Today's Headlines

Bloomberg:
- The cost of protecting corporate bonds from default held near a 12-week low as capital-raising plans by Royal Bank of Scotland Group Plc and CIT Group(CIT) boosted confidence that financial companies are weathering a freeze in some credit markets. Contracts on CIT, the biggest independent US commercial finance company, reached the lowest in more than three months as concerns eased about the NY-based company’s ability to repay debt maturing this year.
- Growers and traders said the US Commodity Futures Trading Commission(CFTC) is failing to adequately regulate speculators and index funds during the record rally in crop prices. “The market is broken, it’s out of whack, and someone has to step in and bring relief,” William Dunavant Jr., chairman of cotton merchant Dunavant Enterprises, said. The rallies have been fueled by a surge in demand for futures by large funds such as the Goldman Sachs(GS) Commodity Index Fund, AIG Index Fund and Pimco Commodity Fund. The increased investment by index funds in crop futures has “put a strain on consumers as well as many producers and commercial participants that utilize the futures markets to manage risk and discover prices,” Walter Lukken, acting chairman of the CFTC, said. Index funds had almost doubled positions to 1.732 million agricultural contracts as of April 15, up from 896,734 contracts in January 2006. Global commodity investments, including those from hedge funds, rose by more than a fifth in the first quarter to $400 billion.
- Crude oil rose to a record $119.86 a barrel in NY as the US dollar dropped, boosting speculation in the commodity by investment funds.
- Citigroup(C) CEO Vikram Pandi, facing shareholders for the first time since his appointment in December, said the credit-market contraction that saddled his bank with record losses is abating.
- GSO Capital Partners LP, the credit investment firm bought by Blackstone Group last month, is raising a $510 million collateralized loan obligation to buy high-risk, high-yield debt being sold by banks at discounted prices.
- Coach Inc.(COH), the largest US market of luxury leather handbags, posted third-quarter profit that advanced more than analysts estimated, helped by a 20% sales gain at namesake stores in North America.

Wall Street Journal:
- Why I Left Greenpeace by Patrick Moore, co-founder and former leader of Greenpeace. Greenpeace puts politics before science, Moore says.

VentureBeat:
- Google(GOOG) wants to turn your home page into your social network. Social networks like Facebook and MySpace are often just one click of a bookmark away on users’ web browsers. Google looks to be one-upping them by turning its personalized home page, iGoogle, into a social network of sorts.

USA Today:
- New US Smog Rules Would Hit Smaller Counties.

Detroit News:
- The US Transportation Dept. today will propose a sweeping increase in fuel economy standards, requiring passenger cars to average 35.7 miles per gallon and light trucks 28.6 mpg by 2015.

Kydo News:
- Macau’s government won’t issue new gaming licenses nor provide land for new casinos, citing city CEO Edmund Ho.

Gulfnews.com:
- Iraq on Monday made much-needed diplomatic gains after Gulf countries and Egypt pledged to consider opening embassies in Baghdad. The decision by the eight-member group to embrace Iraq’s political and security progress was seen as a “qualitative leap forward” by Iraq’s foreign minister who attended the one-day meeting in the Bahraini capital.

Haaretz.com:
- Italy is expected to join a European Union consensus on Iran’s nuclear program, after dropping earlier objections last week, possibly paving the way for new sanctions.

Bear Radar

Style Underperformer:

Small-cap Growth -2.41%

Sector Underperformers:

Airlines (-10.5%), Semis (-4.72%) and HMOs (-4.3%)

Stocks Falling on Unusual Volume:

DST, CLMT, WNR, NVLS, OMCL, UAUA, AIRM, NFLX, VNUS, BRKR, PTEC, IIVI, CERN, ASTE, TRLG, ECLP, AXE, MDP, CIT, LXK, BJS, CSL and AGP

Stocks With Unusual Put Option Activity:

1) UAUA 2) PGNX 3) PDE 4) RSH 5) MCO

Existing Home Sales Slightly Exceed Estimates, Weekly Retail Sales Confirm Last Week's Improvement

- Existing Home Sales for March came in at 4.93M versus estimates of 4.92M and 5.03M in February.

