• The European markets are trading lower today after Deutsche Bank said it may not meet earnings estimates this year and warned of possible further writedowns. The European DJ Stoxx 50 Index this morning is trading -0.67%. Asia and Pacific Rim markets closed mixed today with Japan -0.30%, Hong Kong +0.68%, China +0.22%, Taiwan -0.31%, Australia +1.18%, South Korea +0.32%, Bombay -0.81%.

   

• Durable goods orders – Today’s Feb durable goods orders report is expected to show a +0.7% gain overall but a –0.3% decline excluding transportation. In January, durable goods orders fell by –5.3% overall and by –1.6% excluding transportation. The US manufacturing sector already appears to be in a recession and needs new orders to prevent a further deterioration in confidence among manufacturing companies and to prevent employee layoffs.

   

• New home sales – Today’s Feb new home sales report is expected to show a -1.9% decline to 577,000 units. In January, new home sales fell by –2.8% to a 13-year low of 588,000 units. The volume of new home sales is now back down to where it was in 1994. New home sales have plunged by an overall 58% from the peak of 1.389 mln units posted in July 2005. The new homes market is in dire need of some buyers since there is a huge 9.9 month supply of unsold homes on the market, which is a 16-year high. Despite aggressive discounts and promotions by homebuilders, potential homebuyers are still generally unwilling to pull the trigger on buying a new home due to (1) fears that home prices will continue to fall, (2) the difficulty of obtaining a mortgage for many buyers, and (3) fears about a US recession.

   

• 2-year T-note auction – The Treasury today will sell $28 bln in 2-year T-notes, the most ever. The 2-year T-note was quoted at 1.80% in when-issued trading late yesterday afternoon. The 12-auction averages for the 2-year are as follows: 2.72 bid cover, $702 million in non-competitive bids, 2.48 bp tail to the median yield, 7.68 bp tail to the low yield, and 45% taken at the high yield. The 2-year is only mildly popular among foreign central banks. Indirect bidders, a category made up of mostly foreign central banks, have taken an average of 27.7% of the last twelve 2-year auctions, which is well below the average of 33.8% across all recent Treasury coupon auctions. Foreign central bank participation was particularly poor in the last two auctions with 19.3% taken at the January 2-year auction and 19.7% taken at the February 2-year auction.

• June S&Ps this morning are trading -4.20 on a cut in Citigroup earnings and on possible further writedowns by Deutsche Bank. The US stock market yesterday chopped on either side of unchanged and closed mixed (Dow -0.13%, S&P 500 +0.23%, Nasdaq Composite +0.61%). Bullish factors for stock prices yesterday included (1) the 9.9% surge in Monsanto after the company raised its full-year earnings forecast to $3.15 to $3.25 a share, from an earlier prediction of as much as $2.80, (2) the 4.4% rally in Yahoo after Citigroup upgraded it to "buy" from "hold" and increased its price estimate on the stock to $34 from $31 saying Microsoft may increase its takeover bid for the company, (3) the move higher in metal producers with the rally in metal prices yesterday as Freport McMoran moved up 4.1%, Newmont Mining rallied 3% and Titanium Metals rose 3.9%, and (4) the unexpected rise in the Richmond Fed's manufacturing index for Mar. Bearish factors for stock prices yesterday included (1) the record drop in US home prices in Jan as home prices declined for the 13th month in a row, (2) the larger than expected decline in US consumer confidence in Mar to a 5-year low, (3) the 3.5% drop in Bank of America as the 2nd biggest US bank by assets was downgraded by Merrill Lynch to "sell" from "neutral," (4) the 3% drop in Lehman Brothers, the biggest underwriter of US mortgage bonds, on top of Monday's 4.1% decline after analysts at Fox-Pitt Kelton Cochran Caronia Waller reduced the company's profit estimates, and (5) the prediction by Goldman Sachs that credit losses linked to the collapse of the US subprime-mortgage market will grow to $460 billion.

• Deutsche Bank AG, Germany's biggest bank, is trading nearly 3% lower in Europe this morning after saying the US subprime collapse and slowing economic growth will make it harder to reach its full-year profit goal and warned of further writedowns because of "deteriorating" prices on its leveraged loans and asset-backed securities.

