Better Late......

4/16/10 Better Late.....

The government has accused Goldman Sachs & Co. of defrauding investors by failing to disclose conflicts of
interest in mortgage investments it sold as the housing market was
faltering.
The Securities and Exchange Commission said in a civil
complaint Friday that Goldman failed to disclose that one of its
clients helped create -- and then bet against -- subprime mortgage
securities that Goldman sold to investors.
Goldman Sachs denied the allegations. In a statement, it called the SEC's charges
"completely unfounded in law and fact" and said it will contest them.
The
charges are a blow to the reputation of the most powerful firm on Wall
Street, which earned a record $4.79 billion last quarter and has long
profited from high-octane trading.
The allegations come as
lawmakers seek to crack down on Wall Street practices that helped cause
the financial crisis. Among proposals Congress is weighing are tougher
rules for complex investments like those involved in the alleged
Goldman fraud.
The Goldman client implicated in the fraud is one
of the world's largest hedge funds, Paulson & Co., which paid
Goldman roughly $15 million for structuring the deals in 2007.
Goldman Sachs shares fell more than 13 percent after the SEC announcement, which also
caused shares of other financial companies to sink. The Dow Jones
industrial average fell more than 140 points in midday trading.
Congress is sending President Barack Obama an $18 billion bill to restore unemployment benefits for people who have been out of a job for months and resume full Medicare payments to doctors threatened by a 21 percent cut.
The
House cleared the bill Thursday night by a 289-112 tally taken just two
hours after it emerged from the Senate on a 59-38 vote that capped an
unusually partisan debate. Republicans largely chose to take a stand
against the legislation for adding to the $12.8 trillion national
despite backing it by wide margins in December and again recently.

European finance ministers discussed Greece's debt crisis on Friday
but said Athens was seeking to clarify how an emergency aid mechanism
would work, rather than requesting it.
Greek Prime Minister
George Papandreou told parliament that any request to activate the
40-45 billion euro ($56-$63 billion) financial aid package announced by
euro zone governments would be made in the country's best interest if
needed."We are taking all the preparatory actions required," said Papandreou.

Brett Steenbarger: "If you're not seeing the market well,
step back and reassess your views. If you're not trading well, step
back and reassess yourself. The capacity to flexibly engage markets and
disengage from them is an important component of career longevity."

GE's orders for big-ticket equipment and services fell 8% in Q1 to $17.1B. That's below the $18B GE reported in Q2 2009, which CEO Jeff Immelt at the time described as the potential low point for new orders amid the broad economic downturn. CEO Jeff Immelt: "We saw encouraging economic signs, including
increases in airline passenger miles and freight loadings, declines in
receivables delinquencies, and growth in local advertising markets."

The share of America's jobless out of work for 27 weeks or more reached a new record of 44.1% in March.

Wholesale prices in China for the month were up 5.9% year-on-year, compared to a 5.4% rise in February.
"There are signs of overheating," said Stephen Green, Standard Chartered's head of Greater China research in Shanghai.

Mar. Housing Starts: +1.6% to 626K vs. 610K expected and 616K last month (revised). Permits +7.5% to 685K vs. 634K expected and 637K last month (revised).

The Association of American Railroads (AAR) today reported that U.S. freight railroads saw a 7.5 percent rise in carloads during March compared with the same month last year, and a decline of 11.5 percent compared with the same month in 2008.

Millions of Americans are not only upside down on their mortgage,
they also appear to be shunning that monthly payment in favor of
meeting their everyday expenses.
In the state of California, for
example, more than 10% of credit card-carrying consumers were choosing
to pay that bill rather than their mortgage as of last fall, according
to a recent study published by the credit reporting agency TransUnion.

Exports rise 15.8% and 10.9%, respectively, helped by the dollar's
weakness. Imports rise 10.8% at Long Beach but fall 2.9% at Los Angeles
compared with March 2009.

Continental Airlines is again discussing a merger with United Airlines,
two years after the Houston-based carrier abandoned similar talks and
declared its desire to stay independent.

ZeroHedge: "PDMA Chief Petros Christodoulou was quoted as saying in an interview
with Japan's Jiji news agency published Friday. Greece is now
effectively a Lehman Brothers, whose busted balance sheet is entirely
dependent on the "discount window" of the IMF's benevolence. Should
there be a hiccup in ultra-short term debt availability, the country
will default overnight."

It's mid-April and gas is $3+ a gallon and the peak driving season has not begun. How much is left on credit cards for gas and then for shopping? The brick wall is approaching our economy.

"Something isn't sitting well with
small business owners," Bill Dunkelberg, chief economist of the
National Federation of Independent Business, said in a written
statement accompanying the latest edition of his organization's monthly
"Small Business Optimism" report. "Poor sales and uncertainty continue
to overwhelm any other good news about the economy." Capital
expenditures remain near record lows, sales are still weak, and credit
lines are hard to find, according to the around 950 business owners
NFIB surveyed in March. While job cuts have slowed, few businesses say
they plan to hire new workers within the next three months. NFIB's
findings dovetail with those from American Express, which recently
polled owners of firms with 100 or fewer employees. One in five
businesses said their companies are "sinking ships," while more than
half said they were merely "staying afloat." Just 21% reported that
their business was healthy or growing.

Washington-based trade group The
American Petroleum Institute said Thursday U.S. gasoline production in
March was the highest ever level on record. At 9.3 million barrels per
day, it was 7.5% above March 2009. Domestic crude production, at 5.5
million barrels a day, remained at a five-year high, the API said in
releasing its monthly statistics. Crude imports fell in March compared
to last year, the API said.

U.S. consumer sentiment dropped in early April, according to media reports on Friday of the Reuters/University of Michigan index. The consumer sentiment index fell
to 69.5 in April from 73.6 in March. Economists surveyed by MarketWatch
had been expecting the sentiment index to hit 75 in April. While the
economy has been picking up, consumers remain worried about jobs and
their personal finances. The index hit a 28-year low of 55.3 in
November 2008.

Schork Report: "Therefore, it goes without saying, once Exxon et al. master the shale
learning curve, producers will not be so keen to sell into a $6 market,
especially when No.6 oil is trading at an equivalent $12."

Three bank failures in Florida and one in Massachusetts brought the year's tally to 47, according to the Federal Deposit Insurance Corp. Friday. In Florida, TD Bank took over the deposits and assets of AmericanFirst Bank, First Federal Bank of North Florida and Riverside National Bank of Florida, for a total of $3.9 billion in assets and $3.17 billion in deposits. Massachusetts' Butler Bank had its $268 million in assets and $233.2 million in deposits taken over by People's United Bank of Bridgeport, Conn. Earlier in the day, the FDIC announced another bank failure in Michigan.

Bernstein Research analyst Brad Hintz said Friday that Goldman Sachs could face a maximum liability of $706.5 million stemming from securities fraud charges filed against the investment bank by the Securities and Exchange Commission.

The Dow Jones industrials fell 126 points, or 1.1%, to 11,019. The Standard & Poor's 500 Index was off 20 points, 1.6%, to 1,192. And the Nasdaq Composite Index was off 34 points, 1.4%, to 2,481. The declines for the three indexes were the biggest since Feb. 4.

Taxes

4/15/10 Taxes

April 9 was Tax Freedom Day, the day on which Americans have earned
enough to pay their federal, state and local taxes, as calculated by
the Tax Foundation, a non-partisan tax research group in Washington.

Analysts surveyed by Platts saw an increase in natural gas storage by 76 to 80 billion cubic feet in the week ended April 9.
Natural gas for May delivery
declined 11 cents, or 2.6%, to $4.09 per million British thermal units.
The Energy Information Administration reported an increase of 87
billion cubic feet in the week ended April 9.

Euro Will Drop to $1.19 by Next Year on Greece Crisis, BNP Says.

Apache Corp said Thursday it will buy deepwater exploration firm Mariner Energy Inc.
in a deal valued at nearly $4 billion in cash, stock and debt. Mariner
Energy shareholders will receive 0.17043 of a share of Apache common
stock and $7.80 in cash for each share for a total of $2.7 billion.

Capital One Financial Corp's U.S. credit-card defaults rose in March in a sign that consumers may still be under stress.
In
a regulatory filing, Capital One said the annualized net charge-off
rate -- debts the company believes it will never collect -- for U.S.
credit cards rose to 10.87 percent in March from 10.19 percent in
February.

The Fortune 500 largest U.S. companies slashed
a record 821,000 jobs last year, even as their collective profit soared
more than three-fold to $391 billion, according to the business
magazine, which issued the annual ranking on Thursday.
The
companies suffered an 8.7 percent drop in 2009 sales as the recession,
the sharpest decline since 1983, took its toll and spared few
industries last year, but the cost cutting, including the job cuts,
more than offset that.

Existing tax preferences for fossil fuels give gas, oil and coal an
advantage, while suppressing investment in clean energy technologies,
Assistant Treasury Secretary Michael Mundaca said.

The number of people applying for unemployment benefits jumped 24,000
in the latest week, but the increase appeared to stem largely from the
Easter holiday and other onetime factors that distorted the data.
Initial claims rose to a seasonally adjusted 484,000 in the week ended
April 10, the Labor Department said Thursday. The four-week average of
initial claims -- a better gauge of employment trends than the volatile
weekly number - increased 7,500 to 457,750. Economists surveyed by
MarketWatch had forecast claims to drop to 430,000. Continuing claims
in the week of April 3 climbed 73,000 to 4.64 million.

U.S. April Empire State index 31.9 vs 22.9 March.

"Industrial production edged up 0.1 percent in March and increased at an annual rate of 7.8 percent in the first quarter. Manufacturing output rose 0.9 percent in March, led by widespread gains among durable goods industries. Factory production was likely held down in February by the winter storms but nonetheless rose at an annual rate of 6.6 percent for the first quarter as a whole. The output of mines increased 2.3 percent in March. Utilities output dropped 6.4 percent; after a relatively cold February, demand for heating fell in March as temperatures climbed to above-normal levels. At 101.6 percent of its 2002 average, industrial output in March was 4.0 percent above its year-earlier level. Capacity utilization for total industry advanced 0.2 percentage point to 73.2 percent, a rate 7.4 percentage points below its average from 1972 to 2009, but 3.7 percentage points above the rate from a year earlier.

The Philly Fed index rose to 20.2 in April from 18.9 in March, slightly better than expectations of an increase to 20.0.

UK Treasury holdings have literally exploded from $106 billion in October, to more than double, or $231.7 billion in February.

The NAHB/Wells Fargo housing
market index rose 4 points to 19 in April, reversing a fall in March.
This is the highest level of the index since last September.



