• The European DJ Stoxx 50 this morning is trading -1.21% on today's weaker than expected German and French business confidence surveys and on worries about earnings. Credit Suisse today reported a net loss of SF 2.15 billion due to SF 5.3 billion in asset write-downs, but the stock rallied by more than 3% today since the bank said it is "comfortable" with its capital position, suggesting it may not need to dilute current shareholders with a capital raise. Asia-Pacific markets today closed mixed: Japan -0.28%, Hong Kong +1.55%, China +9.29%, Taiwan -0.20%, Australia -1.16%, Singapore -0.51%, South Korea +0.09%, Bombay +0.14%. Chinese stocks soared by 9.3% today after the Chinese government cut the stamp tax on equity trading to 0.1% from 0.3%, which was a direct attempt by the government to provide support for the beleaguered Chinese stock market which was previously down by nearly 50% from its peak.

• The April German IFO business climate index fell by -2.2 points to 102.4 from 104.8 in March, which was much weaker than the expected -0.4 point decline to 104.4. The report left the IFO index at a 2-year low and indicated that German business executives see a weakening business climate. Moreover, the April French sentiment index for manufacturing executives, reported today, fell by 2 points to a 16-month low of 106 from a revised 108 in March, which was weaker than expectations for a report of 108. German and French business executives are worried about rising energy, food and materials costs, the strong euro, a hawkish ECB monetary policy, and spillover weakness from the US economy.

• Claims? Today's weekly unemployment claims report is expected to show a small +3,000 increase to 375,000, adding to last week's rise of +17,000 to 372,000. Meanwhile, weekly continuing claims are expected to show a small increase of +6,000 to 2.990 mln, adding to last week's increase of +26,000 to 2.984 mln. The initial claims series is at the upper end of the range seen in the past five years, indicating the high level of layoffs. Moreover, the continuing claims series is at a 4-year high, indicating that the number of people on the unemployment rolls is piling up. The market continues to watch for further labor market weakness, which would likely lead to a further decline in consumer confidence and spending. The market is consensus is that next Friday's April payroll report will show a -75,000 decline (the fourth consecutive monthly decline) and that the unemployment rate will rise +0.1 point to a 3-year high of 5.2%.

• Durable goods orders? Today's March durable goods orders report is expected to show an increase of +0.1% and +0.5% ex-transportation. That would mark a small upward rebound following the sharp declines seen in February of 1.7% and 2.6% ex-transportation. The market is generally expecting continued weakness in durable goods orders as businesses downsize their production capacity to match lower demand and the widespread view that the US is already in a recession.

• New home sales? Today's March new home sales report is expected to show a decline of 1.7% to 580,000, adding to the 1.8% point decline to 590,000 seen in February. The February level of 590,000 units was a 13-year low. The series has now plunged by a total of 57.5% from the peak of 1.389 mln units posted in July 2005. While spring has arrived, there is little reason to expect any fundamental pickup in home sales given concern about falling home prices and a US recession, and the difficulty of obtaining a mortgage for many prospective new home buyers.

• 5-year T-note auction? The Treasury today will sell $19 bln 5-yr T-notes. The $19 billion size of today's 5-year is the highest in 5 years and is up $1 billion from the last auction in March. Today's $19 billion size is up by a hefty $6 billion from the $13 billion size of the 5-year seen all last year. Today's 5-year issue was trading at 2.50% in when-issued trading late yesterday afternoon. The 12-auction averages for the 5-year are as follows: 2.43 bid cover, $120 million in non-competitive bids, 2.47 bp tail to the median yield, 7.62 bp tail to the low yield, and 41% taken at the high yield. The 5-year is not particularly popular among foreign central banks. Indirect bidders, a category mainly comprised by foreign central banks, have taken an average of 27.3% of the last twelve 5-year auctions, which is well below the average of 33.9% across all recent Treasury coupon auctions.

• June S&Ps this morning are trading -6.20 points on revived worries about earnings after weak reports from Amazon.com and Starbucks. The US stock market yesterday closed modestly higher (Dow +0.34%, S&P 500 +0.29%, Nasdaq Composite +1.19%).

• Bullish factors for stock prices yesterday included (1) the 4.5% gain in Boeing as the world's second biggest aircraft manufacturer said Q1 profit increased 38%, more than expected, as the company increased deliveries and built a record order backlog, (2) the 46% surge in Safeco as Liberty Mutual agreed to to buy the insurer for $6.2 billion in cash, or $68.25 a share, (3) the 16% rise in Broadcom as the maker of chips for mobile phones said Q1 income advanced 14 cents a share, doubling analysts' predictions of 7 cents a share, and (4) the 4% gain in Microsoft after the CEO said he doesn't plan to raise his $44.6 billion offer for Yahoo!, setting the stage for a fight to control the board of Yahoo! that may start this weekend.

• Bearish factors for stock prices yesterday included (1) the 43% plunge in Ambac to its lowest level in 16-years after the world's second largest bond insurer reported a Q1 operating loss of $6.93 a share, much larger than the $1.82 loss expected by analysts (Ambac reported $3.1 billion in charges for subprime mortgage securities), (2) the 8.1% loss in Rockwell Automation after the world's largest maker of factory-automation products said its Q2 profit rose 33%, missing analysts' estimates, due to lower than expected operating margins, and (3) the 5.5% loss in Gannett as the largest US newspaper publisher said Q1 profit fell 8.9% as the drop in classified advertising sales deepened and television revenue declined.

