Stock futures are indicating a low start for stocks ahead of April retail sales data and PPI report tomorrow.

Yesterday, the Federal Reserve left rates unchanged, as expected, and chairman Bernanke reiterated that inflation remains the primary concern even as economic growth is slowing down. Others, however, interpreted Bernanke's statement as being less hawkish as it indicated concern over the slowing growth as well as inflation. It could be that the Fed sees moderate growth in the next few quarters, but is still unsure if inflation was curbed, hence the focus on inflation. Regardless, most investors found comfort in the Fed's statement and U.S. stocks closed higher.

Today, several indicators will be released. Retailers are due to report their April sales through out the day, giving the market an indication of consumer spending during the month. April sales are generally expected to be weak.
At 8:30 a.m., import and export prices for April, along with the trade balance for March are due. The deficit is expected to have widened. Also at that time, weekly jobless claims will be released.
The Treasury Budget is scheduled for 2:00 p.m.

Overseas: As expected, the Bank of England raised its benchmark interest rate by a quarter-point to 5.5% -- a six-year high -- as consumer spending, house-price growth and record employment drove inflation to the highest in a decade. Many economists believe another rate hike is coming.
European stocks fell, led by mining shares as takeover speculations of Rio Tinto (NYSE: RTP) by BHP Billiton Ltd. (NYSE: BHP) have been damped and copper prices declined further. Asian stocks closed mixed with Japan and Hong Kong closing lower.

American International Group Inc. (NYSE: AIG) and Viacom Inc. (NYSE: VIA) are due to report earnings today.

Magna International Inc. (NYSE: MGA), the Canadian firm bidding to buy a piece of DaimlerChrysler (NYSE: DCX) Chrysler group in partnership with Canadian-based buyout and investment firm Onex Corp., has sold a stake to Russian billionaire and automotive entrepreneur Oleg Deripaska. The Russian businessman will pay $1.54-billion to buy 20 million shares. The move will increase Magna's financial liquidity, helping it bid for Chrysler.

As if EADS' Airbus didn't already have enough snafus with it's A-380 megaplane program, the General Accounting Office has concluded that the plane poses a safety challenge to America's airports. Are those cheers I hear coming from Boeing Co. (NYSE: BA) headquarters?

The GAO's concerns include:

• Most U.S. runways were not built for planes of this size and weight, and will require an upgrade, service restrictions, or both.
• The increased turbulence it will create on landing and takeoff will mean a need for more buffer area around the plane to guard against impacting other flights.
• This could result in possible reduction in flights and therefore airport handling capacity.
• Its size will impose a large burden on fire and rescue operations.
• The cost of retrofitting airports to accommodate A-380 could be a problem. Heathrow in London has spent $885 million to prepare for the plane's flights.

Oil industry analyst Trilby Lundberg surveys 7,000 gas stations every two weeks, and according to his figures, gas hit $3.07 last week, a record.

There may be no bad news here for the likes of Exxon Mobil Corp. (NYSE: XOM) and ConocoPhillips (NYSE: COP). But, don't tell that to the car companies. Sales by domestic manufacturers fell almost 8% in April.

The ripple from higher gas prices could swamp the modest recovery that has begun among the Big Three. Ford Motor Co. (NYSE: F) showed progress in its first quarter, with a significant narrowing of its loss. General Motors Corp.'s (NYSE: GM) North American auto operation also showed progress during the quarter. Most of the improvements, however, came from cost cuts. The companies are trying to size themselves for a U.S. annual sales rate of 16 million with about half of the market share going to imports.

Higher gas prices could shatter those plans. Even with a cut of $9 billion a year in costs, GM cannot weather an indefinite downturn in sales, especially if its profitable SUVs and pick-ups bear the brunt of the fall. Ditto Ford.

Then there is the potential sale of Chrysler, which has sent DaimlerChrysler's (NYSE: DCX) shares up almost 35% in the last three months. Larger losses could kill any deal to sell the unit. If it stays with its German parent, the gains in DCX shares are bound to disappear.

Douglas A. McIntyre is a partner at 24/7 Wall St.

General Motors Corp.'s (NYSE: GM) first quarter results may not be as bad as they look, even though they are horrendous.