The Dow Jones Industrial Average ended up 21.46 points, or 0.2%, at 11,144.57, a fresh closing high for the year. The S&P 500 index rose 1.02 point, or 0.1%, to 1,211.67, and the Nasdaq Composite gained 10.83, or 0.4%, to 2,515.69, with both average also ending at 2010 closing highs.

Google Inc. said Thursday its first-quarter net income rose to $1.96 billion, or $6.06 a share, from $1.42 billion, or $4.49 a share in the same period last year. Net revenue for the period ended in March came in at $5.06 billion. Excluding special items, Google said earnings for the quarter were $6.76 a share. Wall Street analysts polled by Thomson Reuters had expected Google to post first-quarter earnings excluding items of $6.60 a share, and $4.95 billion in net revenue.

Inflation Muted

4/14/10 Inflation Muted

U.S. retail gasoline demand dropped 3.6 percent in the week to April 9, according to a MasterCard SpendingPulse report released on Tuesday.
Gasoline demand averaged 9.298 million barrels per day last week, the weekly survey showed. Gasoline demand fell 1.1 percent from the same period last year, SpendingPulse showed.

Israel issued an "urgent" warning Tuesday to its citizens to leave
Egypt's Sinai Peninsula immediately citing "concrete evidence of an
expected terrorist attempt to kidnap Israelis in Sinai."

Magnitude 7.1 earthquake hits southwest China.

China's currency is undervalued
and the Chinese government should move to let the market value it,
President Barack Obama said Tuesday. Obama said it's in China's
interest to let the market determine the value of the yuan, but also
said he won't hold Beijing to a deadline for action. "I have no
timetable," Obama said at a press conference following a nuclear
summit.

Washington-based trade group
The American Petroleum Institute reported Tuesday an increase in U.S.
oil stockpiles of 1.4 million barrels in the week ended April 9.
Analysts polled by Platts expected an increase of 1.6 million barrels.
Distillates increased by 1.7 million barrels, below the Platts analyst
survey's expectations, which stood at 1 million barrels. Gasoline
stocks rose to 1.6 million, whereas the analysts Platts surveyed
projected it to decline by 1.26 million barrels on the week.

Roubini: "And for now, there is more deflation than inflation."

Goldman Sachs, J.P. Morgan, and Morgan Stanley have launched a
last-ditch effort in Congress to fight changes to financial regulation
that would squeeze their derivatives-trading businesses.

The Market Oracle: "Taking an average achievable growth rate of 1.5% per annum for the
next 4 years implies that Britain will grow GDP by a total of £213
billion. However to achieve this growth and based on the governments
own figures, Britain will borrow an additional £478 billion. So Britain
is in effect borrowing more than £2 for every £1 of extra economic
growth. If that does not illustrate a country that is on the road
towards bankruptcy then nothing will. Labour ignited the debt fuelled
boom during mid 2009 which I covered at length in articles such as - 03
Jun 2009 - UK Economy Set for Debt Fuelled Economic Recovery Into 2010 General Election, and analysed at length in the Inflation Mega-Trend Ebook (FREE Download)
Nothing has changed as the Labour government looks set to deliver the forecast scorched earth economy to the next Government, something that Britain will have to suffer the
consequences of for at least the next 5 years as the country looks set
to enter into a prolonged period of stagflation as the government
attempts to inflate some of the debt and interest burden away.
Britain Will Eventually Go Bankrupt
Britain will at some point default on its debts to foreigners (as it
has done at least twice before), this is INEVITABLE because ALL
countries eventually DEFAULT on their debts, it is only a question of
when i.e. in the next few years or delay bankruptcy for many decades
and therefore results in the relative risks of default which the market
prices. INFLATION is a symptom of the trend towards bankruptcy as it is
a measure of the continuous COMPOUNDING loss of purchasing power of the
currency. The best that governments such as Britain have been able to
achieve is the slow stealth trend towards bankruptcy where people don't
realise the loss of purchasing and wage earning power over time.
However with government debt heading towards 100% of GDP, Britain looks
set to leave the stealth trend towards bankruptcy behind and about to
accelerate a few notches higher which risks igniting a wage price
spiral that ultimately ends in a hyper-inflationary bust."

The Monetary Authority of Singapore tightened its policy Wednesday,
saying it will revalue upward its undisclosed targeted trading band for
the Singapore dollar and aim for a "modest and gradual appreciation"
against a basket of currencies

The volatility index fell to its lowest level since June 2007 this
week. The VIX is at 15 today…light-years from the 80-90s suffered
during Lehman’s collapse..

Reports showed retail sales rose 1.6% last month, more than expected, while consumer prices rose 0.1%.

China to increase gasoline and diesel prices by as much as 4.6 percent starting today.

The U.S. Energy Information
Administration on Wednesday said crude-oil stockpiles decreased by 2.2
million barrels in the week ended April 9, contrary to market
expectations of another build. Total motor gasoline inventories
decreased by 1.1 million barrels, the agency said. Distillates stocks
increased by 1.1 million barrels.

In the first quarter of 2010, the rate of personal bankruptcy filings
in a dozen states increased by double-digit percentages over 2009's
monthly averages. "What is surprising is that there are still hefty
increases in states like Arizona, California and Florida," says AACER
president Mike Bickford, referring to the fact that it might seem that
the worst would be over in states hard-hit by the housing bubble.
"Intuitively, you would think there might be some leveling off in these
states, but that is not the case. In addition, there were large
increases in bankruptcy filings in the Midwest, especially Michigan and
Illinois."

The Dow Jones industrials added 104 points, or 0.9%, to 11,123. It was the best finish for the
blue chips since September 2008 and their first gain of 100 points or
more since March 23.

The Standard & Poor's 500 Index closed up 13 points, or 1.1%, to 1,211, its first close above 1,200 since Sept. 26, 2008. The Nasdaq Composite Index jumped 39 points, or 1.6%, to 2,505, its best finish since June 5, 2008.


Australia's benchmark index
broke above the psychologically important 5,000 level Thursday for the
first time since September 2008.

Overbought

4/13/10 Overbought

US small business owners have little confidence in the economy and are
in no rush to hire or expand, despite signs the recovery is picking up,
a survey released Tuesday showed.
Small U.S. business owners were more pessimistic in March than in February, according to a monthly survey of companies released Tuesday by the National Federation of
Independent Businesses. The NFIB index fell to 86.8 from 88, with only
one of 10 components improving. "Something isn't sitting well with
small business owners," said Bill Dunkelberg, chief economist for the
small-business lobbying group. "Poor sales and uncertainty continue to
overwhelm any other good news about the economy." Most owners think
business conditions will not improve in the next six months, few are
hiring, and fewer than usual are investing in their business. Price
reductions are widespread.

Prices of goods imported into
the United States increased 0.7% in March, after two months of
declines, the Labor Department reported Tuesday. Fuel prices rose 2.9%
in March. Import prices are up 11.4% in the past year, driven by a
63.3% rise in imported fuel prices. Non-fuel prices rose 0.2% in March
and were up 2.7% in the past year. Export prices increased 0.7% in
March, including a 2.1% increase in agricultural export prices. Prices
of imported capital goods fell 0.3%. Prices of imports from China
dropped 0.1%.


The U.S.
trade deficit widened by 7.4% in February to $39.7 billion, the
Commerce Department said Tuesday. The trade deficit was above the
consensus forecast of Wall Street economists of a deficit of $38.5
billion. Imports rose faster than exports in February. The U.S. trade
deficit with China widened to $16.5 billion in compared with $14.2
billion in the same month last year. This is the smallest deficit since
last March.

The International Energy Agency
revised up by 30,000 barrels a day its forecast for global oil demand
in 2010, citing higher-than-expected data from North America and the
Pacific, as well as non-OECD Asia and the Middle East. Oil demand is
now estimated to grow by 1.7 million barrels a day to 86.6 million
barrels a day in 2010, the Paris-based IEA said Tuesday in its monthly
oil report. "It is worth noting that six large non-OECD countries -
China, Saudi Arabia, Russia, Brazil, Iran and India - are expected to
account for almost three-quarters of global oil demand growth in 2010,"
the IEA said.

Dialogue, not sanctions, is the best way to handle negotiations with
Iran over its nuclear program, China's Foreign Ministry said Tuesday.


Real personal income for Americans - excluding government payouts such
as Social Security - has fallen by 3.2 percent since President Obama
took office in January 2009, according to the Commerce Department's
Bureau of Economic Analysis.
For comparison, real personal income during the first 15 months
in office for President George W. Bush, who inherited a milder
recession from his predecessor, dropped 0.4 percent. Income excluding
government payouts increased 12.7 percent during Mr. Bush's eight years
in office.

Recovery in the world's biggest economies could be jeopardized if crude
oil prices stay over $80 per barrel, the International Energy Agency
said today.

Mish: "Large corporations are abandoning the US. I work for IBM. Here is a snapshot of IBM's US headcount:

2005 133,789
2006 127,000
2007 121,000
2008 115,000
2009 105,000
2010 98,000 estimate

These are all good paying jobs that can support a family and pay taxes.

Today,
75% of the total headcount is overseas. The overseas revenue is 65%.
The company reported record profits last year. IBM decided to stop
reporting their US headcount this year."

China's biggest banks face $70B capital shortfall, ICBC's Yang says.

ZeroHedge: "The Tax Policy Center calculates, that for a
return to economic normalcy, or deficits at a "mere" 2% of GDP,
households earnings more than $200/250k would see their tax rates going
up to a stunning 91%. If the economic underperformance target is
reduced to more palatable deficits at 3% of GDP, then the top earners
would be hit with "only" 77% taxes."

St. Petersburg Times:
Washington Will Spend $31,406 Per Household This Year. Taxpayers filing their 1040s are likely wondering just where all their hard-earned tax dollars are going, anyway. Washington
will spend $31,406 per household in 2010 — the highest level in
American history (adjusted for inflation). It will collect $18,276 per
household in taxes. The remaining $13,130 represents this year's
staggering budget deficit per household, which, along with all prior
government debt, will be dumped in the laps of our children. Government
spending has increased by $5,000 per household since 2008, and nearly
$10,000 per household over the past decade. Yet there is no free lunch:
If spending is not reined in, then eventually taxes must also rise by
$10,000 per household.

John Hussman: "When you don't require the reported value of
assets to have a clear and tangible link to the value that the assets
would have in liquidation, bad things happen. Yet this is what
regulatory and accounting rules are allowing for the banking system at
present...Presently, a normalization of valuations, not to extreme undervaluation
but simply a reversion to post-war, non-bubble norms, would imply an
average annual return for the S&P 500 of just 2.97% over the coming
5 year period...I suspect that the secular bear market that began at the valuation peak
of 2000 is incomplete. As of last week, the S&P 500 remained
strenuously overvalued on the basis of normalized fundamentals. From
that perspective, even if the trough we observed in March 2009 was the
ultimate price low of the secular bear market since 2000, it's not likely to represent the ultimate valuation trough...Again, at this point it does not matter whether we anticipate further
credit strains or not. Wholly on the basis of current valuations,
stocks are priced to deliver unsatisfactory returns in the coming years
- a situation that is worsened by strenuous overbought conditions and
upward yield pressures here."

