Stocks Rising into Final Hour on Less Economic Fear, Diminishing Financial Sector Pessimism, Short-Covering, Lower Energy Prices

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Financial longs and Retail longs. I added to my (DISCA) long and took profits in another trading long today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is slightly higher, most sectors are rising and volume is above average. Investor anxiety is above average. Today’s overall market action is neutral. The VIX is falling 2.83% and is very high at 42.85. The ISE Sentiment Index is around average at 152.0 and the total put/call is slightly above average at .91. Finally, the NYSE Arms has been running low most of the day, hitting .49 at its intraday trough, and is currently .67. The Euro Financial Sector Credit Default Swap Index is rising 3.42% today to 181.33 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 4.00% to 202.97 basis points. This index is still below its Dec. 5^th record high of 285.99. The TED spread is falling 2.74% to 96 basis points. The TED spread is now down 367 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising 2.68% to 57.50 basis points. The Libor-OIS spread is falling .52% to 96 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 3 basis points to 1.34%, which is down 130 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 .21%, which is up 1 basis point today. It is a good sign that (XLF)/(IYR) are maintaining yesterday’s gains. It is also a big positive that the TED spread continues to trend lower. The ongoing drop in mortgage rates remains a huge positive, as well. The MS Cyclical Index is substantially outperforming the broad market today, rising 3.5%. Nikkei futures indicate an +209 open in Japan and DAX futures indicate an +20 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, less economic fear, diminishing financial sector pessimism and lower energy prices.

Today's Headlines

Bloomberg:

- Mortgage applications in the U.S. rose for a fourth consecutive week as a decline in borrowing costs prompted more refinancing. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan rose 3 percent to 1,194.4 in the week ended March 27 from 1,159.4 the prior week. The group’s refinancing gauge gained 3.7 percent, following a 41 percent gain the prior week, and its purchase index rose 0.1 percent. The average rate on a 30-year fixed-rate loan fell to 4.61 percent, the lowest level since the mortgage bankers group began records in 1990, from 4.63 percent the prior week.

- Bonds backed by mortgages on everything from California homes to New York skyscrapers are rallying on speculation that Treasury Secretary Timothy Geithner’s latest effort to bolster prices will succeed and potentially spur banks to boost lending. Top-rated commercial-mortgage bonds rose 6.2 percent since March 20 to almost 80 cents on the dollar on average, according to Merrill Lynch & Co. indexes. The most-senior class of benchmark 2005 securities backed by fixed-rate Alt-A home loans, or those ranked between prime and subprime, increased about 12 percent to about 54 cents, according to Deutsche Bank AG. “If we can bring a new buyer in, accepting lower yields due to the magic of leverage, maybe prices can close the gap that now exists” between what investors are willing to pay and the price banks are willing to sell at, said Dan Nigro, who helps oversee $2.5 billion of home-loan bonds as a money manager at New York-based Dynamic Credit Partners LLC.

- The number of Americans signing contracts to buy previously owned homes unexpectedly rose in February, reinforcing signs that the housing slump in its fourth year may be near a bottom. The index of signed purchase agreements, or pending home resales, gained 2.1 percent to 82.1, from 80.4 in January, the National Association of Realtors said today in Washington. “We are seeing a bottom in housing sales,” David Wyss, chief economist with Standard & Poor’s in New York, said in a Bloomberg Television interview. “People are coming in as bargain hunters. This is a good time to be buying a house.”

- German Chancellor Angela Merkel and French President Nicolas Sarkozy stepped up their calls on fellow leaders from the Group of 20 nations to agree on tighter regulation of the global financial system. The two leaders, appearing together just hours after President Barack Obama and U.K. Prime Minister Gordon Brown shared a podium to call for unity, demanded new rules governing hedge funds, steps to control executive pay and new financial “architecture” to ensure no repeat of the global crisis. “Germany and France will insist that our intentions don’t just remain statements but that they become reality,” Merkel told reporters at a joint press briefing with Sarkozy in London today before the start of the G-20 summit. “We want results but we don’t want results that have no effect in practice.”

