MAJOR PAPERS:

• The Wall Street Journal reported that an alliance of cable, Internet and chip titans will announce plans to invest $3.2B in a company that will deliver Web access for laptops and cellphones using WiMax. The venture, valued at over $12B, includes Sprint Nextel Corporation (NYSE: S) and Clearwire Corporation (NASDAQ: CLWR) and will be backed by Comcast Corporation (NASDAQ: CMCSA), Time Warner Cable Inc (NYSE: TWC), Intel Corporation (NASDAQ: INTC) and Google Inc (NASDAQ: GOOG).
• According to people familiar with the matter, Robert Verrone, one of the most zealous commercial real-estate lenders during the industry's boom, will leave Wachovia Corporation (NYSE: WB) within the next week, the Wall Street Journal reported.

WEB SITES:

• Bloomberg reported that the Department of Justice is probing whether UBS AG (NYSE: UBS) helped clients evade American taxes. In an e-mailed statement, the firm said one senior bank employee was "briefly detained" by authorities.
• Bloomberg also reported that Vallejo, California's city council voted to go into bankruptcy. Officials said that after talks with labor unions failed to win salary concessions from police and fire fighters, the city does not have enough money to pay its bills.
• According to a rumor, TechCrunch reported that the Yahoo Inc (NASDAQ: YHOO) board of directors yesterday authorized Yahoo chairman Roy Bostock, rather than CEO Jerry Yang, to call Microsoft Corporation (NASDAQ: MSFT) CEO Steve Ballmer about re-starting negotiations.

UBS (NYSE:UBS) is making a bid to increase the unemployment rate all on its own. The bank will lay-off 5,500 people, mostly investment bankers. It will also sell a package of $15 billion portfolio of subprime mortgages to Blackrock (NYSE:BLK). According to Reuters,"UBS cautioned that conditions in financial markets were still tough and declined to offer any results forecast."

The UBS comments about what happens next are a coded message that layoffs at the firm may not be over. UBS has suffered as much or more from subprime write-downs as any bank in the US or abroad.

The news is especially bad for people employed at brokerages and big banks. A continuing spike in mortgage defaults could cause more difficulty in the pool of financial instruments created around the market. That, in turn, could cause more write-offs at large banks triggering the need to raise capital and cut costs.

Tens of thousands of people have been fired on Wall Street already. The news out of UBS shows that the process is far from over.

Douglas A. McIntyre is an editor at 247wallst.com.

Divx (NADSAQ:DIVX) is up15% on stronger-than-expected earnings.

Anadarko Petroleum (NYSE:APC) is up over 8% on good numbers.

DH Horton (NYSE:DHI) is down 6% due to a quarterly loss.

UBS (NYSE:UBS) is down over 2% after announcing lay-offs of 5,500 bankers.

Stocks may trade differently in the pre-market than they do in the regular session.

Douglas A. Mcntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

Stock futures were lower early Tuesday morning as oil prices remained high offsetting any recent optimism about the economy in light of Monday's surprise expansion in the service sector. Several companies are also reporting earnings today and will be in focus.

U.S. stocks dropped on Monday after Microsoft withdrew its takeover bid for Yahoo and as commodity prices once again spiked. The Dow industrials lost 88 points, or 0.68%, the Nasdaq Composite fell 12 points, or 0.52%, and the S&P 500 lost 6 points, or 0.45%.

Without much economic news today, no doubt investors will have no choice but to focus on the high oil prices. After setting a record close Monday and hitting a new trading high of $120.93 a barrel Tuesday, crude retreated to $119.88, down 9 cents from Monday's close. It is interesting that just as hopes were growing the slowdown of the US economy may not be as deep and long as originally thought, crude prices surge again, concerning investors about inflation and profits once again.

The layoffs on Wall Street are not over. As a matter of fact, they may just be beginning. Many of the people at Bear Stearns (NYSE: BSC) are already gone. Citigroup (NYSE: C) says it will cut operating expense by 20%. Some of that has to be people.

UBS (NYSE: UBS) may now be looking at a plan to cut 8,000 people. A lot of that will come in the firm's banking division. According to Bloomberg, "The company will probably say it's eliminating between 2,500 and 3,000 jobs in its investment bank, more than 10 percent of the division, two people familiar with the matter said May 2."

UBS has been under some pressure to break itself into pieces to "unlock shareholder value." It is not quite clear how that would work, but management is against it.

The word from UBS is a particularly sad reminder of how the actions of a relatively few traders and executives who bet on mortgage-backed securities will cost tens of thousands, if not hundreds of thousands, of people in the financial community around the world their jobs. Those who are to blame probably already have new employment. At least they can say they were "creative thinkers" when they go for job interviews.

Douglas A. McIntyre is an editor at 247wallst.com.

U.S. stock futures were lower this morning, indicating stocks could start the day and week on the down side after Yahoo! rejected over the weekend Microsoft's raised bid. With Microsoft withdrawing its bid, shares of Yahoo! are expected to lose the 50% they have gained since the bid talk. Share of Microsoft, though, are expected to rise.