The U.S. economy is the world’s largest and requires a huge amount of
energy. In 2009, during the deepest recession in 80 years, the U.S.
still imported about 12 million barrels of oil a day.
About 70 percent of that is used as the principal transportation fuel
for America’s 250 million cars and light trucks, and 8.5 million heavy
trucks.
China’s economy, the world’s second-largest in terms of purchasing
power, is about half the size of the U.S. gross domestic product.
According to its central bank, China’s economy grew at an annual rate
of 10.7 percent in the fourth quarter of 2009.
To keep its economy growing at that rate, China needs about 8 million barrels of oil a day. It imports about half of that. In sum, China has locked in about 5.2 billion barrels of oil to import.
Five billion barrels is the amount the United States must import (at
current levels) between now and 2023. But China has a big advantage
because its state-owned oil company is financed by its state-owned bank.

China has imposed duties on imports from the U.S. and Russia of a
common type of electrical steel used in the power sector, following a
final decision on its countervailing and antidumping investigation, the
nation's Ministry of Commerce said Tuesday.
The duties took effect Sunday and are valid for five years, the
ministry stated on its Web site. In December, China had made a
preliminary ruling and required importers to pay deposits ahead of a
final decision on the matter.
Tuesday's announcement by China's commerce ministry comes after last
week's decision issued by the U.S. commerce department to impose
antidumping duties of up to 99.14% on imports of steel pipes from
China.
In the probe against U.S. companies, the ministry said it will levy
countervailing duties of as much as 44.6% and antidumping duties of as
much as 64.8% on imports of the electrical steel from the U.S.
The investigation into Russian companies has resulted in antidumping
duties of as much as 25% on the same type of products, the ministry
said in its statement. Companies that responded to the investigation—AK
Steel Corp. and Allegheny Ludlum Corp. of the U.S. as well as Russian
company Novolipetsk Steel, or NLMK, and its affiliate VIZ-Stal
Ltd.—will face lower duties, it said.

The Dow Jones industrial average was up 0.68 point, or 0.01 percent, at 11,006.65. The Standard & Poor's 500 Index was down 1.84 points, or 0.15 percent, at 1,194.64. The Nasdaq Composite Index was up 1.06 points, or 0.04 percent, at 2,458.93.

Insider Selling

4/12/10 Insider Selling

Finance ministers of the 16 euro nations on Sunday discussed details
of a financial lifeline for Greece, whose debt crisis has hiked
borrowing costs for the Athens government and slammed Europe's common
currency.
The
ministers held an emergency video conference hoping "to finalize
technical details" of a deal letting Greece borrow at below-market
interest rates, said an official who asked not to be identified given
the sensitive nature of the negotiations.
"It is hoped that the
finance ministers can make a very strong statement (of support for
Greece) before financial markets open Monday," said the official.
European governments put together a
30 billion-euro ($41 billion) loan package for debt-burdened
Greece, trying to stamp out its fiscal crisis and restore
confidence in the euro. The interest rate is reported at 5%.

Mike Burk: "The market is overbought. There has not had a down week in the past 9 weeks.
The NASDAQ composite (OTC) hit a recovery high Friday logging 181 new highs which was nearly 100 short of the 280 new highs recorded on March 17.
I expect the major averages to be lower on Friday April 16 than they were on Thursday April 9. Last weeks negative forecast was a miss."

Palm (PALM) is seeking buyers and has retained two investment banks (Bloomberg).

California Kitchen Pizza (CPKI) is on the block. (WSJ).

Fully 44 percent of the nation's 15 million unemployed have been out of work for more than six months.

Japanese bank lending in March fell at its sharpest pace since August
2005 after a steep increase in loans a year earlier and weak corporate
demand for funds.

Power generators Mirant and RRI Energy plan to merge in an all-stock
deal in a bid to cut costs and strengthen their financial standing amid
challenging wholesale power markets.

DynCorp International (DCP)
will go private in a $1.5B transaction with private investment firm
Cerberus Capital Management. Under the agreement, Cerberus will pay
$17.55 per share in cash, a 49% premium over Friday's closing price.

Insider buying cratered in the week ending April 9th as corporate
executives refused to buy into the rally after the recent surge in
stocks. Buying has been consistently light since the rally started last
March, but was particularly light this week. Total purchases of just
$2.1MM was the lowest level during the entire 75% equity rally though
the weekly average has ticked slightly higher over the last 8 weeks.
Meanwhile, the heavy stream of insider selling continued as insiders
unloaded $824mm onto the market.

Michael Panzner: " Professor Robert Shiller, and neither of the following two articles
citing his work and perspectives paints an especially positive picture
for asset prices in the period ahead:
"So, How Are Stock Prices Now That We're Back At DOW 11,000? They're 30% Overvalued"(Business Insider's The Money Game)
So, how do look now that the DOW is back to 11,000?
Not outrageous. But certainly not cheap.
Measured
using our favorite valuation technique, Professor Shiller's cyclically
adjusted PE analysis, the S&P 500 has a PE of 22X. The long-term
average (1880-2010) is about 16X. The current level is actually close
to the big peaks of the past--with the exception of the gigantic one
that peaked in 2000."

Robert McHugh: "While the rally from March 2009 through April 2010 has been impressive, there are big picture, huge Head & Shoulders top patterns that are warning this is simply a Bear Market rally, the eye of the storm, a temporary respite. The rally from March 2009 has not been as long time-wise, or as strong as the decline that preceded it. So far, it has retraced approximately a Fibonacci 60 percent of the 2007 to 2009 decline. It is a Bear Market rally. Because we are in a huge Grand Supercycle degree Bear Market, rallies or bounces can seem large and long. But big picture patterns suggest all the borrowing and spending, and monetary printing by the Central Planners will only produce a temporary Bear Market Bounce at great cost to the Federal Budget Deficit. Another leg lower is likely over the next several years, and the Central Planners cannot prevent it. When it starts is the question."

The U.S. Commerce Department approved duties of about 30 percent and 99
percent on imports of Chinese steel pipes used in oil and gas wells,
acting on a complaint by American producers including U.S. Steel
Corp(X). The final ruling affects $1.1 billion of annual imports, the
U.S. said in a statement yesterday. Thirty-eight companies including
Tianjin Pipe International Economic and Trading Corp. must pay a 29.94
percent rate, while Jiangsu Changbao Steel Tube Co. and remaining
producers are charged 99.14 percent.

"Drastic Measures" Needed to Curb Public Debt, Says BIS. Economists
at the Bank for International Settlements have warned the fiscal
problems facing industrial economies are more serious than official
figures suggest, and that proposed measures for tackling public debt
could prove insufficient.

Goldman Sachs on Monday lowered its 2010 forecast for gold prices to $1,165 an ounce and its 2011 forecast to $1,350 an ounce.

China Petroleum & Chemical Corp.,
Asia’s biggest refiner, plans to buy ConocoPhillips’s stake in
oil-sands producer Syncrude Canada Ltd. in a deal that may be
worth about $4 billion, a person familiar with the matter said.

The Dow Jones industrials ($INDU) closed above 11,000 for the first time in 18 months today.
The blue chip index closed up 9 points to 11,006, its first close above 11,000 since
Sept. 26, 2008. The index had briefly dropped under 11,000 with about 15 minutes to go in trading.

The Standard & Poor's 500 Index hit a new post-crash high, up 2 points to 1,196, but it failed to top 1,200, which it hasn't passed in more than 18 months. The Nasdaq Composite Index, meanwhile, was up 4 points to 2,458.

Analysts polled by Platts expect an 11th consecutive increase in U.S. crude-oil inventories. The analysts surveyed forecast stockpiles will be up by 1.60 million barrels, while gasoline stocks will be down by 1.26 million barrels. Distillates stocks, which include heating oil and diesel, will be up by 1 million barrels.

The U.S. government ran a $65 billion budget deficit in March, the Treasury Department reported Monday, far lower than the year-ago number due partly to a revision of the projected cost of the government's program to bail out banks. Income was $153 billion in March, the Treasury said, 19% over the total recorded last March. Spending was $219 billion. A year ago in March, the deficit was $192 billion.

Money

4/10/10 Money

A plane carrying Polish
president Lech Kacynzski and his wife has crashed in Western Russia,
and the governor of the region said there are no survivors, according
to media reports. The plane crashed near Smolensk airport, about 275
miles west of Moscow.

Halliburton said on Friday it agreed to buy Boots & Coots , a
company that provides pressure control services for oil and gas wells,
in a stock and cash deal worth about $240 million.
Halliburton
said Boots & Coots shareholders will receive about $3 for each
share of Boots & Coots they hold. That $3 consists of $1.73 in cash
and $1.27 in Halliburton stock, according to the statement from
Halliburton.

China posted its first trade
deficit in six years in March even as the yuan stayed pegged to
the dollar, aiding government efforts to play down the
currency’s role in global economic imbalances.
The $7.24 billion shortfall, reported by the customs bureau
on its Web site today, compared with a median forecast for a
$390 million deficit in a Bloomberg News survey of 26 economists.
Imports surged 66 percent from a year earlier as exports gained
24 percent.


Doug Noland: "How about a few days of hearings examining issues specific to
total mortgage Credit having almost doubled in just six years, to end
2007 at $14.5 TN. More specifically, how was it possible that the vast
majority of this Credit was perceived - in the marketplace; by the
rating agencies; by the regulators - as “money good”? A more
conceptual analytic focus would get us much closer to appreciating key
Credit system dynamics than a piecemeal grilling of policymakers and
executives from Citi, AIG, Lehman, Bear Stearns, the GSEs and the like....The misperception of mortgage Credit “moneyness” was the root
cause of the crisis. The market perceived that Trillions of
mortgage-related securities were a safe and liquid store of nominal
value. This created the insatiable market demand for these debt
securities that Wall Street so capably exploited. Supply and demand
dynamics no longer applied, as Trillions of mortgage Credit was
supplied at lower yields and easier terms. And greater mortgage Credit
excess inflated home prices and economic output, further buttressing
the perception that mortgage debt was Good Money. The markets’ fateful
misconception – and a momentous breakdown in the market pricing
mechanism - can be traced directly to Washington....Throughout the risk markets, prices are buoyed by confidence that
the Fed will restart monetization operations in the event of any market
liquidity disruption. Hedge funds and other speculators are thriving
once again as they successfully exploit Washington’s inflationary
policymaking. Washington further disrupts the market pricing mechanism
with its ongoing massive fiscal stimulus, ultra-low interest rates, and
liquidity backstop operations....Importantly, you don’t want to allow distortions in money
perceptions to establish a foothold. Such distortions are always and
everywhere the lifeblood of Bubbles. Above all, you certainly don’t
want to finance a massive inflation of non-productive debt with
“money.” This only ensures a problematic widening gulf between
perceptions of safety and liquidity and the actual deteriorating
underlying soundness of these financial claims. And when the inflation
of this money is also distorting market perceptions for Credit and
asset prices throughout the entire system, inflationism is really
playing with fire. Money Not Good."


