The Dow Jones Industrial Average ended up 43.83 points, or 0.41%, to 10,685.98. The S&P500 finished up 8.95 points, or 0.78%, to 1,159.46. The Nasdaq Composite increased 15.80 points, or 0.67%, to 2,378.01. On the NYSE, advancers outnumbered declining issues by 2.7 to 1 where consolidated volume came to 4.99 billion shares compared with 4.70 billion shares traded Monday. All sectors rose. Short-term growth rates show basic materials and financials as leading the current rally with healthcare and utilities lagging, so it’s the same as last year so far.

Since yesterday’s close, Massey buying Cumberland Resources for $960 mln. Staples bids to buy out Corporate Express Australia. Thieves grab up to $75 million in Eli Lilly drugs in Connecticut. Discover Financial posts Q1 loss, says to repay TARP. TD Ameritrade says Q2 earnings looking like Q1. Goldman loses bid to exclude pay from proxy vote. Simon may offer new deal for General Growth. Hartford to offer shares to repay Treasury; stock dips. Blockbuster raises Chapter 11 as possibility. American’s flight attendants union ask for “release” from talks. Delta to cut 840 jobs in Cincinnati consolidation. Verizon files patent action against Cablevision. The ABC News Consumer Comfort Index jumped by 6 to near the year-end high and last spring. BoJ leaves doubled the special stimulus program started in December. Japan tertiary activity index has a strong January. EUR/USD extends rally to levels above 1.3800. UK Claimant Unemployment Rate Moves Down in February. The 10-year yield is up 1 basis point at 3.66%. Gold is +7.20 to $1,129.70/oz. Crude oil is +0.48 to $82.18/brl. API oil inventories rose less than expected for the govt report but the total is similar to the govt’s expected rise.

S&P bollinger band levels are 1164, 1124, 1084. S&P 13-wk ma 1115; 39-wk ma 1051. The S&P, transports, and FedEx make nice gains. The VIX is still is hung up at the January lows for eight days, so about the only thing that didn’t break out. Seasonality suggests interest rates should be watched after this week but otherwise nothing really sticks out as a negative until April when stocks would be expected to soften up. The spring equinox this weekend? Even sunspots picked back up this week. Calls hit 2x puts again but it’s gotten more excessive before.


(6:00 AM) S&P futures (+2.10 vs Fair Value -0.04). The range is +3 to -0.5. Japan’s intraday traded in a 0.4% range trending up until after lunch when they fell 0.6% and then rose 0.8% for +0.6% from the open to close. Singapore slipped 0.3% the first hour and then rose 0.8% by after lunch before giving 0.3% back. Hong Kong traded flat the first hour and a half and then rose 1.3% before the last hour and gave 0.3% back. India traded flat the first hour, rose 0.5% in a half hour, traded in a 0.2% range for 3 hours, and gave the gain back. Germany is trading flat so far and London is struggling early but they would pick up later in the day if Asian trading is any indication. The 3-day Arms shows little change just above 1 and above the 10-day which moves back down to overbought. Long minus short Arms pulled back from overbought and remained. Short-term advance/declines are neutral and closer to oversold when compared to the moving average. 10-day volume moves lower but YOY is pausing.

US Treasury Market Review

U.S. Treasuries saw the 10-year yield finished down 5 basis points at 3.65%. Weak 4 Week Auction Anticipates Tightening; Direct Take Down Greater Than Indirect For First Time; Highest Yield Since August. Seasonality suggests interest rates could drag dollar/yen higher after this week and it would weigh on the commodities. The positive would be silver correcting.

Commodities Review

Crude Oil settled +$1.90 at $81.70/brl. OPEC meets Wednesday with no change in output targets expected. Expectations: U.S. crude inventories +1.1mb to 344.1mb in the week ended 3/12. Distillates -1.3mb; Gasoline -1.5mb. Tuesday evening, API reported: Crude oil inventories rose by 0.4mb last week to 344.0 million; distillate stocks fell by 0.8 million barrels to 151.0 million (the total would allow for a DOE build of 1.5 mmbls if the two sets of figures were to come back into full congruence”); and gasoline inventories declined 3.7 million barrels to 226.0 million.

