• Job market woes. New jobless claims were the worst since September 17, 2005 (the week following Hurricane Katrina), up 38K to 407,000. There may be discrepancies due to Easter. The AXL strike that has caused shutdowns at 30 GM (GM) factories is also a factor, and, of course, underlying deterioration in the job market. Today, the biggie: Non-farm payrolls.
• Non-manufacturing suggests mild recession. ISM's Non-Manufacturing Index improved for the second month in a row, up 0.3 to 49.6 (vs. 48.5 consensus), suggesting a mild, but not deep, U.S. recession. Strong exports were the key driver. The employment component (46.9) was worrisome; it suggests a non-farm payroll drop of 100K.
• You don't say. IMF chief economist Simon Johnson says U.S. growth is at a "virtual standstill" and could remain weak over the coming quarters.
• Now you see it... In England, mortgage lenders are pulling out of their deals faster than you can say ARM, leaving expectant homebuyers stranded. The BoE warned the trend may get worse as the lack of available credit makes it increasingly difficult for lenders to borrow more money.
• New twist in Clear Channel fight. Influential Clear Channel (CCU) stakeholders, including hedge fund Highfields Capital, are threatening to pull their trading business from Citigroup (C) and Deutsche Bank (DB) if they don't finance CCU's delayed $27B buyout. Private-equity buyers Bain and Thomas Lee won a bid for a potential May 5 trial date to force the bankers (also MS, CS, RBS and WB) to follow through. If the deal fails, Clear Channel's prospects don't look great.
• All talk, no action. Execs from Microsoft (MSFT) and Yahoo (YHOO) met this week at Yahoo's HQ, but failed to make any progress. Yahoo will not hold formal talks based on Microsoft's $31/share (now $29.29) offer, and Microsoft isn't budging.
• Motorola axes 2,600. Motorola (MOT) is firing 2,600 and taking a Q1 severance charge of $104M. Shares gained 1.7%.
• DoubleClick dissections begin. Google (GOOG) plans to sell Performics, recently-acquired DoubleClick's search-engine marketing business - in order to retain its search and advertising objectivity. It is also rumored Google will axe 300 DoubleClick staffers.
• Traders bank on change at UBS. UBS (UBS) shares were up almost 5% this morning after former president and 0.7% stakeholder Luqman Arnold launched a surprise attack, calling for the bank to sell its asset management unit, separate its private-banking and investment-banking businesses, and consider selling the latter. Wealthy patrons have been fleeing UBS, a phenomena best summed up by Bernstein Research's Dirk Hoffmmann-Becking: "It's hard to make a case to someone wealthy that you can manage their money well when you've just lost $37 billion yourself."
• Court smokes smokers. A federal appeals court threw out an $800B class-action suit that claimed cigarette makers misled smokers to believe light cigarettes were safter than regular ones. The logic: It's impossible to determine why, as a group ("class"), smokers chose light. The ruling was not unexpected, and shares of MO and RAI were largely unchanged.
• Spectrum specs. Verizon Wireless (VZ) (VOD) and AT&T (T) said they will use the $16B of spectrum they won in the recent auction to build faster ("4G") wireless broadband networks for high-speed data, voice and video. Their plans will take at least three years. AT&T wireless chief Ralph de la Vaga said its spectrum is more valuable, because it's unencumbered by the open-platform conditions attached to Verizon's. Meanwhile Google (GOOG) confirmed it bid $4.6B in the auction in order to trigger the open-access conditions, after which it dropped out.
• Merrill's done raising money. Shares of Merrill Lynch (MER) rose as much as 4% (+1.2% at close) after CEO John Thain told Japanese reporters, "We have plenty of capital going forward and we don’t need to come back into the equity market." Thain also said he has no plans to merge or sell the firm.
• Ta ta to ATA. Amex's airline index closed flat, rebounding from a sharp early-morning drop, after privately-held ATA Airlines became the second carrier in recent weeks to close down amid high fuel costs. Aloha said adios on Tuesday.
• Run less (to the pediatrician). The FDA approved GlaxoSmithKline's (GSK) oral diarrhea vaccine, Rotarix, a market dominated by rival Merck's (MRK) Rotateq. Advantage GSK, whose vaccine requires only two trips to the doctor to Merck's three.
• Fox to post big miss. MySpace.com parent Fox Interactive Media (NWS) is making its advertising technology business a separate unit; chief revenue officer Michael Barrett will leave; and will miss its fiscal-year revenue forecast by 10% ($100M).
• iTunes tops charts. Apple (AAPL) confirmed a leaked internal memo showing its iTunes store overtook Wal-Mart (WMT) as the number-one U.S. music retailer. Ars Technica reported Apple took a 19% market share to Wal-Mart's 16%.
• Loan delinquencies at highest rate since 1992

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SA Editor
Eli Hoffmann

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