- U.S. regulators accused New York hedge-fund manager Edward T. Stein of running a “classic Ponzi scheme” that moved more than $55 million through accounts while preying on friends and acquaintances. Stein, 59, who manages the Gemini Fund I hedge fund and founded DISP LLC, a firm investing in life settlement policies, has defrauded clients since 1992 and later resorted to stealing their assets, the U.S. Securities and Exchange Commission said in a lawsuit at federal court in Manhattan today.

- Crude oil fell after a government report showed that U.S. oil stockpiles rose to a 15-year high and gasoline supplies unexpectedly increased as the recession curbed fuel demand. Crude-oil inventories climbed 2.84 million barrels to 359.4 million in the week ended March 27, the highest since July 1993, the Energy Department said today. “We will need to see demand come back before there is any sustained rally in this market,” said Kyle Cooper, an analyst at energy consultant IAF Advisors in Houston. “At this point demand is still falling.” “The tanks are brimming,” said Adam Sieminski, the chief energy economist at Deutsche Bank AG in Washington. “The numbers today show there’s plenty of supply.” Total daily fuel demand averaged over the past four weeks was 18.9 million barrels, down 4.4 percent from a year earlier, the report showed. It was the lowest consumption for a four-week period since October.

- U.S. Treasury Secretary Timothy Geithner said there are “encouraging signs” that financial markets are recovering and expressed confidence in the response of global policy makers to the crisis. “You’re seeing encouraging signs of improvement in our markets -- we want to reinforce that,” Geithner said today in a Bloomberg Television interview in London.

- European unemployment increased more than economists expected in February to the highest in almost three years as the recession forced companies across the continent to cut output. The jobless rate in the euro zone rose to 8.5 percent from a revised 8.3 percent in January, the European Union’s statistics office in Luxembourg said today.

Wall Street Journal:

- President Barack Obama conceded the U.S.'s culpability in events leading to the global economic crisis, but, in his first public appearance at a world economic summit here, was quick to warn that other countries must step up with solutions that don't rely on American consumers.

- Republicans in the House Wednesday pressed a budget plan that would cut taxes and radically overhaul Medicare, offering a stark alternative to blueprints offered by President Barack Obama and his Democratic allies. The plan, drafted by Wisconsin Rep. Paul Ryan, the top Republican on the Budget Committee, also freezes overall spending on domestic programs passed by Congress each year and repeals most of the spending in Mr. Obama's recently passed economic-stimulus bill.

- Ticketmaster Entertainment Inc. and Tickets.com Inc. are launching services to let customers buy tickets directly from their mobile phones, in an ambitious attempt to extend Internet commerce to cellphone screens.

- USA Today President and Publisher Craig Moon announced his sudden retirement Tuesday, leaving the country's largest newspaper with its top two jobs unfilled during perhaps the most difficult stretch in its 27-year history. He also said the newspaper has lost about 100,000 subscribers just from the slowdown in travel.

- The home electricity meter is getting a high-tech makeover, and chip makers stand to benefit. With a shove from the Obama administration's stimulus package, utilities are replacing rusty electricity meters in favor of digital "smart meters" as part of a much broader update of U.S. energy infrastructure. The update of meters alone could represent billions in revenue for chip makers over the next decade, though how quickly utilities will roll out the new products remains unclear. Gartner expects more than 150 million smart meters to be installed world-wide in the next five years, with approximately 50% installed in North America. Between 2007 and 2012, Gartner expects smart meters to create $2 billion in business for semiconductor makers. Over the next decade, however, Texas Instruments Inc. expects much more. Mark Buccini, head of TI's smart grid strategic business development, said smart meters could be a $7.5 billion market for chip makers. When including ancillary products -- such as digital, connected thermostats and other devices -- that number could roughly double. Analog chip companies in particular -- such as TI, Analog Devices Inc., STMicronelectronics NV , Freescale Semiconductor Inc. and others -- will see most of the gains as the market expands. Meanwhile, Intel Corp. and others will likely benefit from the need for more computing power to manage data and electricity infrastructure.

