• Global stocks are trading with fairly sharp losses this morning on AIG's loss reported late yesterday, which hurt the global financial sector. In addition, the continued rise in crude oil prices is hurting airline stocks today. Also, HSBC fell -2.4% after a downgrade by Morgan Stanley to "underweight" from "equal-weight." The European DJ Stoxx 50 is down -1.75% this morning. Asia-Pacific stocks closed substantially lower today: Japan -2.06%, Hong Kong -1.52%, China -1.17%, Taiwan -0.84%, Australia +0.85%, Singapore -0.31%, South Korea -1.43%, Bombay -2.01%.

• US Trade Deficit � Today's March US trade deficit is expected to narrow mildly to -$61.0 bln from -$62.3 bln in February. The US trade deficit over the past 1-1/2 years has been moving basically sideways between about -$56 billion and -$63 billion, well below the record of -$67.6 billion posted in August 2006. The US trade deficit has seen upward pressure from the sharp rally in petroleum prices, which has boosted the dollar value of the massive amount of US petroleum imports. However, the US trade deficit has been able to stay down because of the strength of US exports. US exports have been boosted by strong overseas economic growth and by the sharp decline in the dollar seen in recent years, which has made US exports cheaper for foreign buyers. Over the near-term, the US trade deficit is likely to see continued offsetting factors. The continued rise in oil prices should be largely offset by continued strong exports and by weaker imports tied to a possible US recession. Over the long-term, the US trade deficit will continue to suffer from the huge amount of US petroleum imports and the pathetic US savings rate, which forces the US to import capital (which is the flip side of the current account deficit).

• June S&Ps this morning are trading -8.00 points on the negative AIG news and on sharply lower overseas stocks. The US stock market yesterday closed with slight gains (Dow +0.41%, S&P 500 +0.37%, Nasdaq Composite +0.52%).

• Bullish factors for stock prices yesterday included (1) the larger than expected decline in initial weekly unemployment claims, (2) the rally in the big name oil companies as crude oil surged to almost $125 a barrel, (3) the 14% jump in DRS Technologies after the WSJ reported the US military-electronics manufacturer may be bought by Finmeccanica, Italy's biggest defense company, and (4) the 27% surge in R.H. Donnelley after the publisher said Q1 profit was 22 cents a share, beating the 17-cent a share estimate by analysts.

• Bearish factors for stock prices yesterday included (1) Merrill Lynch's downgrade of the US airline industry to "neutral" from "buy," saying higher energy costs pose a "material risk" to earnings, (2) the 23% plunge in Barr Pharmaceuticals after the generic drug maker reported Q1 profit that missed analyst estimates and lowered its full year earnings forecast, (3) the 13% fall in Hovnanian Enterprises as New Jersey's biggest homebulder plans to raise up to $191 million in a stock sale which may dilute the stake of people who already own shares, and (4) the 12% drop in Warner Music Group as the world's third-largest record company reported a bigger than expected Q2 loss as taxes increased and compact disc sales fell and as the company also suspended its quarterly dividend.

• American International Group (AIG) fell -8% in after-hours trading yesterday as the world's largest insurer by assets said they will raise $12.5 billion after posting back-to-back losses for the first time as a publicly-traded company. AIG lost $1.41 in Q1, wider than the 34 cent loss expected by analysts. AIG is down -7.3% in European trading this morning.

• Priceline.com (PCLN) rallied 13% in after-hours trading yesterday as the company said annual profit may reach as high as $5.65 a share, topping analysts estimates of $5.09 a share.

Today's U.S. Market Focus

• June 10-year T-notes this morning are trading +13 ticks on today's weakness in global stocks and on the AIG news, which revived financial sector concerns. June T-notes yesterday closed up +22 ticks. Bullish factors for T-note prices yesterday included (1) carryover strength from European debt prices after ECB President Trichet said "downside risks to growth prevail" in the Euro-Zone, (2) the strong demand seen at the Treasury's $6 billion 30-year T-bond auction, and (3) the late-day drop in the stock market. Bearish factors for T-note prices yesterday included (1) the larger than expected decline in weekly initial jobless claims (-18,000 to 365,000 versus expectations of -10,000 to 370,000), and (2) the drop in the dollar Libor rate to 2.15%, the lowest level in over 3 years, signaling central bank measures to provide additional cash to banks is rerviving lending.

• The dollar is trading moderately lower today due to the negative AIG news with the dollar/yen down -0.76 yen and the euro/dollar up +0.63 cents. The dollar index yesterday rallied to a 2-month high before fading and closing slightly lower. Bearish factors for the dollar yesterday include hawkish comments from ECB President Trichet that inflation will stay high "for a rather protracted period," and that economic growth during the first quarter in the Euro-Zone "appears" to be resilient, signaling the ECB will not be cutting interest rates anytime soon. Bullish factors for the dollar yesterday included (1) the unexpected decline in German exports in March, raising concern the rising euro is hurting German exporters, and (2) a report in the Financial Times that the US intended the Apr 11 statement from the G-7 finance ministers and central bankers to signal it doesn't want the dollar to decline further.

• June crude oil prices this morning are trading sharply higher by $1.15 a barrel and June gasoline is trading +2.00 cents a gallon. Bullish factors center on technical buying and concerns about further rebel attacks and supply disruptions in Nigeria. June crude oil prices yesterday closed higher by +$0.16 a barrel and June gasoline closed +1.960 cents a gallon. June crude oil yesterday posted yet another all-time high of $124.61 per barrel, June gasoline posted a record high of $3.1545 per gallon and June heating oil posted an all-time high of $3.5310 per gallon. Bullish factors for crude oil prices yesterday included (1) the hike by Barclays Capital in its forecast for US crude prices this year by 16% to $116.90 per barrel from an earlier prediction of $100.80 per barrel, citing stronger demand from China and the Middle East and declines in production at non-OPEC countries, and (2) the comment from OPEC President Khelil that crude oil may rise to $200 a barrel because of the continuing depreciation of the dollar. Bearish factors for crude oil prices yesterday included (1) profit taking after the over $13 a barrel run-up in prices this week, (2) the stronger dollar, and (3) the comment from the secretary general of OPEC that "there is clearly no shortage of oil in the market.

Today's U.S. Earnings Reports

Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): CCU-Clear Channel Communications (BEST earnings consensus $0.21 per share), LINTA-Liberty Media (.13), CCO-Clear Channel Outdoor Holdings (.05), DISCA-Discovery Holding (.09), WIN-Windstream (.25), HUN-Huntsman (.22), WCRX-Warner Chilcott (.29), SUG-Southern Union (.60), WR-Westar Energy (.31), CGI-Commerce Group (.71), BID-Sotheby's (.13), RAH-Ralcorp Holdings (.85), GBL-Gamco Investors (.36), AYR-Aircastle (.47), ROSE-Rosetta Resource (.40), SJI-South Jersey Industries (1.12), CCOI-Cogent Communications Group (-.17), VGR-Vector Group (.21)

Global Financial Calendar