BROAD MARKET SUMMARY:
Housing data continues to look gloomy, inflation is still a valid concern, energy prices keep rising, the economy is slowing (likely recessionary), and the credit crisis isn’t anywhere near subsiding. So why were the broad market indices up almost 5% this week? Isn’t it great the human animal comprehends “hope” and understands its impact of future possibilities?

Strong earnings reports hoarded the headlines this week, giving investors a feeling that maybe things aren’t that bad, and that the outlook isn’t as bleak as they thought. Well, what do you think?

INDEX	4/18 Close	4/11 Close	% Chg
DJIA	12,849.36	12,325.42	+4.25%
S&P 500	1,390.33	1,332.83	+4.31%
NASDAQ	2,402.97	2,290.24	+4.92%

West Texas Intermediate Crude closed at $116.77/bbl.
Gold Futures closed at $915.20/oz

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

Notable Economic Data This Week:
•  March Retail Sales data of +0.2% showed an improvement over February’s report of -0.4% and beat expectations of a flat report.
•  PPI came in higher than expected and CPI met expectations, but the core measurement of each proved energy prices are still on the rise.
•  Housing starts eased even further in March to 947k versus expectations for 1010k and previous month starts of 1075k.

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BETTER EARNINGS THIS WEEK:
Google (GOOG) breezed through its quarterly earnings call, with a healthy $5.19 billion in revenue for the quarter ending March 31, and operating income of $1.55 billion. At this rate Google is on track to top $25 billion in annual revenue. The company has a nest egg of over $12 billion in cash. The stock price shot up $76 (about 17 percent) in after-hours trading and Google's search share in the U.S. is nearly 60 percent. Rumor has it that Google insiders are now blowing their noses with $100 dollar bills!

Reversing last week’s trend, IBM (IBM), aka Big Blue, beat estimates for Q1 results and increased its outlook for full fiscal 2008. Q1 profit rose 26% to $1.65 per share, 20 cents higher than expectations. Revenue was $24.5 billion for the quarter. CEO says: "We feel good about the rest of the year."

Intel (INTC) did the markets a favor by reporting strong earnings while other big board stocks including JPMorgan Chase (JPM) followed suit. Wells Fargo (WFC) and JPM reporting positive results was a shining light in the current darkness known as the U.S. credit crisis. Also, a surprise report to the upside from Johnson & Johnson (JNJ) boosted markets as the breadth of operations at the conglomerate convinced investors this is relatively indicative of general economic conditions.

Similarly to the report we brought you last week on WaMu, now Wachovia (WB) lets the street down with its quarterly results. A loss of 20 cents per share compared to a profit of $1.20 per share a year ago paired with news the dividend will be cut, goes to show the financials aren’t out of the woods yet. Wachovia is also raising $7 billion and cutting jobs to try to weather the current credit storm.

Pfizer (PFE) saw Q1 profit fall 18% citing sales of generics on the rise as the culprit for the pressure on their brand drugs Norvasc and Zyrtec, which are used for blood pressure and allergies repectively.

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HOT TOPICS:
An unconfirmed report of a huge oil find in Brazil hit the presses this week sending shares of Petrobras (PBR) higher. An offshore exploration said to contain possibly 33 billion barrels of oil would triple Brazil’s current reserves, move the country into the number 3 spot in the world, and constitute the largest find in decades. Further studies and details are expected to come.

“I do!” Delta (DAL) and Northwest Airlines (NWA), both having emerged from bankruptcy and pink sheets listed securities, announced they have officially agreed to merge. An all stock transaction of $17.7 billion leaves all hubs to remain open, Delta pilots to keep their bargain, and a promise to attempt to build a combined DAL/NWA pilot contract. Combined annual revenue of $31 billion and the world’s most traffic are a couple of highlights of the combined operation.

A really big company is selling some significant assets to a prolific acquirer. Citigroup (C) is selling most of CitiCapital to GE Capital for an undisclosed all cash amount. This will add roughly $13.4 billion in assets to the balance sheet at GE Capital along with 1,400 employees and 160,000 customers.

Merrill (MER) is cutting 4,000 jobs in conjunction with its announcement of a Q1 loss with $6 billion of new write downs. Is finance looking better or not? Depends if you ask the MER, WM, & WB guys, or the JPM & WFC teams.

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ECONOMIC UP & DOWN DATES:
Retail sales in March rose a little thanks to gasoline sales. Without that line item, the results would have been flat since gas stations sales rose 1.1%. This report shows the consumer has become more cautious in their spending habits.

PPI, a measurement of inflation at the wholesale level, rose more than expected by 1.1% due to rising energy costs. Core PPI excludes the energy and food costs and was more subdued. Year-over-year PPI rose 6.9%, while core PPI increased by 2.7% -- the largest rise since July 2005.

CPI, a measurement of inflation at the consumer level, also rose in March due to energy costs. CPI rose 0.3% meeting expectations while core CPI gained 0.2 percent last month, as most analysts had predicted. The CPI measurement of inflation has risen sharply in the 12 months to March, jumping 4.0 percent, the report showed. The core CPI has risen 2.4 percent in the year to March.

Last week home sales data was terrible, now this week we learn that home building data came in at a 17 year low, the slowest pace since March 1991. Also, the Philly Fed data report shows regional manufacturing activity slowed, pointing toward waning economic conditions. This week, the number of unemployment claims continues to rise bringing the total to the highest level in about four years.