Improvements in the spread between the New Zealand debt and comparable
U.S. Debt, is driving investors into the Kiwi. Speculation that the
Reserve Bank of New Zealand will raise its benchmark rate sometime
after June is also providing some support. Traders seem to have
shrugged off the recent International Monetary Fund Report calling the
NZD USD overpriced. Support is also coming from a government report
which said the New Zealand budget cash deficit was narrower than its
forecast.

Auto sales in China continued their ascent in March, rising 56% from
a year earlier to a new monthly record of 1.74 million vehicles, data
from a semiofficial industry group showed Friday.
The previous
record was in January, when sales more than doubled to 1.66 million
vehicles—showing government incentives aimed at boosting demand remain
effective more than a year after they were initially introduced.

From Robert Selna at the San Francisco Chronicle: Office vacancy rate rises in San Francisco The 13 million square feet of available space in the first quarter of 2010 translates to a 17.7 percent office vacancy rate, up from 14.7 percent a year ago and nearly one percentage point from the previous quarter ending in December, according to data released Friday by the real estate firm Jones Lang LaSalle.
...Boston's commercial district has a vacancy rate of 18.4 percent and Chicago's is 16.3 percent, according to Jones Lang LaSalle.

This week the Unofficial Problem Bank List stands at 682 institutions with assets of $364 billion compared with 683 institutions with assets of $361 billion last week.

Virtually all U.S. silver production is going toward the manufacturing of Silver Eagles. - Casey's Gold & Resource Report

Patrick Chovanec: "China’s exports are up just over 20% from last year, but that’s just barely back to the level they were at before the global financial crisis struck. With Chinese exporters already struggling, China’s leaders have been reluctant to hit them with a “double whammy” in the form of a less competitive currency. If exports continue their recovery, though, that will give the Chinese a lot more comfort in moving towards a more flexible exchange rate."

From Leucadia's 2009 Letter: "Out of prudence we take a pessimistic view as to when this recession will end. To think otherwise would be a gamble that we are unwilling to make."

Stiglitz said an International Monetary Fund rescue of Greece would be a "sad" chapter in the history of the European Union.

James Rickards: "Real debt cannot be repaid through any feasible combination of growth and taxes. We will soon arrive at the point where it cannot be rolled over. Debt includes contingent liabilities as well as bonds. In the U.S., this means social security, healthcare and housing obligations estimated at over $60 trillion. That does not include unfunded pension obligations of the states whose plans use fanciful 8% growth assumptions to limit contributions. Pension debt grows exponentially; a toxic brew of increased benefits, contribution shortfalls and anemic performance.
Even what we call money is debt. Paper money is a contract between citizen and government. As with any contract, it pays to read the fine print. Embossed on each U.S. bill is the phrase “Federal Reserve Note.” Give the Fed credit for full disclosure; these notes are liabilities. If the Fed’s mortgage assets were marked-to-market the Fed itself would be insolvent. In short, it’s all debt....The global financial system is a rope of sand....You cannot tax your way to solvency in a world of low growth and compound interest. "

Risk

4/9/10 Risk

The Pragmatic Capitalist: "UBS called the bottom of the recent downturn tothe exact day on February 9th (see here).
They’ve been bullish since then, but are now warning of extreme risks
in the market. According to their Risk Appetite Indicator, risks are
surging as the market advances and investors turn increasingly complacent:
“Our Risk Appetite Indicator edged
higher last week, moving up to 1.21 from 1.15. After briefly dipping
into negative territory in early February, the indicator has risen 5
out of the last 6 weeks (with one week unchanged) and is nearing the
+1.30 level, which we define as extreme risk seeking territory. Last
week, each component ticked marginally higher as the MSCI AC World
index was up 1.9%.”

Major banks masked their risk levels in the past five quarters by
temporarily lowering their debt just before reporting it to the public,
according to data from the New York Fed.

Canada's job market improved in
March less than expected, with the economy adding 18,000 jobs, the
government said Friday. That's fewer than what some economists
anticipated, according to RBS Capital Markets. The gains were the
smallest this year, "suggesting some moderation in economic growth from
the robust pace projected in January," said Action Economics.

Apple launched a war with Google over mobile advertising revenues on Thursday as it announced its own iAd network for the iPhone.

Jeff Rubin, a former CIBC chief economist and author of a book on oil
and globalisation, says: “Triple-digit oil prices are going to threaten
a world recovery.”

Roubini: "Cities, townships and local authorities are subject to
court-adjudicated debt workouts under Chapter 9 of the U.S. Bankruptcy
Code. States are sovereign under the 10th Amendment to the
Constitution, putting them above bankruptcy. Even so, the
constitutional balanced budget amendments in 49 of the 50 states are
honored."

Bill Bonner: "Nearly 7,000 people go bankrupt every day – a record number. And in
March, M3, the broadest measure of the money supply, recorded its
biggest drop ever.
And get this. Peak to trough, December ’07 to February ’10, 8.3
million jobs were lost. As we reported yesterday, take away the
statistical tricks and the number of people with real jobs actually
fell last month – despite reports of an additional 163,000 new jobs in
March."

Wal-Mart Stores Inc. is cutting prices on thousands of products in an aggressive
campaign to reinforce its reputation as a discount leader, as the
company seeks to reverse months of slowing U.S. sales.

EconomicDisconnect: "Many consumers are spending their mortgage payments! It’s beginning to
make sense in the most disturbing way. As homeowners face staggering
payments on houses that have negative equity, a large number are simply
deciding not to pay their mortgage bill, resigned to the fact that
eventually they will lose their house."

The west coast manager of real estate owned, Senior Vice
President Ken Gaitan, stated that Bank of America, which currently
forecloses on 7,500 homes a month nationally, will increase that number
to 45,000 homes per month by December of 2010.
After his surprising statement, two questioners from the audience asked questions to verify the numbers.
Bank of America is projecting a 600% increase in its already large number of monthly foreclosures.

There were 158,141 U.S. bankruptcy petitions filed last month — a
35% increase over February's figure, according to data compiled by
Automated Access to Court Records (AACER). This was a 19% increase over
the number in October 2009, the last record-high month. In the first quarter of 2010, the rate of personal bankruptcy
filings in a dozen states increased by double-digit percentages over
2009's monthly averages. "What is surprising is that there are still
hefty increases in states like Arizona, California and Florida," says
AACER president Mike Bickford, referring to the fact that it might seem
that the worst would be over in states hard-hit by the housing bubble.
"Intuitively, you would think there might be some leveling off in these
states, but that is not the case.


In really bad times, people who are evicted from their
houses will not rent.

Instead, they will move in with friends or family
for some time.

As the Wall Street Journal explained last October:
Driving the change [i.e. large numbers of rental
>vacancies and lower rents] is the troubled employment market, which is
>closely tied to rentals. With unemployment at 9.8% — a 26-year high —
>more would-be renters are doubling up or moving in with family and
>friends during periods of job loss. Landlords have been particularly
>battered because unemployment has been higher among workers under 35
>years old, who are more likely to rent. Nationally, effective rents
>have fallen by 2.7% over the past year, to around $972.
As Zack’s Investment Research writes:
A smaller percentage of Americans owned their own homes
in the 4th quarter of 2009 than at any time since 2000. In the 4th
quarter 67.2% of Americans owned their own home, down from 67.6% in the
third quarter and two full percentage points below the peak set in the
fourth quarter of 2004.

The Chinese Ministry of Finance was unable to sell all of its planned
issuance of 91- and 273- day bills. The bond failures were attributed
to increasing concerns of monetary tightening which, of course, would
impact short-term rates and make investors skittish about locking up
capital. If China has difficulty selling bills, what's the outlook for the U.S.?

Casey's General Stores (CASY +22.1%) soars as Canadian convenience store operator Couche-Tard launches a hostile offer to buy the company for $36 a share, a 14% premium over Thursday's closing price.

Houses with loans of $5 million or more will likely see a sharp rise in foreclosures this year, according to a RealtyTrac study for The Wall Street Journal.

Sovereign Debt Crisis at 'Boiling Point', Warns Bank for International Settlements.

Total wholesale inventories increased 0.6 percent, the Commerce
Department said, from an upwardly revised 0.1 percent gain in January.
Wholesale inventories in January were previously reported to have
slipped 0.1 percent.

Euro zone officials agreed on Friday on the terms of a possible
financial rescue for Greece as a credit ratings agency downgraded
Athens' debt by two notches citing a worsening economy and rising
borrowing costs.
Deputy finance ministers and central bankers of
the 16 countries sharing the European single currency decided that any
emergency loans would be made on terms almost identical to standard IMF
bailouts if Greece needed them, an EU source said.

Gold futures settled at a fresh four-month high Friday as prices
overcame a wobbly start to rally on rekindled concerns about the global
economic recovery. Gold for June delivery, the most active contract,
added $9, or 0.8%, to end at $1,161.90 an ounce on Comex, the highest
for a most-active contract since early December. A Fitch Ratings
downgrade of Greece's credit ratings gave markets a decisive upward
push.

Iran's president unveiled a new generation of centrifuges used to
enrich uranium Friday, defying international warnings against
continuing its sensitive nuclear work.

Fitch Ratings cut oil refining company Sunoco Inc's senior
unsecured debt rating to the lowest rung of investment grade on Friday,
partly reflecting declining demand for gasoline, the agency said.


Regulators on Friday closed Beach First National Bank of Myrtle Beach, S.C.,
bringing the total number of failed banks so far this year to 42. Beach
First National had about $585.1 million in assets and $516 million in
deposits as of Dec. 31. Bank of North Carolina in Thomasville, N.C.
will assume all of its deposits and assets.

The Dow industrials added 70.28
points, or 0.6%, to end at 10,997.35, up 0.6% for the week. The
blue-chip index had traveled above the 11,000 milestone just minutes
ahead of the market's close. The S&P 500 Index
rose 7.93 points, or 0.7%, to 1,194.37, a weekly rise of 1.4%, while
the Nadaq Composite Index gained 17.24 points, or 0.7%, to 2,454.05, up
2.1% from the prior week's close.