CNBC:

- Job cuts appear to be slowing in the US after businesses slashed payrolls in November through February, John Challenger of Challenger, Gray & Christmas said. “It looks at least for now that the heaviest downsizing has started to pass us,” said Challenger.

- Bidding Wars Over a House? Real Estate Pros See Bottom.

- The U.S. economy will have negative growth for 2009 before it improves slowly in 2010, Dallas Federal Reserve Bank President Richard Fisher told CNBC Wednesday. "Obviously we're under duress right now. I expect a gradual lifting of performance, getting less bad as we go through the year, but still I expect negative growth for this year, and improvement for the subsequent year," he said.

Barron’s:
- Home Sales May Have Already Bottomed. The steep declines in home prices along with a 200-basis-points decline in conforming mortgage rates from peak 2008 levels have combined to drive housing affordability to record levels. We thus continue to believe home sales bottomed in January and that housing prices will level out later in 2009.

NY Times:

- The Obama administration’s $500 billion or more proposal to deal with America’s ailing banks has been described by some in the financial markets as a win-win-win proposal. Actually, it is a win-win-lose proposal: the banks win, investors win — and taxpayers lose.

Washington Post:

- The Obama administration will play a key role in reshaping General Motors'(GM) board of directors over the next six months, potentially giving it even greater control in the management of the storied American manufacturer. The president said Monday that "the United States government has no interest in running GM." But in practice it is already exerting tremendous influence over it, a situation that has triggered fierce debate over how much power the government should wield over the companies that it aids. Some critics characterize the White House's removal of Wagoner as a move toward European socialism. "They have opened Pandora's box -- the U.S. government has decided they know better than the private company," said Sen. Bob Corker (R-Tenn.) "There is no question that this country is moving down a very different and foreign path. We have crossed this threshold: We own this company and we are telling it what to do."

The Detroit News:

- Lynn Allen is busy squirreling away marijuana seeds - at $5 a shot - as he prepares to take advantage of a new state law that will allow seriously or terminally ill patients to legally smoke pot to ease their pain and suffering. The 52-year-old married father of two from Williamston is confined to a wheelchair and unable to work because of a lack of stamina. He is one of an estimated 50,000 Michigan residents who may qualify for medical marijuana use once the state begins accepting applications on Saturday.

Politico:

- Senate Democrats won an early test vote Tuesday in support of climate change legislation, but the partisan tone was ominous for President Barack Obama if he is to really move ahead on this issue while also coping with a weakened economy. The 54-43 roll call came as top Democrats on the House Energy and Commerce Committee unveiled their own ambitious plan to reduce greenhouse gases, promote energy efficiency and require the greater use of renewable resources to generate the nation’s electricity. Chairman Henry A. Waxman (D-Calif.) set out a schedule of moving to a full committee markup by mid-May, but the early skirmishes on the Senate floor are telling of the steep road ahead. Not a single Republican joined with Democrats in supporting a relatively innocuous budget amendment giving Senate committees the flexibility to design a cap-and-trade system that does not increase “the overall burden on consumers.”

USA Today:

- Smokers are gasping at higher cigarette and cigar prices as the largest federal tobacco tax increase in history takes effect. "Oh my gosh," Bernardo Torres said Tuesday when a clerk at a CVS Pharmacy in Falls Church, Va., told him the new price, which went up in anticipation of the tax increase. Torres wanted to buy his aunt two cartons of cigarette-size cigars, but he walked away empty-handed after hearing the new price: $134. The tax on little cigars went from 4 cents to $1.01 a pack. "I don't know what to do. This is going to hit her hard," Torres said of his disabled aunt, 64, a heavy smoker who won't quit. The increases, which raise the federal cigarette tax from 39 cents a pack to $1.01, applies to all tobacco products. It comes as more than two dozen states, desperate for revenue in a sunken economy, consider boosting their own tobacco taxes this year.

