Wake Up Call - Sailing Home

Major U.S. equity indices have opened broadly higher this morning, as during a press conference, Iran's President Ahmadinejad pardoned the captured U.K. sailors. Asian stocks had already rallied today, after international traders perceived a U.S. sentiment change. You might want to consider short term trades in Saudi Arabia's market, where shares had dropped a ton during the crisis, and should now recover in the near term. Economic data today exposed false hopes for housing that developed yesterday. See the details of our discussion below.

Asia:
Hang Seng Index +1.03%; Shanghai/Shenzhen 300 +0.82%; NIKKEI 225 +1.74%; S&P/ASX 200 +1.39%; Taiwan TAIEX +0.9%; BSE SENSEX 30 +1.28%; KRX 100 +1.41%; Ho Chi Minh +2.27%

U.K., Europe & Middle East:
DJ STOXX 50 Index -0.15%; FTSE 100 -0.2%; CAC 40 +0.18%; DAX +0.05%; Russian RTS Index +0.52%; Tel Aviv 25 +2.41%; Tadawul All Share +1.0%; DSM 20 -0.02%


Key Headlines:

• *** Mahmoud Ahmadinejad has officially pardoned the U.K. sailors, marking the end of the crisis. As we outlined to you at the beginning of the issue, Iran is not served by bringing the United Kingdom back into the Middle East just as it plans to return its troops home. We expect to see oil prices return to pre-crisis levels. The key drivers of oil in the near future should be gasoline supply/demand and economic developments.
• *** Asian markets rallied today, after perceiving a positive change of sentiment in the U.S. and on declining oil prices. At the same time, The Reserve Bank of Australia surprisingly kept rates steady at the conclusion of their two-day meeting.
• *** ADP Employer Services reported today that private employers added 106,000 jobs in March, but this is less than the 120,000 that was anticipated by the market. The result marked an increase from the 97,000 jobs added in February. Service sector growth in March was probably boosted by tax season hiring, in our view. The construction sector continues weak and manufacturing showed a decrease in March. Still, Challenger, Gray & Christmas reported that announced layoffs in March fell 42% from February.
• *** The Mortgage Bankers Association reported that mortgage applications decreased in the week ended March 30. Wall Street Greek believes the 3.2% decline better reflects the current tighter lending environment than yesterday's report on pending home sales from February. Yesterday's news lifted the market, and the shares of home builders and lenders. We exited most of our short-term short positions on previous weakness, and are currently short an oil sensitive idea. We still believe the medium/long-term trends suggest investors may want to find new opportunities to enter lending and home building ideas on the short side down the road.
  
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