Unemployment

4/8/10 Unemployment

The number of people applying
for unemployment benefits rose 18,000 to a seasonally adjusted 460,000
in the week ended April 3, the Labor Department reported Thursday.
Economists surveyed by MarketWatch had expected a result of 442,000.
The four-week average of initial claims -- a better gauge of employment
trends than the volatile weekly number - rose 2,250 to 450,250. For the
week ended March 27, continuing claims fell 131,000 to 4.55 million.
The four-week average of these ongoing claims declined 36,000 to 4.65
million, the lowest level since January 2009. In the week ended March
20, about 5.8 million jobless workers, not seasonally adjusted, were
receiving extended federal benefits, down 223,000 from the prior week.
Altogether, 11.1 million people were collecting some type of
unemployment benefits in the week ended March 20, down about 373,000
from the prior week. A Labor Department official said interpretation of
the data around this time period is clouded by events such as Easter
that make it difficult to properly adjust for seasonal factors.

George Ure: " Tax Freedom Day will arrive on April 9 this year, the 99th day of 2010, according to the Tax Foundation's annual calculation using the latest government data on income and taxes. Americans will work well over three months of the year—from January 1 to April 9—before they have earned enough money to pay this year's tax obligations at the federal, state and local levels. This year's Tax Freedom Day is one day later than in 2009, but more than two weeks earlier than in 2007. The shift toward a lower tax burden since 2007 has been driven by three factors: (1) The recession has reduced tax collections even faster than it has reduced income; (2) President Obama and the Congress have enacted large but temporary income tax cuts for 2009 and 2010, just as President Bush did in 2008; and (3) Two significant taxes were repealed for 2010 as part of previous legislation, the estate tax and the so-called PEP and Pease provisions of
the income tax. Despite all these tax reductions, Americans will pay more taxes in 2010 than they will spend on food, clothing and shelter combined." 27% of your work year goes to government.

U.S. natural gas storage is expected to increase by 29 to 33 billion
cubic feet in the week ended April 2, analysts polled by Platts said.
The Energy Information Administration releases its report on natural
gas storage Thursday at 10:30 a.m. Eastern. Natural gas's most active
contract has gained 3.9% so far this month, following a 31% decline in
the first quarter of the year. Natural gas for May delivery, the most
traded contract, was down 8 cents, or 1.9%, to settle at $4.02 per
million British thermal units Wednesday.

Natural gas storage increases by 33 bln cubic feet. Increase in nat gas storage within expectations. Natural gas holds on to losses, at $3.90/mln Btus.

Baker Hughes reported that the international rig count for March
2010 was 1,074, up 6 from the 1,068 counted in February 2010, and up 62
from the 1,012 counted in March 2009. The international offshore rig
count for March 2010 was 295, down 6 from the 301 counted in February
2010 and up 14 from the 281 counted in March 2009.
The U.S. rig count for March 2010 was 1,419, up 69 from the 1,350
counted in February 2010 and up 314 from the 1,105 counted in March
2009. The Canadian rig count for March 2010 was 386, down 178 from the
564 counted in February 2010 and up 190 from the 196 counted in March
2009.
The worldwide rig count for March 2010 was 2,879, down 103 from the
2,982 counted in February 2010 and up 566 from the 2,313 counted in
March 2009.

Contrarian: "Higher prices of milk, fruits and pulses pushed food inflation to
17.70 per cent for the week ended March 27, fueling expectations that
Reserve Bank of India may further tighten rates in its annual monetary
policy on April 20.
Food inflation in the previous week stood at 16.35 per cent. With
prices of essential items rising and fears of food inflation spreading
to manufactured goods, the overall inflation for March, data for which
is expected next week, is likely to cross the double digit mark."

Wealth, Income, and Power by Professor G. William Domhoff at the University of California at Santa Cruz: "In
the United States, wealth is highly concentrated in a relatively few
hands. As of 2007, the top 1% of households (the upper class) owned
34.6% of all privately held wealth, and the next 19% (the managerial,
professional, and small business stratum) had 50.5%, which means that
just 20% of the people owned a remarkable 85%, leaving only 15% of the
wealth for the bottom 80% (wage and salary workers). In terms of
financial wealth (total net worth minus the value of one's home), the
top 1% of households had an even greater share: 42.7%."

Mish: "If the top 20% have 84% of the wealth (and recall that 10%
have 85% to 90% of the stocks, bonds, trust funds, and business
equity), that means that the United States is a power pyramid. It's
tough for the bottom 80% -- maybe even the bottom 90% -- to get
organized and exercise much power."

Russell Napier: “For 120 years, the US borrowed money to kill people [in wars]. Now, it’s borrowing money to keep them alive."

ZeroHedge: "Panic in Greece as total freefall envelops both the bond and the stock
market. The 10 Year is now at an absolute record 447 bps spread to
bunds, or in the mid 7's in absolute terms. The stock market has
tumbled by about 5% and Greek CDS have surged to a record."

Early Easter boosts March retail sales (Reuters) as consumer buy trinkets with money saved from not paying mortgage or credit cards.

The 30-year fixed-rate mortgage
average rose to 5.21% with an average 0.6 point for the week ending
April 8, the highest since August 2009.

A team led by Yuri Oganessian of the Joint Institute for Nuclear
Research in Dubna, Russia, reports smashing together calcium-48 — an
isotope with 20 protons and 28 neutrons — and berkelium-249, which has
97 protons and 152 neutrons. The collisions spit out either three or
four neutrons, creating two different isotopes of an element with 117
protons.

Costco Wholesale Corp. said Thursday that
sales at stores open at least a year rose 10 percent in March, buoyed
by strong growth overseas.
The
warehouse club operator said its international sales at store open at
least a year grew 28 percent, with U.S. results up 5 percent.
Removing
higher gasoline prices and a weaker dollar, sales at stores open at
least a year increased 3 percent in March with overseas up 7 percent
and U.S. results up 2 percent.

The Dow Jones Industrial Average gained 29.55 points to 10,927.07. The S&P 500 Index added 3.99 points to 1,186.44. The Nasdaq Composite Index rose 5.65 points to 2,436.81.

Consumers

4/7/10 Consumers

Consumer borrowing fell again in February, reflecting weakness in credit cards and auto loans. Analysts said the sharp reduction showed that the weak economy is still making consumers hesitant to take on more debt.

The Federal Reserve said Wednesday that borrowing declined by $11.5 billion in February, surprisingly weaker than the small $500 million gain that economists had expected. The February decline was the 12th decrease in the past 13 months as consumers slash borrowing in the face of a deep economic recession and high unemployment.

Analysts said consumer borrowing is being held back by lingering fears about job security with unemployment still near 10 percent and a move by banks to tighten credit standards following the severe financial crisis of the past two years.

Christopher Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York, said the job worries were a bigger factor holding back borrowing than the tighter lending standards.

Japan Airlines Corp. plans to slash its personnel by 16,500, or roughly one-third of its existing workforce, during the current fiscal year, according to a report Wednesday.

Toyota Motor Corp.plans to keep its sales-incentive program in the U.S. going through
this month and next in the wake of major safety recalls, according to a
report Wednesday.

A 7.8-magnitude earthquake
struck Northern Sumatra, Indonesia, early Wednesday morning, according
to the U.S. Geological Survey. The earthquake struck 325 miles west of
Kuala Lumpur, Malaysia, according to the USGS, and 880 miles northwest
of the Indonesian capital Jakarta. In addition, the National Oceanic
and Atmospheric Administration reported that a local tsunami watch is
in effect for the region.

The Federal Reserve is considering allowing maturing Treasury bonds
to roll off its portfolio as an alternative way to drain reserves from
the banking system, according to minutes from its March meeting.
The
move would mark a shift from the current policy of reinvesting the
proceeds from government debt into new Treasury bonds as the old ones
come due.

CKE Restaurants Inc
rose 8% to $11.99 in pre market trades on Wednesday after the company
said it received an alternative takeover proposal to acquire all the
outstanding shares of the company. The company did not name the new
buyer or the price. The offer came after CKE shareholder Porter Orlin,
a New York-based investment manager, said it was dissatisfied with a
going-private offer of $11.05 a share from private equity firm Thomas
Lee Partners LP. Under CKE's merger agreement with Thomas H. Lee, it
has until 12:01 p.m. on April 27 to conclude discussions with the new
buyer. CKE Restaurants manages a total of 3,141 franchised, licensed or
company-operated restaurants in 42 states and in 16 countries,
including 1,224 Carl's Jr. restaurants and 1,905 Hardee's restaurants.

Vacancy rates at US shopping centers and malls rose to the highest
levels in at least 10 years in the first quarter, accompanied by a drop
in rents that wiped out years of growth. Is there an end in sight?

Time is running out for home buyers seeking tax credits of up to
$8,000, with purchase contracts needing to be signed by the end of this
month and loans closed by the end of June.

Tens of thousands of loans have been hitting the "notice of trustee sale" bin, and that means they are coming to foreclosure.
The
actual foreclosure numbers have been down recently because of all the
modification efforts, but as we see more loans not qualifying for
modifications and more loans defaulting on modifications, the
foreclosure numbers rise.


M1 for February 2010 is estimated at 1.7103 trillion versus the February 2009 M1 of 1.5621 trillion which means that the M1 inflation rate is 9.487%. The unadjusted 12-month inflation rate for goods and services gobbled up by consumers is a weak 2.1%.

Dams have dried up in southwest China, Thai fishermen have almost
completely stopped their fishery activities on the Mekong River, and
nearly half of northern Vietnam's farmland is under threat because of a
regional drought.
The region is facing water shortages and low
water levels along the Mekong River -- particularly the tributaries
that feed into it -- after a shorter-than-usual monsoon season last
year and light rainfall in the dry season, affecting millions of
people, livestock and hectares of land, and generating losses in the
millions of dollars, officials from various countries and the United
Nations say.
"This is a regional drought. It's not just
restricted to one area. We expect it to go on now for maybe another two
to three weeks before the rainy season starts, and then the water
levels on the river will hopefully start to rise," said Jeremy Bird,
chief executive officer of the Mekong River Commission, which was
formed in 1995 by Thailand, Vietnam, Laos and Cambodia to oversee
sustainable development along the waterway.

Moody’s Investors Service lowered Los Angeles’ bond rating effective Wednesday -- and warned that the city risks further downgrades.Moody’s cut L.A.’s general-obligation bond debt rating to Aa3 from Aa2.


Apple's iPad tablet computer costs as little as $259.60 to build, according to analysis by the research firm iSuppli.

