• Banks boost markets. U.S. equities were broadly higher yesterday as writedowns at UBS (UBS) and Deutsche Bank (DB) ($19B and $3.9B respectively) seemed to create the belief the dirt is now out from under the couch. UBS said it will raise $15B and replace its chairman. The rally may have been partially driven by investors looking to reinvest money on the first day of Q2. It brought the market back to month-ago levels. UBS shares jumped almost 15%, which may have been partly fueled by takeover speculation.
• IMF subdues outlook. The IMF now expects U.S. GDP growth of only 0.5% in 2008, and European growth of 1.3% -- down from 1.5% and 1.6% respectively. World growth will be about 3.7%, down a previous estimate of 4.1% and the slowest since 2002. The IMF sees a 25% chance world growth will slip to 3% -- the criteria for a global recession -- in 2008 or 2009.
• Fed reveals details behind Bear loan. Details emerged about the Fed's $29B loan (revised from $30B) to soon-to-be-defunct Bear Stearns (BSC): The securities backing the loan are primarily "mortgage-backed securities and related hedge investments." BlackRock (BLK) is holding the securities in trust. JPMorgan lent another $1B, but the Fed gets repaid first. Any losses would be shaved from the surplus the Fed remits to the Treasury from the interest on its $800B loan and securities portfolio. Meanwhile, another Bear Stearns director sold the majority of his stake for $10.67/share.
• Bipartisan housing bill gains speed. Democratic and Republican Senators are working on legislation to help millions of homeowners avoid foreclosure. They hope to floor a bill as early as this afternoon. At a minimum, the bill is expected to include $200M for homeowner counseling programs; $10B in tax-exempt bonds for local housing authorities to refinance subprime loans; $4B for local governments to buy foreclosed properties; and a $15,000 tax credit for buyers of foreclosed homes or vacant newly built homes.
• Mortgage applications down sharply this week. Mortgage applications were down 28.7% from a week ago, but up 4.8% compared with a year ago. Refinance loans were down 38.1% W/W. 30-year fixed-rate mortgages were steady at 5.75%.
• Auto sales still soft. Auto sales were weak again in March. Here's the blow by blow (Y/Y): GM (GM) -19%; Ford (F) -14%; Toyota (TM) -10% (it was Toyota's 7th drop in 9 months); Chrysler -19%; Honda (HMC) -3.2%; Nissan (NSANY) -3.8%. Only Nissan and Honda posted monthly gains on an adjusted basis (+6.3% and +3.2%). Seasonally adjusted annual sales are now 15.1M, below the 16M considered healthy, and in line with recently-lowered analyst estimates. "I'd like to tell you the worst is behind us but I really can't give you that assurance," Ford's Jim Farley said. "The second quarter may be the most difficult of the year."
• Sprint's iPhone rival. Sprint Nextel (S) unveiled Tuesday a potential iPhone competitor. Made by Samsung, the Instinct looks similar to the iPhone, and boasts a touch-sensitive screen, virtual keyboard, web-surfing, a camera, and -- you guessed it -- visual voicemail. Sprint's network is faster than AT&T's, which is the iPhone's only carrier, but also covers a smaller area. Meanwhile, an extreme shortage of iPhones still has Apple watchers mystified.
• Fannie tightens reins. Fannie Mae (FNM) told lenders it will now (as a rule) only buy mortgages whose borrowers scored at least 580 on their credit tests (scores range from 300 to 850); it previously had no minimum. Fannie will now require five years to pass from a previous foreclosure for borrowers to re-establish their credit history. However, Fannie also told companies that collect loan payments they can increase their forbearance period on delinquent borrowers to six months from four.
• Doors to reopen at Thornburg. Jumbo lender Thornburg (TMA) will start lending money "within weeks, if not days." The move comes after it managed to scrape together $1.35B through asset, debt and stake sales, narrowly escaping bankruptcy. Some investors don't like the 18% its paying on its bonds, and the warrants it issued to buy shares for $0.01.
• More kicks to Newsday tires. Tribune's Newsday has a new suitor: Jared Kushner, owner of the New York Observer. He joins News Corp. (NWS), Cablevision (CVC) and New York Daily News owner Mortimer Zuckerman. Sources say Tribune would like to fetch at least $500M.
• Ohio banks may merge. National City Corp. (NCC) is considering selling itself to hometown rival bank KeyCorp (KEY), sources say. Private-equity firm KKR may play a part in funding the deal. Shares of NCC are down more than 70% over the past year as investors fret its large exposure to the mortgage market. Key has largely avoided riskier mortgages and home-equity loans.
• Medtronic device misses goal. A new study of an expensive device designed to coordinate erratic heart beats failed to prove that it helps patients with a mild heart condition from getting worse. The devices are already approved for patients with more severe heart failure, but manufacturers Medtronic (MDT), Boston Scientific (BSX) and St. Jude (STJ) had hoped the device (called CRT) would help less-sick people too. Despite missing the primary goal, the study did show many patients did improve.
• Pfizer halts melanoma trial. Pfizer (PFE) discontinued a Phase-III clinical trial of the experimental advanced melanoma treatment tremelimumab; early results indicated it was not superior to standard chemotherapy. Shares fell 1.1% in extended trading.
• Staples secures $3B for takeout bid. Staples (SPLS) secured $3B in loans for its planned bid for Corporate Express NV. Lehman Brothers (LEH), Bank of America (BAC) and HSBC (HBC) are behind the funding. Perhaps the credit market freeze is thawing just a bid. Staples' shareholders were not thrilled with the news; shares fell 2.9% in extended trading.
• Gold becoming scarce. Newmont Mining (NEM) says gold's getting harder to find and mine. "Exploration is not only becoming tougher and riskier but more expensive, and it is becoming more and more difficult to find gold in any surface quantity," a spokesman said. "As an industry, we are spending more and more on exploration but even in a high demand and high price environment, and more drilling happening, the gold sector is not discovering the same ounces as it used to." Meanwhile costs for labor and shipping are climbing fast.
• United Grounds 52 Boeing 777s For Inspection, Sees Delays
• EMI hires Google's chief information officer

Today's Markets

• Asian markets were up sharply Wednesday, a reaction to Tuesday's surge in the U.S. Nikkei +4.21% to 13,189. Hang Seng +3.18% to 23,872. Shanghai +0.56% to 3,348. BSE Sensex +0.79% to 15,750.
• In Europe, markets were mildly higher at midday. FTSE +0.02% to 5,854. CAC +0.41% to 4,886. DAX +0.45% to 6,570.
• U.S. index futures are down from yesterday's close at 7:10 AM. Dow -0.02% to 12,624. S&P -0.13% to 1,368.75. Nasdaq +0.12% to 1,860.

• Friday Outlook: What Phony Sell-off?!  »
• Will the July Lows Hold?  »
• Are Undecided Investors More Bullish?   »
• Foreclosed Families Turn Against Wachovia SF Branch [Housing Tracker]  »
• Freddie, Fannie: Debt-Ridden, But Their Bonds Are Worth Holding  »

SA Editor
Eli Hoffmann

• Bio & more articles