Good Morning.  Here's what you need to know:

1. Rep. Paul Ryan's " Roadmap for America's Future" proposes a transformation of the Medicare program.  In a few weeks, Republican members of the House will be asked to vote in favor of this transformation.  That vote will likely be the key issue in their re-election campaigns. 

2. President Obama on Wednesday will call upon Republicans to join him in writing a broad plan to raise revenues and reduce the growth of popular entitlement programs.  As the NYT notes,  Mr. Obama will in effect " come off the sidelines" of the debate over reducing the nation’s debt, and get in the game.

3. A bipartisan Senate group, which has been working on a debt reduction plan, would rather President Obama stay on the sidelines.  They're concerned that the president’s new level of involvement with the nation’s fiscal problems will complicate the politics of their efforts.

4. President Obama " has opened the door to a deal with Republicans that would allow the U.S. to increase its ability to borrow, potentially easing worries in financial markets that the country might default on its debt," the WSJ reports. Previously, the White House had insisted that Congress raise the debt ceiling without conditions.

5.  Remember last week's FY 2011 budget deal? Last Friday's budget deal? It faces a close vote in the House of Representatives.  There's a chance it might not pass, although most Congressional vote-counters expect that it will squeak by.

6.

. Top Federal Reserve Bank officials yesterday sent a clear signal that the Fed will not lift interest rates from rock-bottom levels anytime soon.  These officials dismissed the idea that soaring commodity prices will lead to broader U.S. inflation.

7.  Drought in much of the Southwest is hurting farmers across several states -- especially Texas and New Mexico -- potentially reducing supplies of crops and cattle.  This year's drought has been especially bad.

8. Pakistan is demanding that the United States dramatically reduce Special Forces and CIA operations within its borders.  The demand was made by the head of Pakistan's intelligence service, who is in Washington for meetings with high-ranking US national security officials.

9. " As a delegation of Afghan officials traveled to Washington to present their plan to international financial authorities to dismantle Afghanistan’s largest private bank, President Hamid Karzai on Monday denounced Western accounting firms and advisers for corruption and failing to detect the bank’s troubles," The New York Times reports.  Mr. Karzai wins the prestigious Chutzpah Award for 2011, so far.

10.  US policy-makers imagined that the " humanitarian intervention" into Libya would be a short-lived affair, ending in Col Qaddafi's removal from power.  It hasn't turned out that way.  Stalemate in Libya raises the question: " what next?"

11.  Mitt Romney announced the formation of an exploratory presidential campaign committee.  Mr. Romney is expected to formally announce his candidacy for the 2012 GOP presidential nomination later this year.

12.  Donald Trump now says that he will " probably" run as an independent presidential candidate in 2012 if he is not the 2012 GOP presidential nominee  . Which he won't be. Mr. Trump says he is not doing this to boost the ratings for his NBC TV show, he's doing it because he " hates what's happening to this country."

10 Things You Need To Know Before The Opening Bell

Image: AP

Good morning. Here's what you need to know.

 

• Asian indices were in the red with the Nikkei down 1.69%. Major European indices are down and US futures indicate a negative open.

• UK retail sales fell 1.9% year-over-year in March, the steepest decline in six years. Non-food retailers took an especially hard hit and the pound slid against the dollar on the news. Here are 8 shocks slamming the global economy >

• German investor confidence plummeted in April due to rising oil prices and the ECB rate hike. The ZEW Indicator of Economic Sentiment fell 6.5 points to a 7.6, well below the all time average of 26.6.

• UK annual CPI inflation fell to 4% last month, as inflation slowed in March after stores lowered food prices. This compares with a 4.4% year-over-year inflation rate in February which analysts had expected would hold steady. Here's why Richard Koo thinks QE has failed >

• The Japanese government has raised the severity level of the nuclear crisis at its Fukushima Dai-ichi plant from a level 5 to a level 7. Radiation levels however are 1/10 th of the 1986 Chernobyl disaster. Don't miss: A look at what un-contained nuclear meltdown did to Chernobyl >

• The February trade deficit nailed expectations. Read about it here >

• Aluminium producer Alcoa reported 1Q income of $309 million or 27 cents per share. EPS was up to 28 cents a share a 33% increase over the previous quarter. Earnings were expected come in higher and shares are down in early trading.