• Citigroup (C) is trading 1.3% lower in Europe this morning after an Oppenheimer analyst said the biggest US bank by assets may lose -$1.15 a share in Q1, down sharply from an earlier prediction of -$0.28, and cut the bank's full-year earnings estimate to a loss of -$0.15 a share from a profit of +$0.75.

• Brazilian equities were downgraded to "underweight" by UBS citing "interest-rate cycle headwinds" as growth in Latin America's biggest economy has been supported by record low interest rates but the country's central bank is considering raising rates to stem the rise in inflation.

• Clear Channel Communications (CCU) plunged 22% in after-hours trading yesterday as the WSJ reported the company's planned private-equity buyout is close to falling apart.

• Jabil Circuit (JBL) dropped 13% in after-hours trading yesterday after the company said it expects to earn as much as 22 cents a share in Q3, well below analysts' predictions of 34 cents a share, after which JPMorgan downgraded the stock to "underweight" from "overweight.

Today's U.S. Market Focus

• June 10-year T-notes this morning are trading up +3 ticks on lower equity markets and on speculation today's new home sales report for Feb will drop to a new 13-year low. June T-notes yesterday moved higher and closed +10 ticks. Bullish factors for T-note prices yesterday included (1) the record drop in home prices and the 13th monthly decline in a row in the Jan S&P/CS home price index (-10.7% versus expectations of -10.5%), (2) the greater than expected decline in US consumer confidence in Mar (-11.9 to a 5-year low of 64.5 versus expectations of -1.5 to 73.5), (3) the assertion by JPMorgan that Merrill Lynch, the 3rd largest US securities firm, will report a total of $5 billion in additional losses on CDO's, Alt-A mortgages, and commercial mortgages, and (4) the prediction by Goldman Sachs that credit losses linked to the collapse of the US subprime-mortgage market will probably swell to $460 billion. Bearish factors for T-note prices yesterday included (1) unexpected gain in the Richmond Fed manufacturing index for Mar (+11 to 6 versus expectations of unch at -5), and (2) the action by the Fed in creating their own company, overseen by Blackrock Inc., in managing and selling the $30 billion in assets of Bear Stearns.

• The dollar this morning is trading lower with the dollar/yen -0.69 yen and the euro/dollar +0.86 cents. The euro rallied this morning on an unexpected rise in German business confidence and on hawkish remarks from ECB President Trichet who said the Euro-Zone economy was "sound" and that interest rates at a 6-year high will contribute to its aim of containing inflation. The dollar index yesterday moved lower, giving up all of Monday's gains and more. Bearish factors for the dollar yesterday included (1) the larger than expected fall in US home prices in Jan, (2) the greater the expected decrease in US consumer confidence in Mar to a 5-year low, and (3) trepidation before ECB President Trichet's speech before the European Parliament today. Bullish factors for the dollar yesterday included (1) the unexpected rise into positive territory for the Richmond Fed manufacturing index in Mar, and (2) the comment from the chairwoman of the European Parliament's Economic and Monetary Affairs Committee that the ECB "must be concerned about" the euro's strength.

• May crude oil prices this morning are trading +$1.28 a barrel and May gasoline is trading +1.59 cents a gallon. Crude oil prices are higher this morning on concern that fighting in southern Iraq between the Iraqi army and Shiite radicals may disrupt oil supplies and on speculation gasoline stockpiles declined in today's DOE inventory report. May crude oil prices yesterday traded sideways and closed +$0.36 a barrel while May gasoline closed +3.84 cents a gallon. Bullish factors for crude oil prices yesterday included (1) the better than expected Mar Richmond Fed manufacturing index, and (2) reports of escalting violence between Iraqi forces and Shiite radicals near one of Iraq's main oil producing regions. Bearish factors for crude oil prices yesterday included (1) concerns of a US recession as consumer confidence fell to a 5-year low in Mar and US home prices fell the most on record for the 13th month in a row in Jan, and (2) expectations for a build in crude oil stockpiles in today's DOE inventory report. Expectations for today's DOE inventory report are for a +1.8 mln bbl climb in crude oil inventories, a -1.15 mln bbl drop in gasoline stockpiles, a -1.63 mln bbl drop in distillate inventories and a +0.5 increase in the refinery capacity rate to 84.3%

Today's U.S. Earnings Reports

Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): ORCL-Oracle (BEST earnings consensus $0.30 per share), PAYX-Paychex (.39), RBN-Robbins & Myers (.43)

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Global Financial Calendar