Los Angeles Mayor Antonio Villaraigosa called for shutting down
“nonessential” city services two days a week, after Controller Wendy
Greuel said the municipality’s cash may run out next month.

China is considering allowing the yuan
to trade against the Russian ruble, South Korean won and Malaysian
ringgit to promote its use in cross-border trade, an official at
the China Foreign Exchange Trade System said. The People’s Bank of
China is investigating the possibility of offering new foreign-exchange
pairs, said an official at the Shanghai-based interbank exchange, a
subsidiary of the central bank.

The price of copper passed $8,000 a ton for the first time in 20 months yesterday.

ZeroHedge: "As Social Security taxes increased over time, so did the benefits.
Essentially, previous generations paid into the system when taxes were
low and retired when the benefits were high. A retiree’s maximum tax
loss from Social Security in 1940 was $923 in today’s dollars. Compare
this to the current maximum of $13,243."

The euro hit a fresh one-week low against the dollar on Wednesday as
concerns over Greece's fiscal problems escalated, while the Australian
dollar stayed buoyed on expectations of higher interest rates.

Thailand's prime minister
declared a state of emergency in the capital city of Bangkok and some
surrounding areas after protesters broke into a parliamentary compound,
escalating a weeks-long protest over claims that the country's current
leadership is illegitimate, according to report by Agency
France-Presse. Prime Minister Abhisit Vejjajiva announced the emergency
measures during a nationally-televised press conference after
supporters of the ousted premier Thaksin Shinawatra stormed the
parliament building.

The Midwest Manufacturing Index fell 0.8% to
82.6, paring back a 2% gain in January. Compared to a year ago, the
index was -0.5% in the midwest, and +2% nationwide.

Nearly two-thirds of Americans think the time is right to buy a house, and that prices will be the same or higher over the
coming year, according to a Fannie Mae survey. The 64% of respondents
that said it's a good time to buy is just shy of the 66% that said the
same thing in 2003, as the housing market took flight.

Eurozone growth came to an unexpected halt in Q4 on weak consumer and investment spending. Eurostat had previously pegged Q4 growth at 0.1%, but in its final estimate said output was unchanged from Q3, while output in seven of 16 member nations actually fell.

The Energy Information
Administration reported Wednesday an increase in crude-oil stockpiles
by 2 million barrels in the week ending April 2, while analysts polled
by Platts expected an increase of 1.5 million barrels.


Yields on the current 10-year notes declined 6 basis points to 3.89%. The
euro fell to $1.3368 from $1.3398 in late New York trading on Tuesday.
The dollar index rose to 81.465, from 81.379 Tuesday.

The Treasury Department sold
$21 billion in 10-year notes on Wednesday at a yield of 3.900%, the
highest level since last June. Bidders offered to buy 3.72 times the
amount of debt sold, the highest ever, according to RBS, and above the
average of 3.02 times at the last four comparable sales. Indirect
bidders, a group of investors that includes foreign central banks,
bought 43.1%, versus 36.6% of the last four on average. Direct bidders,
which include domestic money managers, purchased another 16.3%,
compared to an average of 12.2% recently.

Young adults in the United States are being squeezed out of the
labor force as older workers either delay retirement or seek jobs to
rebuild nest eggs destroyed by the recession, a study showed on
Wednesday.
The size of the labor force fell 6.3 percent for young
workers, but increased 8.5 percent for workers 55 years and older
between December 2007 and January 2010, according to the study by the
Washington-based Economic Policy Institute (EPI).

Fed's Hoenig: 1% fed funds rate could happen soon.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified
for enough credits, deductions and exemptions to eliminate their
liability. That's according to projections by the Tax Policy Center, a Washington research organization.

The Dow Jones industrials finished down 72 points to 10,898 after dropping as many as 124 points by 3:15 p.m. ET. The decline was the Dow's biggest since Feb. 23, when the index fell 101 points.
The Standard & Poor's 500 Index was off 7 points to 1,182, and the Nasdaq Composite Index was off 6 points to 2,431.

The Yuan

4/6/10 The Yuan

The United States on Monday reiterated its call for China's currency to
be market-based, as lawmakers warned they would act if there was no
movement from China on revaluing the yuan.

Australia's central bank raised its key cash rate by 25 basis points to
a 14-month high of 4.25 percent on Tuesday and flagged further moves
ahead as the resource-rich nation rides a tide of Asian demand.

George Ure: "A 5:30 AM check of the USGS Earthquake Site (here) showed that as of this morning there had been 140 quakes listed...just so far today and yesterday had an amazing547 quakes listed, the vast majority guess where?"

About 39.4 million Americans, the most ever, received food stamps in January, the government said.

U.S. Feb. job openings decline to 2.72 million.

Treasury Secretary Timothy Geithner said he was confident that China
would see that it is in its own interest to make its currency more
flexible, and said global economic recovery "looks quite strong now."
Geithner, in an interview on Tuesday with India's NDTV, said it was "China's choice" whether or not it revalues the yuan.
"As
I said before and I'll say it again, but I want to make sure I am
repeating myself, I am confident that China will decide it's in their
interest to resume the move to a more flexible exchange rate, that they
began some years ago and suspended in the midst of the crisis," he said
in India's capital.

CA Inc. plans to cut roughly 1,000 positions as part of a cost-cutting
program, the software company said in a regulatory filing with the
Securities and Exchange Commission.


A Stanford University study commissioned by Gov. Arnold
Schwarzenegger says California's public pension funds are underfunded
by as much as $500 billion.

The
estimated shortfall applies to the retirement systems for California
state and local government workers, teachers and University of
California employees.

The most profitable supertanker
market in more than a year is heading for a 35 percent slump as
oil refineries from Japan to the U.K. shut for maintenance and
leave a surplus of vessels.
Shipping costs will fall to an average of $28,758 a day
this quarter from $44,576 on April 1, according to the median
estimate in a Bloomberg survey of 13 analysts, traders and
shipbrokers. Rates to hire the ships, each bigger than the
Chrysler Building, averaged $49,908 a day in the first quarter,
the most since the last three months of 2008.


China says firmer yuan not key to U.S. trade imbalance.

The Dow Jones Industrial Average fell 3.56 points to 10,969.99. The S&P 500 index rose 2.0 points, or 0.2%, to 1,189.44. The financials sector led the gains on the broad index, rising 1%. The technology-heavy Nasdaq Composite rose 7.28 points, or 0.3%, to 2,436.81.

10-year Treasury Bond

4/5/10 10-year Treasury Bond

John Mauldin: " So, either we have a slow-growth economy for 5-6 years, or we hit the wall all at once. Think depression if it's the latter. Either way, it's a tough investment environment."

Mike Burk: "Most of the breadth indicators deteriorated last week and the secondaries underperformed the blue chips.
I expect the major averages to be lower on Friday April 9 than they were on Thursday April 1.
Last weeks negative forecast was a miss."

The U.S. office vacancy rate rose to 17.2 percent, a level unseen since
1994, as the market lost about 11.6 million net square feet of occupied
space during the first quarter, according to the report released on
Monday. The U.S. vacancy rate inched up 0.2 percentage points from a
quarter earlier and was 2 percent higher than a year ago.

Rob Hanna: "Unscheduled Fed meetings have been typically been surprises where the
announcement came out of the blue - and the time of day was not
consistent. Monday is the first unscheduled Fed meeting that I can
recall that has been announced beforehand. While behavior may fall in
line with other scheduled Fed meetings, I believe it would be dangerous
to make any assumptions in this unique case.
Traders should be aware that news will likely hit in the afternoon that may affect the market."

There will be a review and determination by the Board of Governors of the advance and discount rates to be charged by Federal Reserve Banks.

John Hussman: "The first crucial observation is that high risk
market conditions like we observe at present come with an "unpleasant
skew." If you look at overvalued, overbought, overbullish, hostile
yield conditions of the past, you'll find that the most likely market
outcome, in terms of raw probability, is a continued tendency for the
market to achieve successive but slight marginal new highs. While this
movement tends to be fairly muted in terms of overall progress, it can
be somewhat excruciating for investors in a defensive position, because
the market tends to pull back by a only a few percent, followed by
bursts that recover that lost ground and achieve minor but widely
celebrated new highs. That is the "unpleasant" part.
The
"skew" part is that although the raw probability tends to favor slight
successive new highs, the remaining probability tends to feature nearly
vertical drops, typically well over 10% over a period of weeks.
Frankly, I thought we had begun that process in the decline from the
January highs, but much like we observed in early 2007, that initial
decline was quickly recovered and followed by a restoration of
overvalued, overbought, overbullish, hostile yield conditions.
Eventually, of course, the outcome for investors was very bad, but that
in no way rescued us from discomfort as the market approached its final
peak in 2007. I suspect something similar is at work at present, but we
will take our evidence as it comes.
Here
and now, it does not matter which "data set" we live in - whether we
are presently in a temporary lull prior to a second wave of credit
difficulties, or whether we are in a typical post-war recovery, the
present set of conditions would hold us to a defensive investment
stance."

The Energy Department is preparing to make sweeping revisions to
its U.S. natural-gas production data after finding it has been
overstating output, raising new questions about the government's
collection of energy information.
The monthly gas-production
data, known as the 914 report, is used by the industry and analysts as
guide for everything from making capital investments to predicting
future natural-gas prices and stock recommendations.
But the
Energy Information Administration, the statistical unit of the Energy
Department, has uncovered a fundamental problem in the way it collects
the data from producers across the country—it surveys only large
producers and extrapolates its findings across the industry. That means it
doesn’t reflect swings in production from hundreds of smaller
producers.
The EIA plans to change its methodology this month,
resulting in “significant” downward revisions in some areas, according
to Gary Long, the acting director of the 914 form, who led the review.

CEOs have increased spending about 9% on the personal use of
corporate jets over the last year, says a study by the Corporate
Library.

A close look at how much Iranian money has been frozen to date in the
U.S. under existing sanctions shows that the total amount is
surprisingly small.


Economists Carmen Reinhart of the University of Maryland and Kenneth
Rogoff of Harvard University have recently shown that a 90 percent
debt-to-GDP ratio usually touches off a crisis.
This year, the debt will reach 63 percent of GDP, a ratio that has
ignited crises in smaller wealthy nations. Fiscal crises gripped
Canada, Denmark, Sweden, Finland and Ireland when their debts were
below where the United States is shortly headed.
Japan's debt is much higher, but most of it is held domestically,
and Japan's economy has been weak for 20 years. "I really don't think
we want to be like Japan," said UC Berkeley economist Alan Auerbach.

Apple Inc., trying to revive demand
for tablet-style computers with its iPad, said it sold more than
300,000 of the devices on the first day of their debut weekend.
The number includes preorders, sales at Apple stores and
deliveries to channel partners, the company said in a statement
today. Users downloaded more than 1 million iPad applications
from Apple’s site and bought more than 250,000 electronic books
from its online store during the first day.