Reuters:
- Hedge funds may be sniffing around the growing mountain of troubled European companies, picking out those they see as most likely candidates to undertake bond exchanges as a way to make money, according to market talk. Debt-laden Dutch NXP Semiconductors NXP this week managed to cut its debt by about $465 million in an example of a debt-swap restructuring deal that has been more common in the United States up until now. This type of deal is expected to become more prevalent in Europe now, however, as a way to salvage firms with good business models but which have been saddled with too much debt. Hedge funds can make significant returns by buying bonds that have fallen to low double-digit prices in companies where a possible debt exchange would give them a better recovery rate on their investment.

- Taliban insurgents reject a U.S. offer of "honorable reconciliation," a top spokesman said on Wednesday, calling it a "lunatic idea" and saying the only way to end the war was to withdraw foreign troops. If the U.S. plan fails to show results, analysts say, time is on the Taliban side. U.S. Secretary of State Hillary Clinton told an international conference on Afghanistan on Tuesday that those members of the Taliban who abandoned extremism must be granted an "honorable form of reconciliation."

- A top Federal Reserve official said on Wednesday she expects the U.S. economy to stabilize this year and begin to recover in 2010. "I expect economic conditions to stabilize by the end of the year and then begin to recover next year as the fiscal stimulus boosts spending and as we work off excess inventories," Cleveland Fed President Sandra Pianalto said in a speech to a bankers' group.

Financial Times:
- Large US banks like Citigroup, Bank of America and Wells Fargo stand to receive a surprise first-quarter earnings boost from Thursday’s expected loosening of controversial accounting rules by the Financial Accounting Standards Board.Wall Street executives and auditors say the accounting watchdog’s likely approval of changes to “mark-to-market” rules could lead to increases of up to 20 per cent in quarterly profits of large commercial banks.

- Anti-capitalist demonstrations spiraled into violence in the City on Wednesday as protesters smashed their way into a bank branch sparking clashes with riot police. Demonstrators broke windows at the RBS branch on Threadneedle Street, threw missiles and smoke bombs and some forced their way inside. The building was daubed with graffiti, including the slogan “thieves”, and activists vandalised the branch, throwing out computers, chairs and office equipment. The flashpoint came after activists had pledged peaceful demonstrations under the G20 Meltdown banner ahead of the summit of world leaders at the ExCeL centre in Docklands today.

Handelszeitung:

- Fiat SpA CEO Sergio Marchionne said Chrysler LLC is “nothing” and the “big three” US carmakers should all go into Chapter 11 bankruptcy, citing an interview. “Thirty-five percent of nothing is still nothing,” Marchionne was quoted as saying, responding to a question as to whether Fiat is planning to take a 35% stake, free of debt, in Chrysler.

Le Monde:

- European Central Bank President Jean-Claude Trichet said the US and Europe should be careful not to push spending and deficits too far, citing an interview.

Xinhua:
- International Monetary Fund Managing Directro Dominique Strauss-Kahn said the US dollar hasn’t lost its dominance in the global currency system.

Milliyet:
- Turkish opposition party leaders rejected a request by President Barack Obama to hold joint talks on April 6 during Obama’s visit to Ankara.

Bear Radar

Style Underperformer:
Small-cap Growth (+.21%)

Sector Underperformers:
Education (-8.99%), Biotech (-2.25%) and Medical Equipment (-1.24%)

Stocks Falling on Unusual Volume:
APOL, CELG, AUXL, ZOLL, URBN, FIS and YPF

Stocks With Unusual Put Option Activity:
1) LO 2) CELG 3) CREE 4) S 5) ATHR

Bull Radar

Style Outperformer:
Mid-cap Value (+1.02%)

Sector Outperformers:
Homebuilders (+3.57%), Banks (+2.59%) and Wireless (+1.91%)

Stocks Rising on Unusual Volume:
DCM, HMC, BLKB, TM, HBC, CMN, NVO, OSIR, CMED, JKHY, CREE, FSYS, FMER, LAYN, ATHR, MICC, DISCA, RIMM, SOHU, BLKB, RZG, IR, ASH, TSL, NVO, SHI and ELP

Stocks With Unusual Call Option Activity:
1) CREE 2) ESRX 3) CELG 4) PLCM 5) APOL

