios the Federal Reserve is using to test banks during a global recession and credit crunch. GE made the forecast at a meeting today in New York where Chief Financial Officer Keith Sherin and other executives are trying to allay investors’ concerns with the most detail yet about the unit’s funding, holdings, reserves and potential writedowns and losses. The unit’s businesses include credit cards, real estate, plane leasing and corporate lending. “We’re running GE Capital to be safe and secure in this environment,” Sherin told the audience, adding that GE is “committed” to having a finance business. “We have enough capital to be able to weather a very adverse set of cases.”

- Congressional Democrats are growing increasingly nervous about the ability of Treasury Secretary Timothy Geithner and the Obama administration’s economic team to manage the crisis and effectively convey a coherent policy. On the same day that President Barack Obama expressed “complete confidence” in Geithner, some Democratic lawmakers said the administration’s handling of the bonuses paid by American International Group Inc. was the latest in a series of missteps that have plagued Geithner and other top officials since the presidential inauguration. “The economic team has got to get its act together,” said Senator Ron Wyden, an Oregon Democrat. “I want the team to begin to get to dealing with these issues in a coordinated way.”

Wall Street Journal:

- Some of the most vocal critics of American International Group(AIG) Inc.'s bonus payments are also the biggest recipients of campaign contributions from the company, including President Barack Obama and Senate Banking Chairman Christopher Dodd. Last year, as both men were running for president, each raised $104,000 from AIG employees. Mr. Dodd, a Connecticut Democrat, is the top all-time beneficiary of AIG contributions, with a total of $280,000 in donations from the company's employees and fund-raising arm since 1990, according to campaign-finance data collected by the nonpartisan Center for Responsive Politics. Messrs. Obama and Dodd are among the top Democrats who have taken donations from AIG but now are criticizing the company. Another one, Sen. Charles Schumer of New York, threatened this week to increase taxes on the AIG bonuses if they aren't returned. Mr. Schumer has accepted $112,000 in donations from AIG's employees and its political action committee, making him the second-largest recipient among active lawmakers since 1990. That could prove awkward to the White House and Congress as they now move to crack down on the firm -- particularly for Mr. Dodd, who faces re-election next year. For much of his career, he has been close to the financial-services industry and has been a leading recipient of contributions from the sector. When Mr. Dodd was raising funds from AIG, his donor list included some executives from the company's financial-products division that created the instruments that brought billions of dollars in losses to the company and led to its collapse.

NY Times:

- Aiming to outdo Amazon.com(AMZN) and recapture the crown for the most digital titles in an e-book library, Sony is announcing Thursday a deal with Google(GOOG) to make a half million copyright-free books available for its Reader device, a rival to the Amazon Kindle.

- Boutique investment firms and top hedge funds are slowly lapping up the cream of global banking talent as the financial crisis forces banks to cut staff and limit the pay of their top risk-takers, Reuters says. From Singapore to New York, leading traders and sales chiefs are making the switch as government pressure piles on Wall Street and European banks to cut multimillion-dollar bonuses. ‘‘The firms that still have a lot of assets under management, the hedge funds that have not been hit by redemptions, they are still picking up some of the money-makers from the big banks,’’ Pernille Storm at Hudson, an executive search firm in Singapore, told Reuters.

LA Times:

- Imports into the Los Angeles and Long Beach ports plunged even deeper into a recessionary hole in February, hitting lows not seen since 1997. With exports also sharply lower, the sluggish traffic at the nation's biggest cargo container complex is yet another symptom of the broad malaise that continues to grip world economies. In Southern California, the trade gateway supports more than 280,000 workers, and its slowdown is being felt across the region. But early signals suggest that the declines might be bottoming out.

Washington Times:

- As he empathized with recession-weary Americans, President Obama arranged in the days just before he took office to secure a $500,000 advance for a children's book project, a disclosure report shows. The terms of the book deal were disclosed in a Senate financial disclosure report filed Tuesday. Analysts say there don't appear to be any rules that would bar such transactions after a president takes office, but it's unclear whether an incoming or sitting president has ever signed a book deal upon entering the White House.

TheStar.com:

- Warren Buffett tarnished as Main Street oracle.

Detroit Free Press:

- The Obama administration announced today a $5 billion financing plan to aid struggling auto suppliers, the first move by the president toward a broader rescue of the U.S. auto industry.

Reuters:
- Citigroup Inc (C) said on Thursday it may conduct a reverse stock split as part of an exchange offer that could give U.S. taxpayers a 36 percent stake in the bank.

- Package delivery giant and U.S. economic bellwether FedEx Corp said on Thursday it was taking market share despite a recession that drove its profit down 75 percent, and its shares jumped. "If this is what FedEx can do in really tough times, imagine what they can do when things bounce back," said Sandeep Kar, a transportation analyst at consulting company Frost & Sullivan. "They are going to emerge as a lean and mean company that will experience rapid growth." "This is a good stock to get into," he added. FedEx shares rose more than 5 percent in early trading.

Handelsblatt:

- Pfizer Inc.(PFE) may acquire companies and licenses to expand in the market for generic drugs, citing David Simmons, president of the company’s established products unit.

Trend-Tendances:

- European Central Bank governing council member Guy Quaden said the bank could cut its benchmark interest rate further. “Inflation has rapidly diminished and today I’m hearing more often talk about the possibility of deflation that we need to eliminate,” Quaden said.

The Australian:

- George Soros is having a very good crisis. Other investors are wilting, political power structures are being upended and market economists are scrambling to fashion new theories, but the world’s most famous speculator is having a belated heyday. At 68 Soros had just predicted a global financial collapse which did not happen, just as he had done a decade earlier; his pet theory of market behavior, which he calls "reflexivity", had been largely ignored; and his political donations had bought him little sway in Washington. Yet today, he says, all those strands seem to have come together – "the American election, the financial crisis, the theory of reflexivity, so it is actually a very stimulating period". In August 2007, with the first symptoms of the credit crunch on the horizon, Soros came out of semi-retirement to reassume control of his Quantum investment fund, astutely repositioning it for the tsunami about to hit. By year’s end Quantum was up almost 32 per cent for 2007, netting Soros profits of $US2.9 billion at a time when other financiers were struggling to break even. His fortune was estimated at $US11 billion by Forbes in September 2008 and it has grown even larger amid the spreading financial carnage.