U.S. stocks ended mixed on Friday, but finished the week with gains as stocks rose to four-months highs. The Dow industrials ended Friday up 48 points, or 0.36%, the S&P 500 gained 4 points, or 0.32%, while the Nasdaq Composite ended down 3 points, or 0.15%.

Not much economic news is due out this week, but some indicators may still affect sentiment. Today, April's index will be reported at 10:00 a.m., after the market open, and is expected to show a slight decline in April.
Also, Federal Reserve Chairman Ben Bernanke is due to speak in New York about mortgage delinquencies and foreclosures.
Meanwhile, the dollar lost ground against several other currencies, and oil prices rose on supply worries after an attack on a Shell oil station Nigeria. U.S. crude rose close to $117 a barrel.

Some investors are starting to believe that the worst of the credit crunch is behind us, and European banks including UBS (NYSE: UBS) and Royal Bank of Scotland (NYSE: RBS) are leading a bullish move in the markets.

The dollar stabilized and oil weakened, giving a boost to many blue chip stocks. Home Depot (NYSE: HD) rose nearly 4% in trading on Thursday, and American Express (NYSE: AXP) was up nearly 7%.

Not all news is positive, however. U.S. futures are flat as the markets await the Labor Department's official employment report, due today. According to Bloomberg's calculation, unemployment in the U.S. continues to rise as employers shed more than 75,000 jobs in April. The unemployment rate is now probably at 5.2%, a three-year high. And real unemployment is probably worse that that, since the Labor Department's calculation method, which Bloomberg uses, significantly undercounts unemployment and underemployment.

And the Microsoft-Yahoo! saga continues. The AP reports that Microsoft (NASDAQ: MSFT) may go hostile in its bid to buy Yahoo! (NASDAQ: YHOO) today. Should be entertaining, so say tuned.

UPDATE: Job numbers better than expected, unemployment falls to 5.0%.

Shares of Credit Suisse Group (NYSE: CS) are trading higher despite that fact that the company reported a loss for the first three months of the year, hit by its exposure to the credit markets. European shares didn't react to well though as it was the bank's first quarterly loss in five years.

Credit Suisse posted a first quarter net loss of $2.1 billion as the global effects of the U.S. subprime mortgage crisis came with substantial write-downs. Thus, the company was forced to write down 5.3 billion francs ($5.3 billion) in mortgage securities and big buyout loans.

Making some comments on its quarterly earnings figures, the company stated its dissatisfaction with the current results, but on the positive side "most of our businesses performed well, with revenues near, or in some cases above, those in the first quarter of 2007." Looking ahead, the company's Chief Executive Brady Dougan is confident that Credit Suisse "will continue to serve as a safe haven for clients in uncertain and volatile markets, and to seize the opportunities that arise in times of market dislocation to create long-term value."

It looks like European banks have been hit much harder by the subprime crisis than U.S. banks. Last week, UBS (NYSE: UBS) wrote off about $19 billion, and today we have news that Royal Bank of Scotland (NYSE: RBS) suffered an $11.7 billion loss. We haven't seen numbers like that in the U.S. and this may be a story that needs to get more play. The European banking system is in far worse shape than the banks on our side of the Atlantic, and the impact that will have on global growth should not be underestimated.

Keep in mind that nothing like the FDIC or SIPC exists in Europe, so a major bank failure could be catastrophic for consumers. Banks have started tightening credit, and the once red-hot real estate sector has cooled, especially in places like Poland. I have friends who are in the real estate business in Eastern Europe and they say things have really slowed down.

MAJOR PAPERS:

• The Wall Street Journal reported that New York state's attorney general, Andrew Cuomo, has launched an investigation into auction-rate securities and is seeking information from some of Wall Street's biggest institutions including UBS AG (NYSE: UBS), Citigroup Incorporated (NYSE: C) and Merrill Lynch & Co Inc (NYSE: MER), a person familiar with the matter said.
• According to the Financial Times, Deutsche Bank AG (NYSE: DB) and other investment banks are working on plans to develop a clearing house for the credit derivatives markets. In an attempt to reduce counterparty risk, the banks are trying to develop a system that would only allow institutions with strong capital bases and credible trading histories to clear trades in the credit default swap markets with a central counterparty.

OTHER PAPERS:

• The news that The Royal Bank of Scotland Group Plc (NYSE: RBS) is planning a rights issue of between GBP5B and GBP12B received mixed reviews from British analysts and investors, the Telegraph reported. The analysts expect the bank to cut its dividend.

WEB SITES:

• DigiTimes reported that Nvidia Corporation (NASDAQ: NVDA) is planning to launch the GeForce 9600 GSO GPU in May to compete with Advanced Micro Devices' (NYSE: AMD) Radeon HD 3830, according to sources at graphics card makers.