USGS reports at 3:40 PM Pacific on Sunday, April
4, 2010, 30 miles southeast of Mexicali, Mexico, a 7.2 quake hit about
6 miles down. Mexicali's population is nearly a million. Reuters is
reporting that “some people were trapped in elevators, retaining walls
collapsed in some places and electricity was out in several parts of
Baja California state. ... Some buildings in Tijuana, about 135 miles
from the epicenter, were badly damaged. The quake was felt about 200
miles northwest in Los Angeles.”211 quakes worldwide on the USGS site since the Sunday 7.2 Baja event and 202 aftershocks.

Enticed by an expanded tax
credit, home buyers came back into the market in February, the National
Association of Realtors said Monday, reporting an 8.2% increase in its
pending home sales index. The index had fallen 7.8% in January and was
down 20% from the peak in October. Following February's surprise
increase, the pending home sales index is up 17.3% compared with a year
earlier. Economists were looking for a decline or a smaller increase in
the index in February, in part because of extreme weather in the
eastern half of the nation. However, the index showed sales contracts
increased about 9% in the Northeast and South, and about 22% in the
Midwest. Sales contracts declined about 5% in the West.

U.S. March ISM services index 55.4% vs 53.0 Feb.

Reggie Middleton: "Let's not mince words here. Greece is going to
effectively default on its debt, one way or another, and it is probably
going to do it relatively soon."

ZeroHedge: "At this point one has to be an immaculate idiot (read Chairman of the
Fed) not to see, that what the Fed is doing with the pursuit of the
same catastrophic monetary policy which failed the first time around,
and will fail now, is pushing us straight into the abyss, from where
America just barely managed to crawl out in 2009 via $3 trillion in
additional public debt issuance to date (a number which will likely hit
$10 trillion within the next 5 years, to result in a debt-GDP ratio of
approximately 200% when including the GSEs). It has gotten so bad that
even Fed governors are begging Bernanke to stop the madness before it
is too late: a first sign of internal mutiny. Alas, just like when
everyone ignored Michael Burry, who laughed into the face of
conventional groupthink in the mid-2000's (which by definition is
always wrong, and will be this time around as well), so will Wall
Street and its proxy, Washington D.C., ignore that which is all too
obvious until it is once again too late. Hopefully by then intelligent
and very rich life on Mars will be discovered, cause there will be no
one left to bail out not just the US, but the world."

Pickens says a typical trash truck consumes as much fuel each year as 325 automobiles.
According to the national trade group Natural Gas Vehicles for America,
natural gas-fueled automobiles emit 20 to 30 percent less greenhouse
gas than diesel and gasoline-powered vehicles, as well as fewer
particulates and other pollutants.
But CNG vehicles are more expensive - a natural-gas-fueled truck comes at a $50,000 premium over a conventional truck.
And so Pickens and Natural Gas Vehicles for America are lobbying for
legislation now in Congress that would provide federal tax credits up
to $32,000 per vehicle, an incentive to buy in.

10-year Treasury bonds yielding 4% and 30-year at 4.84%. Just the tip of the iceberg.
Thanks to Bernanke this has been a no-brainer.

Today produced a spike in the 10 year UST-Bund spreads to over 90 bps, a level unmatched since mid-2006.

The Dow Jones Industrial Average rose 46.48 points, or 0.4%, to 10,973.55. The S&P 500 Index climbed 9.34 points, or 0.8%, to 1,187.44. The Nasdaq Composite Index gained 26.95 points, or 1.1%, to 2,429.53.

LA's controller Wendy Greuel just announced that she expects LA's general fund to be "out of money" by May 10, and that LA will likely deplete all reserve funds by the end of Q2.

ZeroHedge: "The just completed 3 Month and 6 Month Bill auctions were the weakest ones conducted so far in 2010. Out of 14 auctions conducted so far across both maturities this year, the 3 Month closed at the highest rate seen since December, at 0.175%, coupled with the lowest Bid To Cover over the same period, coming in at 3 month low of 3.6.The same is true for the 6 Month: the closing high rate of 0.265% was the highest in 2010, combined with the weakest Bid To Cover YTD, at 3.63. Direct bidders once again came in to save the day."

Happy Easter

4/4/10 Happy Easter


More Americans filed for bankruptcy protection in March than during any month since the federal personal bankruptcy law was tightened in October 2005, a new report says, a result of high unemployment and the housing crash.
Federal courts reported over 158,000 bankruptcy filings in March, or
6,900 a day, a rise of 35 percent from February, according to a report
to be released on Friday by Automated Access to Court Electronic
Records, a data collection company known as Aacer. Filings were up 19
percent over March 2009. The previous record over the last five years
was 133,000 in October.
Bloomberg: “China’s central bank said new asset bubbles are emerging
in some parts of the world and some sectors and these bubbles may burst
unless ‘supported by economic fundamentals.’ The rapid increase in
asset prices has been pushed up mainly by excessively loose monetary
policies pursued by governments around the world, the People’s Bank of
China said…”

Bloomberg (Michael B. Marois and Paul Dobson): “The People’s Bank of
China said the U.S. dollar will have only a limited rebound in 2010
because of the nation’s high fiscal deficit and low interest rates.
The greenback may see a ‘technical rebound’ from last year’s declines,
though the appreciation may not be ‘too big,’ the central bank said in
its 2009 international financial markets report…”

“If you can manipulate news, a judge can manipulate the law. A smart lawyer can keep a killer out of jail, a smart
accountant can keep a thief from paying taxes, a smart reporter could
ruin your reputation- unfairly.” Mario Cuomo

China is expected to post its first monthly trade deficit in six years.

“Successful
politicians are insecure and intimidated men. They advance politically
only as they placate, appease, bribe, seduce, bamboozle or otherwise
manage to manipulate the demanding and threatening elements in their constituencies.” Walter Lippmann

China’s Premier Wen Jiabao said
one country can’t be blamed for imbalances in trade
relationships, a comment that comes amid pressure on the
Asian nation to allow its currency to appreciate.
Trade problems “can’t be blamed on one side,” visiting
Japanese Finance Minister Naoto Kan quoted Wen as saying
today.
“I didn’t tell him what to do” about China’s currency,
Kan told reporters today in Beijing after the meeting. “I
told him I expect China to make a wise judgment.”


"When it comes to controlling human beings, there is
no better instrument than lies. Because you see, humans live by
beliefs. And beliefs can be manipulated. The power to manipulate
beliefs is the only thing that counts."
Michael Ende

Gallup: Underemployment In The U.S. Rises to 20.3% in March


Robert Reich
Apr 2, 2010 12:24PM
The Fed has finally came clean. It now admits it
bailed out Bear Stearns – taking on tens of billions of dollars of the
bank’s bad loans – in order to smooth Bear Stearns’ takeover by JPMorgan Chase. The secret Fed bailout came months before Congress authorized
the government to spend up to $700 billion of taxpayer dollars bailing
out the banks, even months before Lehman Brothers collapsed. The Fed
also took on billions of dollars worth of AIG securities, also before
the official government-sanctioned bailout. The losses from those deals still total tens of billions, and
taxpayers are ultimately on the hook. But the public never knew. There
was no congressional oversight. It was all done behind closed doors. And the New York Fed – then run by Tim Geithner – was very much in the
center of the action.

Jobs

4/2/10 Jobs

The U.S. economy created 162,000
jobs in March, the largest seasonally adjusted increase in nonfarm
payrolls in three years, the Labor Department reported Friday. Nonfarm
payrolls rose for just the second time in the past 27 months, boosted
by the hiring of 48,000 temporary workers to conduct the Census.
Excluding the Census workers, payrolls rose by 114,000. The
unemployment rate was steady at 9.7%, with the labor force rising by
398,000. The report was largely in line with expectations. Economists
surveyed by MarketWatch were forecasting a 200,000 increase in nonfarm
payrolls, with about half of those coming from temporary hires at the
Census Bureau. Average Hourly Earnings of all employees NFP fell by 2 cents, or 0.1%. Average workweek was up by 0.1 hour to 34.0 hours in March. Long-term unemployed (jobless for 27 weeks+) increased by 414,000 to 6.5 million. 44.1 percent of unemployed persons were jobless for 27 weeks +. Involuntary part-time workers increased to 9.1 million in March.
January 2010 data was revised upwards 40k (from-26k to +14k); February was revised up 22k (from -36k to -14k).
The government’s broader measure of unemployment ticked up for the second month in a row, rising 0.1 percentage point to 16.9%.
The comprehensive gauge of labor underutilization, known as the “U-6″ for its data classification by the Labor Department,
accounts for people who have stopped looking for work or who can’t find
full-time jobs. Though the rate is still 0.5 percentage point below its
high of 17.4% in October, its continuing divergence from the official
number (the “U-3″ unemployment measure) indicates the job market has a
long way to go before growth in the economy translates into relief for
workers.The agency said it will take on 1.15 million temporary
workers in the first half of the year to conduct the population
count that occurs every 10 years.
For that reason, economists will be excluding workers on
public payrolls for much of the rest of the year in gauging the
state of the labor market.
US companies cut 23,000 jobs in March.

ZeroHedge: "Key data points for March: change in NFP: 162K; of these - Census +48K;
Weather ~+100K; Birth/Death +81: Net -67,000. Underemployment increased
to 16.9%. In the meantime the dollar is surging, and the 10 Year is
approaching 4.00%"

The Federal Reserve may again
increase the discount rate at its meeting on Monday, further widening
the gap to the more closely-watched fed funds rate, analysts said
Friday. The Board of Governors will meet on Monday to consider the
discount rate, now at 0.75%, to be charged by Fed banks to institutions
seeking emergency funds, the Fed said in a release. The discount window
is rarely used now, so has little impact on the economy and a sign of
normalizing financial markets, since the discount rate used to be 1%
above the fed funds rate. It is now 0.5 percentage points. When the
central bank last raised the discount rate, it said it is not an
indication of monetary policy. "With markets closed in Europe on Monday
and holiday induced light trading session in the US, the Fed is well
positioned to increase the discount rate without causing too much
collateral damage in global financial markets," said Joseph Brusuelas
of Brusuelas Analytics.

China's central bank said on Friday that it expected the dollar to
strengthen this year, but it raised the specter of worldwide asset
bubbles and inflation.
In a lengthy report on the global
financial markets, the People's Bank of China also warned that huge,
hidden bank bad loans in the West could pose a threat to the global
economy.