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Wednesday Watch

Late-Night Headlines
Bloomberg:

- President Barack Obama has determined that a prepackaged bankruptcy is the best way for General Motors Corp.(GM) to restructure and become a competitive automaker, people familiar with the matter said. Obama also is prepared to let Chrysler LLC go bankrupt and be sold off piecemeal if the third-largest U.S. automaker can’t form an alliance with Fiat SpA, said members of Congress who have been briefed on the subject and two other people familiar with the administration’s deliberations. While Obama two days ago gave GM 60 days to come up with deeper cost and debt reductions than the biggest U.S. automaker proposed in a viability plan submitted last month, the “quick and surgical” bankruptcy his administration described as an option appears to be inevitable, the people said.

- Hewlett-Packard Co.(HPQ), the world’s largest maker of personal computers, is “studying” Google Inc.’s(GOOG) Android operating system software for use on scaled-down notebook PCs known as netbooks. “We are interested in understanding all the various operating-system choices in the marketplace that could be used by our competitors,” said Marlene Somsak, spokeswoman for Palo Alto, California-based Hewlett-Packard. “With respect to Google Android, we’re studying the OS in general and looking at its computing and communications capabilities.” A shift of Android use to PCs from smart phones would encroach on a market dominated by Microsoft Corp., whose Windows operating-system software is used on more than 90 percent of the world’s PCs.

- The Standard & Poor’s 500 Index’s best month since 2002 will probably extend into the second quarter, according to a trend measure used by UBS AG analysts who make forecasts using price charts. The Moving Average Convergence/Divergence chart, which is based on calculations from the benchmark’s closing average during the past 9, 12 and 26 days, has generated a “bullish divergence,” UBS analysts Michael Riesner and Marc Müller said. The so-called MACD measure has posted seven “major divergences” since 1932, they said. In five occasions, stocks rallied into a bull market, as happened in 1932, 1935, 1942, 1982 and October 2002. In the other two cases, stocks advanced at least 15 weeks, the analysts wrote. “With the current bullish divergence in the weekly MACD, we have a high-probability pattern for expecting a stronger and longer-lasting countertrend rally, if not even the start of a new bull market,” Riesner and Müller said in a note today.

- Gains in the Treasury market today shifted “technicals” slightly to the bullish side, according to RBS Greenwich Capital.

- Google Inc.(GOOG) had its first-quarter revenue estimate cut at Goldman Sachs(GS) because of declines in the euro and pound. Google will report a 3% decline in revenue versus the fourth quarter, Goldman analyst James Mitchell wrote today. He said this doesn’t change his “broadly positive view of Google’s stock.” Mitchell said the advertising business has improved since January.

- Ten credit-default swaps dealers and five non-dealers were named to a committee that will make binding decisions for the $28 trillion market, including when borrowers have triggered a payout on the derivatives. Pacific Investment Management Co., Elliott Management Corp. and Primus Asset Management Inc. are among asset managers that will serve on the committee starting April 8, the ISDA said today. Legal & General Investment Management Ltd. and Rabobank Intl. also were named as voting members fo the committee. The dealers with votes on the committee will be: Bank of America, Barclays, Citigroup, Credit Suisse Group, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley, Royal Bank of Scotland and UBS AG.

- Confidence among Japan’s biggest manufacturers fell to a record low, a sign the recession may deepen as companies cut spending and jobs. The Bank of Japan’s Tankan index of sentiment among large makers of cars, electronics and other goods slid to minus 58 in March from minus 24 in December, the lowest since the survey began in 1974. Economists predicted a drop to minus 55. A negative number means pessimists outnumber optimists.

- Iran continues to pose a “significant challenge to Iraq’s long-term stability and political independence,” the Pentagon said. “Iran continues to host, train, fund, arm and guide militant groups that seek to bleed the U.S. in Iraq, and Iran remains opposed to a long-term partnership between the government of Iraq and the United States,” the Pentagon said in its latest quarterly report released today to Congress on conditions in Iraq.