• Fiat SpA boosted its stake in Chrysler

• US Lawmakers revealed legislation that delineates programs that would be cut to save $38 billion. The EPA, high-speed rail, agriculture and law enforcement will take a hit. Now, here's Paul Ryan's plan to save America from bankruptcy >

• Civil unrest continues in Libya after rebels rejected the African Union's cease-fire proposal. Rebels said Qaddafi's ruthless attacks on the city of Mistrata made cease-fire impossible. Here's a guide to the military that Qaddafi is using to crush his own people >

• BONUS: Kimberly Stewart, daughter of Rod Stewart, is pregnant with Benicio Del Toro's child. The two are no longer a couple.

Surprise! Stagflation Is Rearing Its Head In Asia

Marcussen notes that the inflation problem in that region is much more severe, with the potential for it to feed on itself and become a much bigger problem. That's because in these economies, the government will be forced to raise wages to keep up with rising food and energy costs. This is already happening in China. Any increase in wages is likely to feed inflation further, going forward.

This, coupled with economies that may already be near full employment, means these countries may already be at their peaks. And yet, their central banks aren't tightening.

Here's why, from Marcussen:

Policymakers are concerned, however, that hiking interest rates may attract more potentially disruptive capital inflows and fast track exchange rate appreciation, risking an abrupt loss of competitiveness. Capital controls have become popular as the new policy tool to address this dilemma. Our concern is that the tool may prove blunt, and that inflationary spirals will ultimately trigger abrupt economic slowdowns in the emerging economies.

So while all eyes may be on the developing weakness in  the UK, that story may be nothing compared to the what's happening in India, China, and other emerging economies.

Stocks weighed down by oil price fears

By PAN PYLAS
AP Business Writer

(AP:LONDON) High oil prices and another strong earthquake in Japan kept a lid on stocks Monday despite optimism over the upcoming U.S. corporate earnings results season.

Though investors will this week monitor Libya's conflict and Japan's struggle to recover from last month's devastating natural disasters, they are slowly turning their attention to corporate earnings.

As usual, Alcoa Aluminum kicks off the earnings season late Monday, and following a strong run of outperforming market expectations, hopes are high. Other big corporations due to report this week include JP Morgan Chase & Co., Bank of America Corp. and Google Inc.

Optimism over the coming earnings statements drove U.S. stocks to post solid gains at the open, which helped European markets pare earlier losses.

The FTSE 100 index of leading British shares was flat by the close at 6,053.44 while Germany's DAX fell 0.2 percent to 7,204.86. The CAC-40 in France was 0.6 percent lower at 4,038.70.

In the U.S., the Dow Jones industrial was up 0.4 percent at 12,430.46, while the broader Standard & Poor's 500 index rose around 0.2 percent to 1,330.80.

The U.S. gains are fairly muted, though, reflecting concerns about the economic impact of high oil prices. Though the benchmark rate as traded in New York was down 90 cents at $111.89 a barrel, oil prices are not far off 30-month highs and are already having an impact on the global economy.

One consequence of high oil prices is a reassessment of when interest rates will be lifted _ last week, the European central bank became the first major central bank to hike borrowing costs, partly because high energy costs have pushed up inflation to uncomfortable levels.

Sentiment was further weighed down by another strong aftershock in Japan, on the one month anniversary of the earthquake and tsunami that devastated the northeastern coast and triggered a still unresolved nuclear crisis. The aftershock struck after Asian markets had closed.

" Another earthquake in Japan this morning is unnerving markets...it was a reminder how unstable the situation in Japan is," said Jennifer Lee, an analyst at BMO Capital Markets.

As well as monitoring corporate news, investors will have a raft of economic data to assess this week, with inflation figures set to take center stage in the U.S., Britain, the eurozone and China. They are expected to show that price pressures remain elevated, partly because energy and commodity costs continue to rise for a variety of reasons, not least the battle for control of Libya, an OPEC member.

" Inflation was a key theme last week with respect to central bank rate decisions and it will continue to remain a key theme this week," said Michael Hewson, market analyst at CMC Markets.

Other economic data this week includes U.S. retail sales and industrial production figures and China's first estimate for economic growth in the first quarter of the year.

Earlier in Asia, Japan's Nikkei 225 stock average dipped 0.5 percent to close at 9,719.70, while South Korea's Kospi edged down 0.3 percent to end at 2,122.39. Hong Kong's Hang Seng index slid 0.4 percent to finish at 24,303.07. Benchmarks in mainland China, Taiwan, Singapore and India also fell.

Chinese stocks had been weighed down earlier by the news that China posted a trade deficit in the first three months of the year, its first since 2004. Higher commodity and energy costs as well as the country's insatiable demand for raw materials were the main reasons behind the deficit.

Trading in the currency markets was lackluster. The euro was flat at $1.4463, not far off last week's 15-month high of $1.4489, while the dollar was 0.5 percent lower at 84.60 yen.

