BROAD MARKET SUMMARY:
Even though the major U.S. indices were down as much as 3.4%, the markets still managed to hold onto some of the gains posted the previous week. With as much optimism that week’s performance may have injected into investors, this week did just as much to prove the range-bound trading continues for now and that investors are still unsure about where we are heading.

INDEX	4/11 Close	4/4 Close	% Chg
DJIA	12,325.42	12,609.42	-2.225%
S&P 500	1,332.83	1,370.40	-2.74%
NASDAQ	2,290.24	2,370.98	-3.41%

West Texas Intermediate Crude closed at $110.14/bbl.
Gold Futures closed at $927.00/oz

Next FOMC Meeting: April 29 & 30, 2008 - Tuesday/Wednesday

Notable Economic Data This Week:
•  Weekly Initial Unemployment Claims fell to 357k from 410k last week.
•  U.S. trade deficit grew in February to $62.3 billion vs. expectations of $57.4 billion.
•  U. of Mich. Consumer Confidence survey showed a reading of 63.2, the lowest since the 62.0 reading in March 1982.

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WEAK START TO Q1 EARNINGS SEASON:
On Monday, aluminum producer Alcoa Inc (NYSE: AA) kicked offer the first quarter earnings season on an uncharacteristic weak note. The company always leads off the season, but rarely does it miss estimates. Profit was 37 cents per share for Q1, missing estimates by 5 cents, but more notably down from 75 cents per share in Q1 2007 period. The weak U.S. dollar and rising energy costs were cited for the 50% haircut.

General Electric (NYSE: GE) reported profit for Q1 of 43 cents per share, categorized as “a large miss” compared to expectations of 51 cents per share. Of even more importance, the conglomerate downgraded its projections for the full year due to difficult economic conditions. With many investors considering GE as a beacon for the entire economy, this news was not well received by the markets.

Conversely, Wal-Mart (NYSE: WMT) actually announced its costs are being managed well. April sales should beat expectations, and the company raised its forecast for Q1. Previous projections were for 70 to 74 cents per share, which after the alterations are 74 to 76 cents for the period. Strong sales of electronics, including flat-panel TVs, computers, digital cameras, and GPS devices helped while apparel and home products hindered.

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DISMAL DATA ON THE US ECONOMY:
Setting the worst reading of all time (data back to 2001), was none other than U.S. existing home sales. The used housing market fell another 1.9% in February bringing the index to 84.6. Judging by this data and on average, there could not have been a worse time to try to sell your home since 2001.

The U.S. trade deficit grew to $62.3 billion in February compared to $59 billion in January and street expectations of $57.4 billion. Worth noting from the report is that the deficit with China, which is under regular scrutiny in the states, fell nearly 10% down to $18.4 billon. That is the lowest in over a year. 

“How does that make you feel?” That is the question the University of Michigan asks U.S. consumers each month, but this month researchers are thinking they shouldn’t have even asked. With a reading of 63.2, consumer confidence hasn’t been this low since March 1982! Mostly concerned with recession talk, job information, and inflation, consumers may spend less at retail outlets. That is one of the biggest risks when confidence reaches such low levels. So now really, how does that make you feel?

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STRUGGLING FINANCIAL INDUSTRY:
Private equity firm TPG made the headlines a couple of times this week by deploying capital into the struggling financial industry. With a $7 billion capital infusion into Washington Mutual (NYSE: WM) and participation in buying $12.5 billion of corporate buyout loans from Citigroup (NYSE: C), Texas Pacific Group is moving a good deal of money that way. 

That was the good news for WaMu, but on the downside equity investors counting on their dividend checks were let down to say the least. Its quarterly dividend will no longer be 15 cents per share, but instead will amount to 1 cent per share. This is the second cut to the dividend in the last four months. The company expects a $1.1 billion dollar Q1 loss, laid off 3,000 employees, and is effectively doing everything in its power to survive the current housing crisis.

While the WaMu CEO is trying to keep his 120 year old company afloat, the CEO at Goldman Sachs (NYSE: GS) declares the credit crisis is nearing an end. “We’re closer to the end than we are to the beginning,” he said with his comments coinciding with Lehman Brothers (NYSE: LEH) taking another $1.8 billion hit.

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MORE THAN A HALF MILLION U.S. TRAVELERS STRANDED:
This week American Airlines (NYSE: AMR) grounded 3,100 flights due to governmental inspections of its MD-80s wreaking havoc with roughly 500,000 travelers. Rail-based travel has seen a spike due to the problems, with Amtrak reporting higher passenger rates this week especially in the Northeast.  With the airlines industry already limping along due to high fuel costs, analysts are unsure what the entire extent of these cancellations might be.

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YAHOO NOT DESPERATE FOR ATTENTION:
This week Yahoo’s (Nasdaq: YHOO) interested parties include Microsoft (Nasdaq: MSFT), Time Warner (NYSE: TWX), News Corp (NYSE: NWS), and Google (Nasdaq: GOOG) - must be nice!  Microsoft said if Yahoo didn’t accept its offer by April 26, a hostile takeover process will be undertaken at a lower offering price. In February, Yahoo rejected a bid of nearly $45 billion from Microsoft saying that significantly undervalued the company. 

News Corp entered the picture this week with talk of joining Microsoft in bidding for Yahoo, which would build an online behemoth including Yahoo, MSN, and MySpace. Yahoo has sought conversations with News Corp earlier this year when attempting to deflect the Microsoft offer. Time Warner’s AOL is also in conversations about a deal with Yahoo that might add value and therefore warrant a higher bid from any suitors. Surprisingly to many, this week Google was brought into the fold with Yahoo suggesting it might outsource part of its search advertising (in a limited test) to figure out if more revenue could be extracted if Google was in charge of it.