• Global stocks are mixed with the European DJ Stoxx 50 Index down -0.32% and March S&Ps down -3.20 points. European stocks are gyrating between slight gains and losses on speculation China will slow its expansion to control inflation after Feb China consumer prices rose to a 16-month high. The dollar and Treasuries are weaker while lower commodity prices have undercut basic-resource producers with BHP Billiton down 1.4%. Also hurting European stocks is the 6.9% drop in Lagardere SCA after France's biggest publisher said full-year adjusted net income fell to 324 million euros ($442.5 million), below analysts' estimates of 374 million euros. A rally in automakers limited declines in stocks after Volkswagen gained 3.7% after it said 2-month sales across its nine brands surged 27%, while Bayerische Motoren Werke AG (BMW) rose 2.6% after it reported full-year net income of 210 million euros, higher than analysts' estimates of 167 million euros.

• The Asian markets today closed mixed with Japan up +0.96%, Hong Kong +0.09%, China -0.09%, Taiwan -0.38%, Australia -0.12%, Singapore +0.41%, South Korea -0.49%, India +0.41%. Feb China consumer prices rose +2.7% y/y and Feb China producer prices climbed +5.4% y/y, both at 16-month highs, which adds to the case for the government to pare back stimulus measures. China's banks extended 700 billion yuan ($103 billion) of new loans in Feb, while M2 money supply climbed 25.5% y/y, well above the government's target of 17% M2 growth for this year, which adds to pressure on the PBOC to tighten lending and curb asset bubbles. Japan's Q4 GDP was revised down to 0.9% q/q and 3.8% y/y from the previously reported 1.1% q/q and 4.6% y/y as companies pared spending. Japan's Nikkei stock index rallied to a 1-1/2 month high after the Nikkei newspaper reported that the Japanese government will probably upgrade its overall assessment of the economy to a "steady recovery," its first upgrade since July, as rising exports to China continue to drive growth and production.

• March S&Ps this morning are trading off by -3.20 points. The US stock market yesterday traded higher most of the day but finished well off of its high (Dow Jones +0.03%, S&P 500 +0.45%, Nasdaq Composite +0.78%). The S&P 500 rose to a 1-1/2 month high and the Nasdaq Composite rallied to a 1-1/2 year high. Bullish factors for stocks included (1) the unexpected decline in Jan wholesale inventories (-0.2% versus expectations of +0.2%), which signals companies had difficulty keeping up with demand as sales increased for the tenth straight month which brought the inventory-to-sales ratio down to 1.10 months, the lowest since records began in 1992, (2) a rally in regional bank stocks led by Zions Bancorp which said net interest margins have improved in the current quarter and write-offs of bad loans are likely to be stable or slightly better than in Q4, and (3) an easing of sovereign debt concerns after former European Commissioner Prodi said the worst of Greece's financial crisis is over and that other European nations won't follow in its path.

• Bearish factors for stocks included (1) figures from the US Labor Department that showed the unemployment rate declined in 9 states in Jan and climbed in 30 other states, which signals the thawing in the labor market is not widespread, (2) an article in the Financial Times that said US government agencies, led by the New York Fed and the Treasury, have told banks not to raise dividends or buy back shares until the economic and legislative situation becomes clearer, and (3) increased concern that China may soon raise interest rates and slow the global economy after its Feb exports surged +46% y/y and its Feb property prices rose the most in nearly 2 years.

• Devon Energy (DVN) rallied 3% in pre-market trading after BP Plc agreed to pay Devon $7 billion for its assets in Brazil, the Gulf of Mexico and Azerbaijan.

• Semtech (SMTC) rose 2.4% in pre-market trading after it reported Q4 earings of 30 cents a share, well ahead of analysts' estimates of 22 cents.