BOTTOM LINE: Sales of previously owned homes in the US fell in March less than economists had anticipated, Bloomberg reported. The median sales price fell to $200,700 from $217,400 a year earlier. The number of homes for sale at the current pace rose to 9.9 months’ worth versus 9.6 months’ worth in February. Purchases rose 2.2% in the Northeast and the West. They fell 6.5% in the Midwest and 3.5% in the South. Sales of condos and co-ops rose 3.6%. Residential construction has subtracted from economic growth since the first three months of 2006. Home sales have stabilized over the last month around current levels, which is a large positive. According to BankRate.com, the average 30-year fixed rate mortgage is falling 7 basis points today to 5.83%, which is down from 6.38% in June of last year. Weekly retail sales rose 1.9% this week versus a 2.0% gain the prior week. This week’s gain confirms the improvement seen last week. After averaging .6% increases during the month of February, weekly retail sales have seen a meaningful improvement, averaging 1.95% the last two weeks. This is especially noteworthy considering how pessimistic the consumer supposedly is and the stimuli that is on the horizon. I still expect home sales to bounce higher over the coming months on lower mortgage rates, lower prices, pent-up demand and less economic angst.

Bull Radar

Style Outperformer:

Large-cap Value (-.42%)

Sector Outperformers:

Gaming (+2.73%), Telecom (+.50%) and Banks (+.24%)

Stocks Rising on Unusual Volume:

LVS, WYNN, ARB, CHK, FCX, GOOG, WTI, STO, HES, ZRAN, VLTR, CNC, SFG, FEED, MPEL, WGOV, TWIN, LOGI, DCOM, FTEK, ARTC, MICC, RMBS, GNTX, FSYS, ASTI, KELYA, GFIG, FITB and PNR

Stocks With Unusual Call Option Activity:

1) ICO 2) AMT 3) CBI 4) LXK 5) MCO

Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance
Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
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In Play
Exchange Volume vs. Average
NYSE Unusual Volume
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Intraday Chart/Quote
Dow Jones Hedge Fund Indexes

Tuesday Watch

Late-Night Headlines
Bloomberg:
- Intrepid Potash Inc., the largest US producer of the potassium compound used in fertilizer, priced an IPO of 30 million shares at $32 apiece.
- Texas Instruments(TXN) forecast second-quarter profit that missed analysts’ estimates as demand for mobile-phone chips slows, sending the shares .60/share lower to $30 in after-hours trading.
- Google Inc. ranked as the world’s most powerful brand for the second straight year, as the company capitalized on its name to sell advertising globally, according to a study by a consulting firm.
- President Bush and the leaders of Canada and Mexico tried to make the case for further trade and immigration at a meeting today amid a political backlash in the US against both.
- China’s stocks dropped, driving the Shanghai Composite Index to 50% below its October record.

Wall Street Journal:
- India Prepares for Slowdown In Economic Growth.
- Believe it or not, some savvy Wall Street deal makers see the beleaguered US banking industry as a glass half-full. Cleveland-based National City’s(NCC) announcement Monday that it is getting $7 billion in capital to shore up its balance sheet is the latest sign that private-equity firms think there is big money to be made by investing in banks pummeled by bad loans and the economy.

MarketWatch.com:
- A production slowdown at the nation’s refineries, now operating at levels last seen in the aftermath of Hurricane Katrina in 2005, couldn’t come at a more troublesome time for consumers watching pump prices flirt with $4 a gallon. “If this operating level persists, the industry will likely see another round of intense legislative scrutiny,” said John Kilduff, an analyst at futures brokerage MF Global. US refineries operated at 81.4% of their operable capacity in the week ending April 11. Spring is typically when refiners idle parts of their plants to undertake maintenance. But they don’t always cut back so drastically.
- Home prices aren’t tanking everywhere. In some housing markets, homes aren’t only retaining value – they’re gaining.
- Wall of skepticism. Market-timers’ caution a bullish sign to contrarians.

NY Times:
- Western banks have stocked up on assets in fast-growing Asian economies, but the current credit crisis has some analysts suggesting they should now be selling them.
- Many of the wealthiest hedge funds managers are lining up behind the Obama campgain.

BusinessWeek.com:
- Strong Signals for American Tower(AMT). S&P believes the leading wireless tower company offers an attractive combination of earnings predictability and growth opportunities.

CNNMoney.com:
- 2008: Fortune 500 List: Wal-mart’s #1.