The list of companies slapped by the auction rate securities debacle continues to grow. This morning, Lakes Entertainment (NASDAQ: LACO) issued a press release announcing an agreement with UBS AG (NYSE: UBS) that's worth quoting verbatim:

... effective April 11, 2008, it entered into a client agreement with UBS Financial Services ... for the purpose of borrowing and/or obtaining credit in a principal amount not to exceed $11.0 million ("Margin Account Agreement"). The Margin Account Agreement is secured by Lakes' auction rate securities ("ARS") held at UBS ... As previously announced, the types of ARS investments that the Company owns are backed by student loans, the majority of which are guaranteed by the U.S. government and all of which have credit ratings of AAA or Aaa. Historically, these ARS investments have been highly liquid, using an auction process that resets the applicable interest rate at predetermined intervals, typically every 28 days, to provide liquidity at par. However, as a result of the recent liquidity issues experienced in the global credit and capital markets, the auctions for all of the Company's ARS investments failed beginning in February 2008 when sell orders exceeded buy orders.

No 8-K detailing the terms of the margin account agreement has yet been released, so we don't know what interest rate they're paying for the credit. But it may be higher than the yield on the auction rate securities that UBS sold to them.

Here's what makes this situation a mess. UBS was recently subpoenaed by New York Attorney General Andrew Cuomo, seeking information about whether the firm misled investors in auction rate securities into believing that the investments were cash-like and more liquid than they have turned out to be.

Now that these companies don't have access to the cash they thought wouldn't be a problem to get at, UBS is helping them out: by letting them use the ARS as collateral to borrow from the bank that got them into this mess: presumably, with interest.

MOST NOTEWORTHY: The Brokers and Asset Managers sector, Pacific Sunwear and Metabasis Therapeutics were today's noteworthy upgrades:

• Goldman upgraded the Brokers and Asset Management sector to Attractive from Neutral as they believe an inflection point has been reached for stocks with minimal credit exposure, or where exposure is marked to market. Goldman expects the problem to shift to regional banks and specialty finance from brokers. As such, Goldman upgraded American Express (NYSE: AXP), Metlife (NYSE: MET), Bank of New York Mellon (NYSE: BK), Franklin Resources (NYSE: BEN), Janus Capital (NYSE: JNS) and NYSE Euronext (NYSE: NYX) to Buy from Neutral.
  
• Wachovia upgraded Pacific Sunwear (NASDAQ: PSUN) to Outperform from Market Perform based on valuation, merchandising improvements, operating efficiencies, favorable product mix, and reductions in underperforming categories.
  
• Rodman & Renshaw raised Metabasis (NASDAQ: MBRX) to Outperform from Market Perform on valuation given the potential for MB07803.

OTHER UPGRADES:

• HSBC raised Novartis (NYSE: NVS) to Neutral from Underweight.
  
• UBS (NYSE: UBS) was upgraded at Morgan Stanley to Equal Weight from Underweight.

Goldman Sachs upgraded MetLife (NYSE:MET) and American Express (NYSE:AXP) to "buy" and cut Wells Fargo (NYSE:WFC) to "sell", according to MarketWatch.

Morgan Stanley upgraded UBS (NYSE:UBS) from "underweight" to "equal weight" according to Briefing.com. The financial news service also reports that Morgan Keegan downgraded Apple (NASDAQ:AAPL) to "under perform" from "market perform".

Douglas A. McIntyre is an editor at 247wallst.com.

MOST NOTEWORTHY: Apple, AstraZeneca and KLA-Tencor were today's noteworthy upgrades:

• Thomas Weisel upgraded Apple (NASDAQ: AAPL) to Overweight from Market Weight, citing a re-set in FY08 expectations and expected growth from Mac market share gains, accelerating iPhone revenue growth and increased iPhone ASPs.
  
• WestLB upgraded shares of AstraZeneca (NYSE: AZN) to Add from Hold as they believe the company's growth in core franchises are being overlooked.
  
• Citigroup upgraded KLA-Tencor (NASDAQ: KLAC) to Buy from Hold , as they believe several near-term catalysts are likely to develop against an increasingly favorable cyclical backdrop. They think KLAC's near-term business is better than most think and maintain a $56 target on the stock.

OTHER UPGRADES:

• Goldman upgraded Anglo American (NASDAQ: AAUK) to Buy from Neutral and added shares to the Conviction Buy List.
  
• UBS (NYSE: UBS) was upgraded to Buy from Neutral at Merrill and added to the Europe 1 List.
  
• Jefferies raised comScore (NASDAQ: SCOR) to Buy from Hold.

Merrill Lynch upgraded UBS (NYSE: UBS) to "buy" from "neutral" according to Briefing.com. The news service also reports that Thomas Weisel upgraded Apple (NASDAQ: AAPL) from "market weight" to "overweight."

KLA Tencor (NASDAQ: KLAC) raised to "buy" from "hold" at Citigroup according to 24/7 Wall St. The financial site also reports that TJX (NYSE: TJX) cut to "hold" from "buy" at Citigroup

Douglas A. McIntyre is an editor at 247wallst.com.