Europe's single currency has been in demand over the past few weeks as the European Central Bank sounded a far more hawkish tone following above-target inflation figures. Last week, the ECB raised its main interest rate by a quarter of a percentage point to 1.25 percent. The markets expect further rate hikes this year.

Those expectations support the euro only if other central banks don't do the same. So far, the U.S. Federal Reserve has given few indications that it's about to follow the ECB anytime soon, while the Bank of Japan is keeping policy loose to help the country in the wake of the disasters.

___

Kelvin Chan in Hong Kong contributed to this report.

What is a Black Swan Event

In View: What is a Black Swan event?

This year the World has experienced some unexpected events with Global impact. These events are called “Black Swans.”

History reminds us that Black Swan events, thought rare, have large influence in the shaping our World.

The term “Black Swan can be traced back to the 2nd Century Roman poet Juvenal’s writing some events are “as rare a bird as a Black Swan.” Though not really rare, no one in Europe at that time had ever seen one, explorers found them in Australia hundreds of years later.

The term was made popular in our time by Nassim Nicholas Taleb, author of “The Black Swan: The Impact of the Highly Improbable.” His best-seller was released in Y 2008, and it describes how the World is affected by these rare and difficult to predict.

Here are some Black Swan events that have had a major impact in shaping our lives World War I, the 1929 Depression, the PC, the Internet, the 9-11 attacks in the USA, the failure of Bear Sterns and Lehman Brothers in Y 2008 ++++.

The events that are now happening in the MENA region, and Japan are Black Swans IMO. They were not widely predicted, and their impact has been felt around the World.

In Q-1 of Y 2011, the MENA region has turned chaotic, as the leaders of Tunisia and Egypt were forced out by social unrest in days, even though they had ruled for decades.

Now, there is a civil war on in Libya, and the protests have hit Bahrain and Syria, this activity has driven commodity prices higher, especially Crude Oil, and is affecting everyone World wide.

Japan was hit with a massive 9.0 Richter Scale earthquake which resulted in a Tsunami. Thousands of people lost their lives, and Japan still battles with damaged nuclear reactors that are leaking radiation causing governments around the World to reassess nuclear power, and call for nuclear plants to have major safety overhauls.

Black Swans are often rationalized in the rear view mirror, as if we should expected them.

When folks talk to me about the financial collapse that occurred in Y 2008, they act as if it should have been known and understood by everyone because of how easy it was for to get a loan on the inflated rise in real estate prices. But, most folks missed it because they did not wish to see it and they did not sell their stocks or their homes in Y 2008 and suffered the consequences, those of us that saw that stuff happening turned up the big winners, and Goldman Sacks was the big winner on the Street, along with Paulson & Company and Lehman Bros. and Bear Sterns were the big loosers.

Black Swan events are not easy to predict, and the majority cannot profit from them. But, if you are one of those that are able to anticipate these unexpected occurrences, you can exploit the situation and prosper, the signs are always there and you do not have to read between the lines. Knowledge is Power so read LTN daily, www.livetradingnews.com

Chevron NYSE:CVX and Royal Dutch Shell NYSE:RDS-A partner in Australia

Chevron sells Shell stake in its Australia Nat Gas project

Chevron Corp. (NYSE:CVX) said Sunday it has agreed to sell a stake in its proposed Wheatstone Nat Gas project in Australia, a Key means for the US Oil giant to address growing demand for energy resources in China and other parts of Asia, to Royal Dutch Shell PLC. (NYSE:RDS-A).

Under the terms of the deal, Shell will gain an 8% interest in Chevron’s Wheatstone and Lago Nat Gas fields offshore of Northwest Australia.

In addition, Shell will gain a 6.4% interest in the project facilities, while Chevron will remain the project operator, Chevron said.

The planned Wheatstone project is a Key element in Chevron’s plan, unveiled late last year, to increase capital spending this year by some US$4.4B.

The project is seen as a big bet by Chevron to be able to feed the continued, rapid economic expansion in China, which has outstripped growth in other parts of the World.

Chevron said Sunday that “front-end engineering and design activity” on the Wheatstone Project is nearing completion, adding that a “final investment decision” on the project is expected in 2-H of this year.

Economic Calendar

US Market Sentiment + the Bulls vs. Bears

US Major Markets Support and Resistance Points

Singapore to be China Trading Hub

Singapore and China are in negotiations to develop Singapore as a trading hub for the Chinese RMB.

This will allow Chinese banks to do more business outside the mainland and also bolster Beijing’s aim to promote its currency as an international unit. Singapore, the Singapore Dollar and the Singapore Exchange would gain from such a move.