• Amazon.com (AMZN) fell over 5% in after-hours trading yesterday and is down 5.7% in European trading this morning as the world's largest Internet retailer provided 2008 full-year operating income guidance of $940 million, which was less than the $985 million the company predicted earlier this year.

• Starbucks (SBUX) dropped 11% in after-hours trading yesterday and is down -9.5% this morning in European trading as the world's biggest chain of coffee shops forecast its first annual profit decline in eight years as sales at US stores slowed.

• Apple is down -0.4% in European trading this morning after the company issued Q2 EPS guidance of $1.00, which was well below the analyst consensus of $1.11. The sales guidance of $7.2 billion was in line with market expectations.

• Microsoft is down 1% in European trading this morning as cautiousness emerged ahead of its earnings report after today's close.

• Ford today reported a Q1 profit of $100 million (5 cents per share). Excluding one-time expenses, Ford reported a Q1 profit of 20 cents, which was substantially better than the market consensus of 15 cents.

• Xilinx (XLNX) fell over 6% in after-hours trading yesterday as the world's biggest maker of programmable semiconductors said Q1 revenue may fall 1% or rise as much as 3%. The midpoint of that range is $480.5 million, less than the $490.3 million estimated by analysts.

Today's U.S. Market Focus

• June 10-year T-notes this morning are trading +1 tick with supply overhang from today's 5-year T-note auction offset by this morning's weakness in S&Ps. June T-notes yesterday closed down -5.5 ticks at a 1-3/4 month low settlement. Bearish factors for T-note prices yesterday included (1) supply pressures as the Treasury is auctioning a total of $57 billion in debt this week, and (2) reduced rate-cut expectations as the market now expects only a 25 bp rate cut at next week's FOMC meeting, down from earlier expectations of a 50 bp rate cut. Bullish factors for T-note prices yesterday included (1) better than expected demand at yesterday's record $30 billion 2-year T-note auction, and (2) the jump in bond insurer debt risk after Ambac Financial, the world's second biggest bond insurer, posted a bigger quarterly loss than expected, raising fresh concerns that the world's biggest bond insurers may face crippling ratings downgrades that would cast doubt on $1.2 trillion in securities they guarantee.

• The dollar/yen is up +0.11 yen this morning and the euro/dollar is down 1.39 cents. The euro fell sharply on today's weak German and French business confidence surveys. The dollar index yesterday rallied and closed higher. Bullish factors for the dollar yesterday include (1) the comment from ECB Council member Noyer that the markets had over-interpreted his euro supportive comments Tuesday, (2) the plunge in the Canadian dollar after Feb Canadian retail sales unexpectedly declined, and (3) the comment from Luxembourg's Finance Minister Juncker that the pace of the US dollar's decline will take a toll on global economic growth. A bearish factor for the dollar yesterday was the comment from Canadian Finance Minister Flaherty that the G-7 didn't discuss the possibility of a coordinated intervention in currency markets to support the US dollar at the most recently ended G-7 meeting in Washington D.C.

• June crude oil prices this morning are trading -47 cents a barrel and June gasoline is trading -1.09 cents a gallon. June crude oil prices yesterday traded on both sides of unchanged and closed up +$0.23 a barrel at a contract high settlement and June gasoline closed +3.230 cents a gallon. May gasoline (nearest future) posted an all-time high of $3.0544 per gallon yesterday while June gasoline posted a contract high of $3.0465 per gallon. Bullish factors for crude oil prices yesterday included (1) the greater than expected drops in inventories of gasoline and distillates in yesterday's DOE inventory report (gasoline -3.18 mln bbl versus expectations of -2.05 mln bbl and distillates -1.38 mln bbl versus expectations of -50,000 bbl), and (2) the increase in US fuel demand in the past four weeks by +0.8% from a year earlier. Bearish factors for crude oil prices yesterday included (1) the larger than expected increase in crude oil inventories in yesterday's DOE inventory report (+2.42 mln bbl versus expectations of +1.5 mln bbl), (2) the greater than expected rise in the refinery capacity rate (+4.2 to 85.6% versus expectations of +0.7 to 82.1%), which promises more output of crude products in the weeks ahead, and (3) the stronger dollar

Today's U.S. Earnings Reports

Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): MSFT-Microsoft (BEST earnings consensus $0.45 per share), COP-ConocoPhillips (2.43), PEP-Pepsico (.70), OXY-Occidental Petroleum (1.96), MMM-3M (1.35), EXC-Exelon (.94), AXP-American Express (.80), MO-Altria Group (.36), AMGN-Amgen (1.05), BMY-Bristol-Myers Squibb (.41), DOW-Dow Chemical (.95), RCL-Royal Caribbean (.28), UNP-Union Pacific (1.61), TRV-Travelers Companies (1.53), RTN-Raytheon (.84), NOC-Northrop Grumman (.84), TMO-Thermo Fisher (.72), BEN-Franklin Resources (1.76), MOT-Motorola (-.06), NEM-Newmont Mining (.55), AET-Aetna (.92), DO-Diamond Offshore (2.16), CB-Chubb (1.55), ZMH-Zimmer Holdings (1.04), AEP-American Electric Power(.86), F-Ford (-.15)

Global Financial Calendar