Wall Street Journal:

- While Congress has been flaying companies for giving out bonuses while on the government dole, lawmakers have a longstanding tradition of rewarding their own employees with extra cash -- also courtesy of taxpayers. Capitol Hill bonuses in 2008 were among the highest in years, according to LegiStorm, an organization that tracks payroll data. The average House aide earned 17% more in the fourth quarter of the year, when the bonuses were paid, than in previous quarters, according to the data. That was the highest jump in the eight years LegiStorm has compiled payroll information. Payments ranged from a few hundred dollars to $14,000. Lawmakers, at their own discretion, gave the money to chiefs of staff, assistants, computer technicians, and more than 100 aides who earned salaries of more than $100,000 a year. "Most aides could make more money elsewhere, but choose to work on Capitol Hill because they believe in public service," said Brendan Daly, a spokesman for House Speaker Nancy Pelosi, a California Democrat who along with other top House leaders awarded bonuses.

- The Obama Administration insists it wants to "partner" with private investors for its new toxic-asset purchase plan. But the more details that emerge, the more it seems Treasury wants to work with only a select few companies. This is no way to conduct a bank clean-up. The investment community was already suspicious last week when Secretary Timothy Geithner unveiled his plan, announcing that Treasury would select four or five companies as "fund managers" to purchase toxic securities. Given that the whole idea is to create a liquid market for these assets, we'd have thought Treasury would encourage as many players as possible. But the bigger shock was when Treasury released its application to become a fund manager, a main rule of which is that only firms that already have a minimum of $10 billion in toxic securities under management can apply. Few hedge funds, private equity players or sovereign wealth funds come near this number. The hurdle would bar many who specialize in the very distressed assets that the Obama Administration is trying to offload from banks. While dozens of banks and insurance companies today hold more than $10 billion in toxic securities, the vast majority are trying to get these assets off their books -- not lining up to buy more. As for asset management firms that hold such a big portfolio -- and are also healthy enough to serve as fund managers -- there is only a small pool, such as Black Rock, Pimco, Goldman Sachs or Legg Mason, as well a titan or two of the hedge fund industry, such as Bridgewater. "This is ugly," says Joshua Rosner, the managing director of Graham, Fisher & Co., an independent research firm. "As long as they are experienced, there is no rational reason for creating limitations on who becomes a bidder and manager of assets. It doesn't serve the public good, though it may serve those few large firms that appear to have a privileged relationship with Treasury." We have no idea if Treasury is playing favorites, but it certainly doesn't look good. All the more so given that some of these big players may have consulted informally with the Obama Administration as it was writing the plan. Not to mention that the big asset management companies that are most likely to land plum fund-management jobs are also the ones that have been most vocally praising the Treasury plan.

- The U.S. economy should find its footing around the middle of the year even after another "significant" contraction in the first quarter, Federal Reserve Bank of Minneapolis President Gary Stern said Tuesday. Still he warned in an interview with The Wall Street Journal and Dow Jones Newswires that, when the recovery does come, it will be hard to discern right away. "My forecast is actually for some improvement beginning around the middle of the year," Stern said.

- Facing heavy government pressure, General Motors Corp.'s chief executive spent his second day on the job making a public break from his predecessor, sending a sharply different message of willingness to shake up the ailing auto maker. In an interview with The Wall Street Journal, Frederick "Fritz" Henderson said he is prepared to do whatever it takes to reorganize the company, including taking GM through bankruptcy court.

- In the closing weeks of his presidential campaign, Barack Obama's running mate, Joe Biden, warned that the world would soon test a young, relatively inexperienced president. "Soon" has become "now."

MarketWatch.com:
- Wells Fargo & Co.(WFC), one of the largest U.S. lenders, told employees this month that it's considering cutting foreign workers, citing political pressure stemming from the government's bailout of the banking industry, according to an internal email obtained by MarketWatch.