USA Today.com:
- General Motors(GM) says the eight-week strike at American Axle and Manufacturing Holdings has forced it to cut production at two more factories. The strike at American Axle has affected production at 30 GM factories in the USA, Canada and Mexico. Several GM plants in Ohio have been among those affected.
- Drivers cut back as gas prices hit all-time high. Gasoline sales have fallen 2% to 11% a month since December in a study by 13 owners of stations scattered across the USA that are not direct competitors. Average prices for full-size SUVs in March tumbled 15.4% from a year earlier at wholesale auctions where dealers buy and sell vehicles, and large pickups were down 12.6%, after adjustments for miles and other factors, according to Thomas Webb, chief economist for Manheim Consulting, a unit of the company that operates many big auctions.

Wired:
- Google-Backed Solar Startup Picks Up Steam, $130 Million. The money, from Google’s(GOOG) philanthropic arm, Google.org, and venture capital firms Idealab and Oak Investment Partners, will go towards the construction of eSolar’s first functioning solar power plant. “ESolar’s long term is to become a viable replacement for all fossil fuel,” said Robert Rogan, a Cal Tech Ph.d. and eSolar’s executive vp for corporate development.

Reuters:
- The board of Calpers, the biggest US pension fund, approved plans on Monday to put more emphasis on how diverse corporations’ boards are and what environmental risks companies pose when it assesses corporate management and governance. Additionally, the board of Calpers endorsed a bill before California lawmakers that would specifically create, for publicly held companies that do business with the state, a standard on disclosing information about climate change-related activities. Environmental policies the board approved would allow Calpers to influence how financial analyst, portfolio managers and companies evaluate climate risks and to encourage consistency in how companies disclose those risks.

Financial Times:
- Mattel(MAT), the biggest US toymaker, is hoping 11m online Barbie fans can help it offset a decline in the sales of real dolls. The group will be the first leading toy company to charge for access to a site that promotes its own toys, introducing subscription-based elements to its rapidly growing BarbieGirls.com “virtual world” website.
- Warburg Pincus, the US-based private equity group, will on Tuesday announce it has raised $15bn for its new global fun, shrugging off the credit squeeze that has made life harder for many of its buy-out rivals.
- Europe’s economy is resilient but not immune to global economic threats, the IMF warned on Monday as it defended its gloomy view on the continent’s outlook.

TimesOnline:
- Russia could soon follow the Middle Eastern sovereign wealth funds and invest billions of dollars in direct overseas investments if, as expected, its national welfare fund is given more freedom to invest.

China Securities Journal:
- China’s mutual funds lost $92.6 billion in the first quarter of this year, citing Beijing-based TX Investment Consulting.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (ALB), target $49.

Piper Jaffray:
- Rated (CRM) Buy, target $81.
- Rated (INFA) Buy, target $19.
- Rated (RHT) Buy, target $26.

Night Trading
Asian Indices are -1.50% to -.25% on average.
S&P 500 futures -.46%.
NASDAQ 100 futures -.55%.

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Earnings of Note
Company/EPS Estimate
- (PNR)/.48
- (EAT)/.32
- (LXK)/.89
- (UNH)/.80
- (BJS)/.55
- (JBLU)/-.07
- (CSL)/.55
- (OMC)/.62
- (KMB)/1.07
- (UAUA)/-3.41
- (JEC)/.78
- (CME)/4.81
- (STI)/1.03
- (BTU)/1.6
- (SII)/.87
- (CPO)/.71
- (WAT)/.64
- (MCD)/.70
- (SHW)/.60
- (BHI)/1.20
- (PH)/1.34
- (LMT)/1.63
- (COH)/.45
- (DD)/1.28
- (WYE)/.89
- (WU)/.28
- (T)/.74
- (AKS)/.83
- (AVY)/.81
- (RHI)/.46
- (IVGN)/1.13
- (YUM)/.40
- (CERN)/.44
- (XL)/2.24
- (NSC)/.77
- (CREE)/.14
- (YHOO)/.09
- (VMW)/.22
- (RJF)/.41
- (ILMN)/.24
- (CEC)/1.12
- (BRCM)/.28
- (VFC)/1.28
- (AAI)/-.31

Upcoming Splits
- (RBA) 3-for-1

Economic Releases
10:00 am EST
- Existing Home Sales for March are estimated to fall to 4.92M versus 5.03M in February.

Other Potential Market Movers
- The House Price Index, Richmond Fed Manufacturing Index, weekly retail sales reports, (URS) analyst day, JPMorgan China Conference, Dow Jones Newswires Wireless Innovations Conference and UBS Retail Softlines/Hardlines Conference could also impact trading today.

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