Hong Kong wad the only city outside mainland China where offshore trading of the yuan, or Renminbi, is allowed.

The Monetary Authority of Singapore (MAS) did not comment directly, but said the city-state “is well positioned to facilitate trade-linked business flows with mainland China”.

Approval from China will boost Singapore’s status as one of the top financial hubs in Asia alongside Hong Kong and Tokyo. The city-state is the second largest forex trading centre in Asia after Japan.

Top leaders in Beijing want to see the yuan adopted as a global reserve currency to reflect China’s growing economic and political clout.

Allowing the yuan to be used more widely overseas also helps China reduce the amount of dollars flowing into the country, which is adding to its already world-beating foreign exchange stockpile and fanning inflation.

Last year, the MAS signed a three-year currency swap agreement with China that allows the city-state to tap up to 150 billion yuan ($23 billion) in liquidity from its Chinese counterpart.

In addition, banks such as HSBC, Singapore’s DBS Bank and the Industrial and Commercial Bank of China currently offer yuan banking services in Singapore.

Paul Ebeling Week Ahead, QQQ, DIA, SPY

PowerShares QQQ Trust, Series 1 (ETF) NASDAQ:QQQ, SPDR Dow Jones Industrial Average ETF NYSE:DIA, SPDR S& P 500 ETF NYSE:SPY

What to expect this week and down the line…

Last week the economic data was light, not so this week, but I believe that the eyes will be on the Crude Oil price. There will also be some focus on what the federal government is doing.

The market is giving us some good stuff in here, and if there is some backing and filling ahead of the Key earnings reports the week after this that will be good too. The market looks like it wants to do that but, we will take what it gives.

I have not heard any rumblings or mumbling either on the Earning’s Warnings Side. So if there is some bit of a pull back that will be a good, as it will put more stocks in good buy positions.

Shayne and I will be watching Crude Oil prices, and are a bit hedged in here, and looking for opportunity as the action plays out.

Always, keep you head, and take what the market gives. Tune out the “Noise” and see the big picture, inflation is coming, it is not a bad thing, it augurs growth and the huge US debt gets settled for less “Bucks.”

The global inflationary pressure is an issue that the central bankers are not able to ignore anymore. Yesterday, the ECB succumbed to the pressure and raised its benchmark rate to 1.25%, the first time since July 2008. In Singapore, the low SIBOR has often been blamed for our banks’ low interest margins.

The following warrants have exercise prices close to Singapore banks last traded share prices and are more than two months to expiry:

UOB – Turning from laggard to leader
UOB was a laggard last year due to its relatively conservative growth, but management is now guiding for mid-teen loan growth in 2011, driven by the higher margin ASEAN markets. This should allow for some valuation reversion for UOB, which indeed has outperformed the other two banks YTD. Macquarie Research Equities (MRE) sees UOB as more defensive, particularly in the current market conditions. UOB is MRE’s top pick over DBS and OCBC.

UOB had its biggest 2011 one-day gains yesterday, rising 2.7% to close at $19.62.

DBS - Hiring spree for expansion
Last month, DBS HK CEO, Sebastian Paredes told reporters that he plans to double its headcount in China in 2011. The bank currently has 1,100 staff in China after acquiring RBS’s retail and commercial banking business.

Hong Kong is DBS’s largest overseas profits contributor to help alleviate Singapore’s tough lending environment. Hong Kong contributed S$579mn net profits in FY10, which was a 25% increase from the previous year. Sebastian expects that the Hong Kong unit to post double-digit loan growth in the first quarter, with its wholesale banking operations outperforming its consumer banking operations.

OCBC – Still below $10 levels
OCBC has a strong regional presence and a diversified earnings stream. Non-interest income accounted for 47% of OCBC’s FY10 total income. OCBC shares closed at $9.75 yesterday, 2.5% away from the psychological $10 level. It was trading at $10.32 this January.

On Friday, China will be releasing a series of macro announcements. According to a Bloomberg survey, the Real GDP is expected to be at 9.4% year-on-year, while CPI is expected to increase by 0.3% to 5.2% in March. 

Tue 12 Apr: FOMC meeting minutes, SG PMI (Mar)
Wed 13 Apr: US Retail Sales (Mar), US Beige Book
Thu 14 Apr: US PPI (Mar), US Initial Jobless Claims, SG GDP Estimate (1Q)
Fri 15 Apr: PRC CPI (Mar), PRC GDP (1Q), US CPI (Mar), US Industrial Production (Mar)