GOLD (Apr) settled +$17.10 to $1,122.50/oz. Gold’s rally cited the dollar but could be attributed to the widened spread vs stocks, talk of a possible attack on Iran, or the latest data suggesting again that Japan and China are losing interest in financing a liquidity scheme in the US. It could even be a shakeout rally or the beginning of an early spring rally. We’ve often gotten some sort of rally in the March-May period but our two year seasonality suggests it’s still early for that. Several blogs have picked up on reports that the U.S. may be transferring “bunker-buster bombs” to a base in the Indian Ocean. Price pull inflation isn’t healthy but Bernanke won’t have to worry about deflation if they start another war.

Reuters/Jefferies CRB Futures Price Index +2.75 to 273.54. To view chart: ( Commodities mostly rallied on Tuesday but the chart looks a bit like the Argentine peso after it crashed several years ago. The CRB could roll over again as we haven’t gone anywhere for 5 months.

International Review

    * Tokyo Nikkei 225 (+125.27 / +1.17%)
    * Hong Kong Hang Seng (+361.56 / +1.72%)
    * Australia S&P/ASX 200 (+56.00 / +1.17%)

(6:00 AM)

    * UK FTSE 100 (+17.97 / +0.32%)
    * France CAC 40 (+10.25 / +0.26%)
    * Germany DAX (+28.53 / +0.48%)


USD/JPY stuck between 90.00 and 90.70/85.
GBP/USD: Back above 1.5200.
EUR/USD extends rally to levels above 1.3800.
EUR/AUD gives back all the gain from during Asian trading and more.
AUD/USD rises to 0.9205.
BOJ’s Shirakawa: latest step not aimed at forex.
Senators back bill to pressure China on currency.
China digs in heels on yuan as U.S. raises pressure.

(6:00 AM)

    * Dollar / Yen (+0.35 to 90.66)
    * Euro / Dollar (+0.0000 to 1.3766)

Looking Ahead…

Wednesday, March 17

Earnings: AXAS -0.01 ATU 0.16 GRRF 0.05 CLC 0.31 CTWS 0.16 MLHR 0.18 IHS 0.62 KONG 0.1 NKE 0.87 SMTS 0.07 STRI 0.22 TWER -0.06 EGY 0.1 WPCS 0.06
Economic Indicator: 7:00AM Weekly Mortgage Applications; 10:30AM Crude Inventories.
Economic Indicator: 8:30AM PPI for February.
Economic Indicator: UK Employment; BOJ Meeting; OPEC Meeting.

Thursday, March 18

Earnings: AZK 0.02 CMRG 0.05 FDX 0.72 GME 1.28 ICXT -0.03 PALM -0.42 ROST 1.16 SCVL 0.12 SMRT 0.17 CATO 0.22 WGO -0.09 RNIN -0.10
Economic Indicator: 8:30AM Initial Unemployment Claims; 4:30PM Money Supply.
Economic Indicator: 8:30AM CPI for February.
Economic Indicator: 8:30AM Current Account Balance for Q4.
Economic Indicator: 10:00AM Composite Indexes for February.
Economic Indicator: 10:00AM Philly Fed Idx for March.
Economic Indicator: 12:00PM Chicago Mftg/Industry for January.
Economic Indicator: 8:30AM CPI for February.

Friday, March 19

Earnings: ELP 0.52 EGO 0.09 NGSX -0.34 ULCM 0.00
Economic Indicator: 10:30AM Weekly Leading Index.
Economic Indicator: 7:00AM: Canada CPI, Germany PPI.
Note: Quadruple Witching.