- The business environment for Chinese manufacturers continued to deteriorate at a quick pace in March, though the drop was less severe than in preceding months, according to data released Wednesday. The CLSA China Manufacturing PMI was at 44.8 in March, down from 45.1 in February but better than the 42.2 posted in January. The trend indicates conditions are still on the mend from last November's low of 40.9, although the manufacturing sector -- vital to China's export-heavy economy -- remained below 50, indicating contraction. "A worsening of domestic manufacturing orders lies behind the drop in the PMI and accords with what we are seeing on the ground in the steel industry," CLSA economic research chief Eric Fishwick said in a statement. "Expect the production index to show softness in April," Fishwick said.

CNBC.com:
- Addision Armstrong of Tradition Energy tells us, "Wednesday's release of the weekly U.S. government inventory data is likely to show that crude supplies -- already 12 percent above the five-year average level -- probably grew by 3.5 million barrels." In other words supplies will increase – a bearish scenario for crude. In fact, supplies are growing so quickly that storage facilities are brimming with more oil than they've had in 16 years. Combined with the strategic petroleum reserve, the nation now has 1.05 billion barrels of oil in storage. To put that in perspective that’s enough oil to fuel roughly 44 million cars for a year. ”I think we’re stuck in a range but the overall direction we’re heading is probably lower,” he says. “When the June contract breaks below $50 I think we could head to $45 pretty quickly.” (video)

NY Times:

- Cerberus Capital Management LP, an investor in auto financing companies Chrysler Financial Corp. and GMAC LLC, is seeking US assistance in combining the two companies.

- During the three most lucrative and widely watched hours of TV, the cable news channel MSNBC outranked CNN for the first time ever in March. Viewers continued to flock to the TV versions of the op-ed page in the evenings, according to Nielsen Media Research ratings released Tuesday, posing trouble for CNN, which placed third for the month in weekday prime time from 8 to 11 p.m. Fox News Channel, the longtime No. 1 cable news operation and a unit of the News Corporation, has extended its lead over CNN and MSNBC in recent months. In March, “The O’Reilly Factor,” Fox’s 8 p.m. program, reached a milestone of 100 consecutive months as the most popular program on cable news.

The Washington Post:

- Key lawmakers are pushing to dramatically escalate U.S. defenses against cyberattacks, crafting proposals that would empower the government to set and enforce security standards for private industry for the first time. The proposals, in Senate legislation that could be introduced as early as today, would broaden the focus of the government's cybersecurity efforts to include not only military networks but also private systems that control essentials such as electricity and water distribution. At the same time, the bill would add regulatory teeth to ensure industry compliance with the rules, congressional officials familiar with the plan said yesterday. Addressing what intelligence officials describe as a gaping vulnerability, the legislation also calls for the appointment of a White House cybersecurity "czar" with unprecedented authority to shut down computer networks, including private ones, if a cyberattack is underway, the officials said.

Lloyd’s List:
- Tanker derivative contract values slid down for all benchmark crude carrier routes close to rock-bottom levels in reaction to a depressing outlook for oil demand.

Legal Times:

- Lobbyists aren’t the only ones feeling offended by President Barack Obama’s stringent restrictions on communications between K Street and the executive branch about stimulus projects. Today, the American Civil Liberties Union and the Citizens for Responsibility and Ethics in Washington partnered with the American League of Lobbyists to send a letter to White House Counsel Gregory Craig. It requests that Obama rescind a directive issued March 20 to all federal agency heads that bars them from having in-person or telephone conversations with registered lobbyists about particular projects, applications, or applicants for funding under the American Recovery and Reinvestment Act. The rule only allows registered lobbyists to submit written communications on these matters.