• June 10-year T-notes this morning are trading down -7 ticks. T-note prices yesterday traded weaker the entire day and settled down -6 ticks at a 2-week low of 116-280. The 10-year T-note yield rose to a 2-week high of 3.743%. Bearish factors yesterday included (1) reduced safe-haven demand for Treasuries after the S&P 500 Index rallied to a 1-1/2 month high and sovereign debt concerns eased after former European Commissioner Prodi said the worst of Greece's financial crisis is over, (2) the larger-than-expected increase in the Feb US budget deficit to a record (-$220.9 billion versus expectations of -$201.0 billion), and (3) supply pressures ahead of the Treasury's $13 billion 30-year T-bond auction on Thursday. Bullish factors included (1) strong demand for the Treasury's $21 billion 10-year T-note auction that had a record bid-to-cover ratio of 3.45, well above the 2.77 average of the last 10 auctions, and (2) comments from Treasury Secretary Geithner who said "substantial challenges remain for the economy and financial system" and that the US economy has not yet fully recovered from the worst recession since the Great Depression.

• The dollar index this morning is slightly weaker with the dollar/yen +0.19 yen and the euro/dollar -0.03 cents. The dollar index yesterday gyrated on both sides of unchanged and finished slightly lower. Bearish factors yesterday included (1) a rally in the commodity currencies of the world, including the Australian and Canadian dollars, after Chinese exports surged 46% y/y in Feb, and (2) strength in the euro after former European Commissioner Prodi said the worst of Greece's financial crisis is over and other European nations won't follow in its path. Bullish factors included (1) the cut by Bank of America-Merrill Lynch to its 3-month yen forecast to 87 per dollar by the end of June, below an earlier forecast of 86 yen, and the cut in its 3-month euro forecast to $1.32 by the end of June from an earlier prediction of $1.38, and (2) the slump in the yen to a 2-week low against the dollar on Japanese deflation concerns after the Feb Japan domestic corporate goods price index fell -1.5% y/y, its 14th consecutive year-over-year decline.

• April crude oil prices this morning are up +10 cents and Apr gasoline is -0.22 of a cent. Apr crude oil yesterday finished higher in volatile trade when it settled up +$0.60 per barrel. Apr gasoline closed up +2.48 cents per gallon. Apr crude rallied to a 2-month high and Apr gasoline soared to a 17-month high. Bullish factors included (1) the weaker dollar, (2) the unexpected fall in weekly gasoline inventories that declined by the largest amount since Oct (-2.96 million bbl versus expectations of no change), (3) the larger-than-expected drop in weekly distillate supplies which fell to a 10-month low of 149.6 million bbl (-2.22 million bbl versus expectations of -1.0 million bbl), (4) increased energy demand from China after Feb China crude imports rose +8.2% m/m and +58% y/y, and (5) the forecast from AccuWeather for an active 2010 Atlantic hurricane season that poses an "above-normal" threat to the refinery laden US Gulf coast. Bearish factors included (1) the drop in OPEC compliance with its production cuts to 53% in Feb, down from 56% in Jan, as cartel members increased production above their quotas to capture recent high prices, and (2) comments from the Kuwaiti OPEC delegate Mohammed al-Shatti who said that oil is unlikely to stay above $80 a barrel because member states of OPEC are overproducing and global crude stockpiles are high.

Earnings reports (confirmed releases, sorted by mkt cap) PLL-Pall Corp. (BEST earnings consensus ($0.47), CCO-Clear Channel Outdoor Holdings (-0.06), NSM-National Semiconductor (0.18), SFD-Smithfield Foods (0.19), JW.A-John Wiley & Sons (0.74), ARO-Aeropostale (0.95), PNY-Piedmont Natural Gas (1.11), BKE-The Buckle (0.84), ABII-Abraxis Bioscience (n/a), ULTA-Ulta Salon, Cosmetics & Fragrance (0.30), SKIL-Skillsoft Plc (0.17), BBEP-Breitburn Energy (0.28), LDK-LDK Solar (0.13).

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