Rally Back To Break Even

Just like that, many investors will begin the trading day today at break even after witnessing a sustained market rally that has erased all of the 2009 losses on the S&P 500 index. The benchmark index is now up a whopping 0.44 percent this year. As the New York Times succinctly puts it, "breaking even never felt so good." Ah, but how far we've fallen. "Stock markets are still down 40 percent from their record highs, and the run higher could still peter out if rising unemployment leads to new, unexpected losses in the banking system," the newspaper writes.

The recent rebound is triggered by a host of factors, chief among them are signs of life in the construction and housing market that pushed the Nasdaq to a 6-month high and the Dow to a high last seen in mid-January on Monday, CNNMoney.com reports. Optimism in the banking sector is also a big factor, even if it is widely believed that more than half of the banks that underwent the stress tests will need additional capital. According to Bloomberg, executives at as many as 10 of the 19 banks under federal scrutiny could be informed later today that they "need additional capital to weather a deeper recession." The Wall Street Journal lists some of the needy financial institutions in line for additional bailout funds. "It could include Wells Fargo & Co., Bank of America, Citigroup Inc. and several regional banks," the newspaper writes. But, looking on the positive side, the newspaper adds it was initially thought that 14 of the 19 banks under review would require additional federal funding.

Google (GOOG) and Apple (AAPL) are under fresh federal scrutiny this morning. The WSJ and the NYT report that the Federal Trade Commission is investigating the boards at Google and Apple—to be specific, two board seats that overlap at both companies—to determine if it is a violation of antitrust laws. The seats in question belong to Google CEO Eric Schmidt and Arthur Levinson, formerly of Genentech Inc. The two men sit on the boards of both companies. "Antitrust regulations allow the government to intervene if directors sit on the boards of two competing companies and their presence could reduce competition," the WSJ writes. Both newspapers point out that the FTC rarely enforces the "interlocking directorates" rule that the companies find themselves potentially violating. "Nevertheless, the agency has already notified Google and Apple of its interest in the matter," the NYT writes, noting that one point of contention could be that the two companies, as they push further into the mobile telecommunications markets, are competing more and more head-to-head.

Chrysler is predicting profits in the future. When? In 2012, the WSJ reports. This optimistic thinking was buried in legal documents Chrysler presented to a bankruptcy judge yesterday; the same documents mentioned the automaker lost nearly $17 billion in 2008. Still, the judge gave Chrysler the green light to use $4.5 billion in government loans for bankruptcy financing. It's a decision that has Chrysler's hold-out lenders fuming, Bloomberg reports. "The group, calling itself Chrysler’s non-TARP lenders, in reference to the Troubled Assets Relief Program, seeks to block the proposed [Chrysler] sale to an alliance led by Fiat SpA, as well as a request by the U.S. automaker for approval of a $4.5 billion Treasury loan to finance the reorganization," the news wire writes. The group argues that the federal government is pushing the restructuring and Fiat deal in violation of federal law.

Meanwhile, Fiat CEO Sergio Marchionne's grand plan to create a European super autos group that rivals Volkswagen hit a few road blocks yesterday in Germany, the Financial Times reports. Marchionne met government and union officials in Berlin to secure crucial political backing for his plan to merge Fiat with General Motors' (GM) German division and the Opel/Vauxhall Group. It appears the Germans want the new group to be based in their country, "one of 14 criteria the foreign minister would use to evaluate any offer," the newspaper writes.

And, finally, regional bureaucrats in Central China have attempted the most puzzling "buy local" stimulus plan yet of the global downturn. According to the BBC, officials in Gong'an county ordered "civil servants and teachers to smoke 230,000 packs of the locally-made Hubei brand each year," with the idea that it would add to county coffers through the cigarette tax imposed on each pack. But already this morning it appears the puff-for-prosperity plan is going up in smoke. Reuters reports the Chinese cigarette stimulus idea has been rescinded. Government officials backtracked on the idea after an uproar in the local press.