Politico:

- Sen. Chris Dodd (D-Conn.) moved to change the location of a $1,000-a-head April 7 fundraiser in New York City Tuesday, after learning that it was to be held at an exclusive club long criticized for having no minority members. Dodd’s fundraiser is being hosted by one of the world’s richest hedge-fund managers, John A. Paulson – after Dodd held hearings as Senate Banking Committee chairman March 26 over whether to impose sweeping new regulations on the hedge-fund industry. But after POLITICO raised questions about the site of the fundraiser, the Harmonie Club, Dodd’s office took steps to find a new location for the event. According to the invitation, the event will be hosted by Paulson, whose hedge fund scored a $15 billion payday when it bet against the subprime housing market in 2007. Paulson’s personal take from that bet was estimated to be between $3 and $4 billion. Paulson has been an active participant in the debate over hedge fund regulation, arguing that his industry needs new government regulation. But in a hearing last fall, Paulson defended the practice of hedge fund managers paying capital gains taxes on their income, instead of much higher income taxes that workers in other industries pay. “I believe our tax situation is fair,” Paulson said at the time. As for the propriety of attending a fundraiser hosted by a hedge fund manager at a time when he’s engaged in the hedge fund regulatory debate, Dodd press secretary Bryan DeAngelis said, “Campaign contributions do not and never have influenced Senator Dodd’s agenda and priorities.

Reuters:

- Kathleen Sebelius, named as U.S. health secretary by President Barack Obama, became his latest nominee to reveal income tax issues, saying on Tuesday she paid nearly $8,000 to settle errors over three years.

- IBM(IBM) will sell a suite of Web-based collaboration software for businesses, including contact management, instant messaging and file sharing programs, the computing giant's biggest effort to date to sell software as a service.

- The California senate on Tuesday approved a bill that would require renewable power to account for 33 percent of electricity delivered by the state's utilities by 2020.

- Ask C.T. Liu about future growth engines for his company, LCD maker AU Optronics, and he whips out his Kindle e-book in lieu of an answer. Strong reception for the Kindle, the brainchild of Web retailer Amazon, is attracting a growing number of developers looking to tap interest in devices that let consumers read newspapers, magazines and books in a digital form that updates wirelessly and saves paper. Sony Corp has joined the paperless wave with its own e-readers, partnering with Google to offer public domain books that are no longer protected by copyright.

The Economic Times:

- The India ministry of commerce and industry has recommended a special duty on imported cold-rolled stainless steel, a value-added intermediate for stainless steel products, after domestic producers complained of cheaper cargo entering the country from China, the US and the European Union. The anti-dumping duty — a levy imposed when an exporter ships a product below cost price or the price at which it is sold within the home market — will also be imposed on exports from Japan, South Korea, Taiwan, South Africa and Thailand. The directorate general of anti-dumping (DGAD) — the commerce department arm for undertaking anti-dumping investigations and recommending duties — has proposed a maximum levy of $1,823 per ton of cold-rolled steel on imports from China. The proposed duties are slightly lower on imports from other countries.

Sai Gon Giai Phong:

- Vietnam’s steel consumption fell 30% in the first quarter as the global recession slashed demand, citing the country’s steel association.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (NILE), target $36.

Night Trading
Asian Indices are -.25% to +1.75% on average.
S&P 500 futures -1.41%.
NASDAQ 100 futures -1.45%.

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

Conference Calendar

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

Earnings of Note
Company/EPS Estimate
- (WOR)/.00

Economic Releases

8:15 am EST

- The ADP Employment Change for March is estimated at -663K versus -697K in February.

10:00 am EST

- The ISM Manufacturing Index for March is estimated to rise to 36.0 versus 35.8 in February.

- The ISM Prices Paid Index for March is estimated to rise to 33.0 versus 29.0 in February.

- Construction Spending for February is estimated to fall 1.9% versus a 3.3% decline in January.

- Pending Home Sales for February are estimated unch. versus a 7.7% decline in January.

10:30 am EST

- Bloomberg consensus estimates call for a weekly crude oil inventory build of +3,000,000 barrels versus a +3,302,000 barrel increase the prior week. Gasoline supplies are expected to fall by -1,500,000 barrels versus a -1,144,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,150,000 barrels versus a -1,584,000 decline the prior week. Finally, Refinery Utilization is expected to rise +.25% versus a -.13% decline the prior week.

Afternoon:

- Total Vehicle Sales for March are estimated at 9.2M versus 9.1M in February.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Pianalto speaking, weekly MBA mortgage applications report, Challenger Job Cuts, Citi Biotech Day and the (NOVL) investor lunch could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by financial and automaker 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.