A report released Monday by the National Alliance to End
Homelessness projects a 33 percent increase over the next decade in
elderly people who are homeless.
That would mean that today's estimate of 44,172 homeless over age 62 would climb to 58,772.
Officials
last year counted only nine homeless people over age 65 in Sedgwick
County. But 39 people ages 55 to 64 reported being homeless, hinting at
the potential for an increase.

Fashion brand Rock & Republic files for Chapter 11 bankruptcy protection.

Closely-watched iSuppli projects iPad (AAPL) sales of 7.1M in 2010, 14.4M in 2011, and 20.1M in 2012.

Obama will host a discussion with employees at Celgard LLC, an
advanced battery technology manufacturer that was able to hire more
workers and expand its operations through an economic stimulus grant,
the White House said.
The White House said Obama will use the plant as an example of the economic progress made since he took office.

In March, the US government issued a massive amount of debt: $332.8
billion - the biggest amount ever since the all time record of $545
billion raised (most of it purchased by the Fed) during the apex of the
financial crisis in October 2008. The US Treasury had $12.717 trillion
in debt subject to limit at the end of March, compared to just $12.384
trillion in the beginning of the month.

Obama: US would go bankrupt without health changes.

Yields on 10-year notes 3.93, +0.07, +1.73%) increased 7 basis points to 3.94%, putting in a third weekly increase. Bond yields move inversely to prices and a basis point is 0.01%.

Yields on 2-year notes 1.10, +0.05, +4.98%) rose 5 basis points to 1.10%, the highest level on a closing basis since late December. Two-year yields have increased for five straight weeks.

Yields on 30-year bonds 4.80, +0.07, +1.44%) rose 7 basis points to 4.80%, the highest level since October 2007.

Natural Gas

4/1/10 Natural Gas

The
U.S. Energy Information Administration is expected to report that 14
billion cubic feet of gas were added to storage during the week ended
March 26, according to the average prediction of 24 analysts and
traders in a Dow Jones Newswires survey. The survey's median was a
build of 15 bcf, with a high of a 23 bcf build and a low of a 5 bcf
withdrawal. Last year, gas storage levels were unchanged during the
same week. On average, 27 bcf were withdrawn from storage during the
same week over the past five years.
If the storage estimate is correct, inventories as of March 26 will total 1.640 trillion cubic
feet, about 11% above the five-year average and 0.84% below last year's
level for that week.

EIA: Natural gas storage up by 12 billion cubic feet.

The number of people applying for unemployment benefits fell 6,000 in the week ended March 27 to a seasonally adjusted 439,000, the Labor Department reported Thursday.
Economists surveyed by MarketWatch had expected a result of 443,000.
The four-week average of initial claims -- a better gauge of employment
trends than the volatile weekly number - declined by 6,750 to 447,250,
the lowest level since September 2008. For the week ended March 20,
continuing claims fell 6,000 to 4.66 million. The four-week average of
these ongoing claims declined 12,500 to 4.68 million, the lowest level
since January 2009. In the week ended March 13, about 6 million jobless
workers, not seasonally adjusted, were receiving extended federal
benefits, up 264,000 from the prior week. Altogether, 11.4 million
people were collecting some type of unemployment benefits in the week
ended March 13, up about 215,000 from the prior week.


The Dow Jones Industrial Average gained 4.1% or 428.58
points during the first quarter, to 10856.63. That marked the Dow’s
fourth consecutive quarterly gain and the best first-quarter
performance since 1999. The broad Standard & Poor’s 500-stock index
rose 4.9% to 1169.43, but still 25% below its all-time high posted in
October 2007.

Pimco sees Europe's action on Greece as ineffective in fixing the
country's problems, while Britain's sovereign debt rating could be
downgraded within a year, a top executive of the world's largest bond
fund said.

China’s manufacturing expanded for a
13th month, business sentiment in Japan rose to the highest
since 2008 and factories in Britain and the euro region stepped
up output as the global economic recovery strengthened.

Social Security is facing a $28 billion shortfall this year.

Is the Japanese long bond market, with a yield of 1.4%, a disaster waiting to happen?


ZeroHedge: "RealPoint has just released its March CMBS delinquency data, according
to which delinquencies hit an all time high 6%. Not to be ignored,
according to TREPP this number is even worse, at nearly 8%, after the
single biggest monthly spike in 30 day + delinquencies."

"Our forecast of +275k for Friday's report on nonfarm payrolls is based
on this premise (an underlying increase of 50k, including non-Census
government, plus another 100k for a weather rebound and 125k for
temporary Census hires). We have not changed this estimate but will
keep it under review, as we always do, pending more information on
hiring (Conference Board and Monster), claims, and the ISM's mfg
employment index." -Jan Hatzius, Goldman Sachs

Groceries accounted for 51% of Wal-Mart's $258.2 billion in U.S. sales last year, up from 49% the year before.

Oil hit an 18-month high on Thursday, breaking up above previous
trading ranges and drawing in fresh inflows from investors at the start
of the new quarter.


Reporting from Washington and Moscow — U.S. and European officials
considering new sanctions against Iran have decided to set aside some
of the harshest of the measures as they seek broader international
agreement in United Nations Security Council negotiations, said
diplomats involved in the talks.
In particular, U.S. officials
and their allies have decided to drop any attempt to impose a ban on
the export or import of refined petroleum products, concluding that
such a measure would be rejected by Russia, China and possibly other
members of the Security Council, the diplomats said, speaking on
condition of anonymity.

The ISM manufacturing diffusion
index rose to 59.6% in March from 56.5% in February, the ISM said. It
was the highest reading since July 2004. Seventeen of 18 industries
were growing in March. The orders and production indexes rose above
61%. The employment index slipped to 55.1%. Economists surveyed by
MarketWatch were looking for the index to strengthen to 57.5%.

Bloomberg: "Prime Minister Vladimir Putin will
pay his first visit to Venezuelan President Hugo Chavez tomorrow
as Russia seeks to regain lost influence in Latin America
through energy and arms deals.
The highlight of the one-day trip to Caracas may be the
formation of a joint venture to pump oil from Venezuela’s
Orinoco Belt. Putin also plans to meet Bolivia’s Evo Morales,
who like Chavez opposes U.S. policy in the region.
Chavez, who visited Russia eight times during his decade in
power, has wooed Putin by signing more than $4 billion in arms
deals and inviting state energy companies OAO Gazprom and OAO
Rosneft to explore for oil. Venezuela was a lone supporter of
Russia during the five-day Georgian war in 2008 and hosted joint
naval war games later that year."

Xstrata Plc, the world’s largest
exporter of coal used for power, raised benchmark prices for the
fuel to an unidentified Japanese utility as much as 40 percent
as a recovery in economic growth in Asia spurs demand.
Zug, Switzerland-based Xstrata agreed to contract prices
for the next 12 months at $98 a metric ton, it said in a
statement. The figure compares with the $70-$72 a ton for the
previous year, cited in the company’s annual report.

Natural gas futures turned
higher Thursday after the U.S. Energy Information Administration
reported a lower-than-expected rise of natural gas in storage. The EIA
reported a net increase of 12 billion cubic feet for the week ended
March 26, while analysts surveyed by Platts expected a net injection of
14 to 18 billion cubic feet to natural gas storage. Prices shot up on
the news, and natural gas for May delivery rose 19 cents, or 4.5%, to
$4.07 per million British thermal units.

U.S. construction outlays fell
1.3% in February on broad-based declines across most types of projects
amid unseasonably strong winter storms in the South, East and Midwest,
the Commerce Department estimated Thursday. Total outlays were down
12.8% from a year earlier at a seasonally adjusted annual rate of
$846.2 billion. Economists surveyed by MarketWatch were expecting the
1.3% decline. Private residential outlays fell 2.1%, private
non-residential spending fell 0.4%, and public construction outlays
dropped 1.7%.

Goldman Sachs lowered its forecast for the March U.S. payrolls report to a gain of 200,000 jobs from its previous expectation of a 275,000 rise, Edward McKelvey, an economist with the firm, said Thursday.



>

ADP

3/31/10 ADP

Companies in the U.S. private
sector shed 23,000 jobs in March, according to the ADP employment
report released Wednesday. The report comes two days before the Labor
Department reports on nonfarm payroll growth for March. The decline in
ADP employment was a surprise. Economists had forecast a gain of 40,000
in March ADP. Economists are also expecting a sizable jump in nonfarm
payroll in March. The consensus forecast of Wall Street economists is
for an increase of 189,000 in nonfarm payrolls. The ADP report does not
include federal workers. Many economists expect a surge in federal
workers related to the 2010 Census. Joel Prakken, chairman of
Macroeconomic Advisers LLC that prepares the ADP report said nonfarm
payroll could still jump in March if there is a reversal of the
depressed hiring from the winter weather in February and from hiring of
census workers.

The Obama administration will propose allowing offshore oil and
natural-gas exploration and development in a large swath of the eastern
Gulf of Mexico.

Steve Forbes: "President Obama and Speaker Nancy Pelosi rammed
ObamaCare through the House by unprecedented parliamentary trickery,
bribery and deceit."

Japanese business sentiment approaches pre-crisis levels, Tankan may show.

China may curb purchases of U.S.
Treasuries this year as its first trade deficit in 17 years
leaves it with fewer dollars to invest, causing yields to climb,
according to Societe Generale SA.
The trade gap will reach $100 billion in 2010, driven by a
45 percent climb in imports as China’s demand growth outpaces
that of other major economies, said Glenn Maguire, chief Asia-
Pacific economist at Societe Generale in Hong Kong. He said
yields on benchmark 10-year U.S. notes will hit 4.5 percent by
the end of 2010, capping the biggest two-year increase since
1980-81.


Seventy-eight percent,
including 82 percent of independents, think government spending is out
of control. Eighty-one percent are fed up with the growing deficit and
73 percent with government spending. Sure, deride the poll because it
came from Fox News; ignore the clarity of American anger.


The Chicago purchasing managers
index fell to 58.8% from 62.6% in February. Economists had been
anticipating a retreat but this was a bigger decline than expected.
Forecasters surveyed by MarketWatch had expected the index to fall to
59.9%. Economists expect the March ISM manufacturing
composite to increase to 57.0 from a February reading of 56.5.



U.S. stocks are holding near recovery highs, but the potential for a pullback is extremely high, Standard & Poor's market strategists said late Wednesday. "Any gains from here will likely be given back in a hurry," S&P said. "It is way too late to chase the market."

Oil has gained 5.1% in March and 5.5% for the quarter, its fifth-straight quarterly increase. Natural gas ended Wednesday's session down 10 cents, or 2.6%, at $3.869 per million British thermal units. The most-active contract has fallen 20% this month and 31% for the quarter.

The Dow closed down 51 points to 10,857. The Nasdaq Composite Index was off 13 points at 2,398, and the S&P 500 was down 4 points to 1,169.