Monday, March 22

Earnings: AE 0.78 ATSG 0.20 AIS -0.03 ARDM -0.02 CCL 0.14 CAAS 0.17 CTFO 0.22 ELP 0.52 CTIB 0.09 CYTR -0.04 DGLY 0.06 FSC 0.27 HALL 0.22 HAST 0.57 KBH -0.42 KHD 0.11 MG 0.05 NRGX -0.11 NEXS -0.17 PVH 0.59 RAD -0.19 RBPAA -0.30 SCHL -0.13 TXI -0.79 TIF 1.13 UTK -0.10
Economic Indicator: 8:30AM Chicago Nat Activity for February.
Note: Spring Equinox.

Tuesday, March 23

Earnings: ADBE 0.37 AIS -0.03 CIG 0.37 DRI 0.92 INHX -0.09 JBL 0.27 KBH -0.42 LIME -0.08 MRNA -0.18 PRGS 0.46 PMD 0.06 SONC 0.02 SCS 0.00 SYPR -0.12 TSPT -0.24 ULTR 0.00 UTIW 0.15 VTRO 0.01 WAG 0.71
Economic Indicator: 7:45AM Weekly retail sales.
Economic Indicator: 10:00AM Existing Home Sales for February.
Economic Indicator: 10:00AM Richmond Mtfg/Services Surveys for March.
Economic Indicator: 8:30AM Canada Composite Indexes, UK CPI, BOJ Minutes.

All Times Eastern



Commodity growth rates: Mar +9.0%, Feb +17.1%, Jan +27.1%.
ICSC-GS Weekly Store Sales Remain Within Range of Expectations for March.
Housing Starts Fall But are Slightly Better Than Expected as Permits Slip for a Second Month Since December.
Import Price Growth Rates Slips Slightly After Rebounding.
FOMC Leaves Target Range at 0% to 0.25%.

Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability.

The ABC News Consumer Comfort Index jumped by 6 points to -43. As good as the gain is, a one-week boost does not make it party time. Confidence is just a little less awful: Ninety percent of Americans still rate the economy negatively (27 points more than average), 54 percent rate their own finances negatively (10 points more than average and more than half for 43 of the last 44 weeks) and 71 percent call it a bad time to spend money.

Icelandic Blackmail Discussion With Max Keiser and Birgitta Jonsdottir, a Member of the Icelandic Parliament .

Icelandic citizens have overwhelmingly spoken. They do not care for the bailouts. They also rightfully believe the Icesave proposal was blackmail. They say global bankers out of the UK used Iceland to set up their shops and now want the people of Iceland to pay for the blowup. The bankers have moved back to London with no penalty whatsoever other than some red paint being thrown on their doorsteps every week or two. They wonder why people don’t see what’s happening in the US. They hope they inspire other countries to stand up to what they view as terrorist bankers. It seems the EU wants Iceland to join the union, so they gain Iceland’s claims to Arctic drilling rights where there are supposed to large oil reserves. (Interestingly, we only get the EU and UK view here in the US, so this Icelandic people view appears only available through the internet. Iceland only has 300,000 people and no military.)

Justice Clarence Thomas’ wife Virginia started a blog Liberty Central “Rebelion to Tyranny”.

The expanded broadband being sought in Washington sounds great but is supposed to be followed by new internet regulations. Each search will have to give an equal number of stories on controversal issues. Google is working with the White House on this.

Markets (oil price and interest rate growth rates relative to the stock market):

Long term: Neutral 2/8.
Intermediate: Neutral 2/26.
Short-term: Positive 3/12.

Relative price seasonality already shows stocks outpacing oil and interest rates beginning 3/9 and that’s only going to improve if oil shows more seasonal weakness. Long-term growth rates have caught up and this normally happens as we move into a slower growth phase for stocks. When we look at long-term relative price, interest rates don’t seem to the be problem they were in 2007-08 or even 2001-02 but that could change in April-May.

Sectors (basic materials and energy growth rates relative to the other sectors):

Long term: Neutral 9/10.
Intermediate: Neutral 11/11.
Short-term: Neutral 1/12.

Commodity sectors’ short-term growth rates show basic material relative strength being offset by some weakness among energy shares.

U.S. National Debt Clock : Real Time.