The company missed Wall Street forecasts largely because of losses its former financial business incurred in the suprime mortgage market. Net income was $62 million, or 11 cents per share, compared with $602 million, or $1.06 a year earlier. Revenue fell 16% to $43.9 billion. Excluding one-time items, profit was 17 cents per share. Analysts had expected profit of 87 cents on revenue of $40.9 billion, according to Thomson Financial.

Nonetheless, the automotive business had a $272 million profit, down from $295 million, helped by the cost-cutting undertaken by Chief Executive Rick Wagoner. Profit in the automotive segment on an adjusted basis was $304 million, up from $40 million.

So far, investors have indicated that they believe GM's challenges are more daunting than its rivals. The automaker's shares have lagged both Ford Motor Co. (NYSE: F) and DaimlerChrylser AG (NYSE: DCX).

But has the market unfairly penalized GM? Is all of the bad news priced into GM's stock?

Anyone looking for a true contrarian bet should consider buying the shares. Remember people don't get rich following the crowd.

Last month's sales figures are out for all the major auto makers, and the numbers aren't pretty. With the exception of DaimlerChrysler (NYSE: DCX) all the major auto makers showed declines last month in their auto sales.
While we have become immune to hearing poor sales figures coming from General Motors (NYSE: GM) and Ford Motor Co. (NYSE: F) it definitely will catch your attention to find out that the red-hot Toyota Motor Corp. (NYSE: TM) also hit some rough pavement last month.

U.S. stock markets are poised to start May on a more upbeat note as indicated by stock futures early in the morning. Still, manufacturing data, auto sales and more earnings will continue to weigh in on investors.

Yesterday, stocks fell as some investors wrapped-up a good April (Dow was up 5.7% in April, Nasdaq and S&P 500, 4.3%) where the Dow passed the 13,000 mark, while others considered economic data that showed further cooling of the economy, but also better-than expected inflation data.

Today, more economic data, especially manufacturing activity and auto sales, will be scrutinized as well as another financial report from Dow component Procter & Gamble.

• At 10:00 a.m. this morning, after the opening bell, the Institute for Supply Management is scheduled to release its index of U.S. manufacturing. The index is expected to tick up to 51 in April from 50.9 in March. This measure will further give investors an idea of the state of the economy and what to expect from earning going forward. Can this environment of better-than-expected earnings continue?
• Pending home sales in March is due also at the same time.
• Automakers are scheduled to release April sales figure. Some are expecting April to be the worst month with Ford Motor Co. (NYSE: F) sales probably down 22%, General Motors Corp. (NYSE: GM) sales expected to drop 11% and DaimlerChrysler's (NYSE: DCX) Chrysler Group sales possible 10% decline.
• Many might also tune in at 11:00 a.m. to listen to Federal Reserve chairman Ben Bernanke, who is scheduled to speak on foreign trade, but might answer questions.

Procter & Gamble Co. (NYSE: PG) is expected to post earnings of 74 cents a share for the third quarter.
Circuit City Stores Inc. (NYSE: CC) shares are down nearly 8% in pre-market trading after the retailer said it expects a loss of $80-90 million in its first quarter and is withdrawing its outlook for the first half of the fiscal year.

Overseas -
Turkey's financial markets fell for a second day after some military leaders threatened to overthrow a presidency candidate should he win the elections.
Many international markets were closed for May Day, but Tokyo was open and Japan's Nikkei shed over 125 points or 0.76%.
In Britain, U.K. manufacturing grew at the slowest pace in three months in April, which could be due to the stronger pound. The FTSE 100 index is down nearly 0.5%.

U.S. automakers, the "Big Three" General Motors (NYSE: GM), Ford (NYSE :F) And DaimlerChrysler (NYSE: DCX) certainly have had to deal with a lot.

First there was oil shock No. 1 in 1973-74, which prompted the domestic industry first-round of fuel economy increases.

Then there was oil shock No. 2 in 1979, which led to more fuel economy increases and industry-wide efforts to improve quality and safety, among other enhancements.

More recently the Big Three have faced a flood of high-quality, more-appealing sport utility vehicles, and cars, particularly from Japan (Honda, Toyota, and Nissan), but also from Europe: The trendier, more-utilitarian models have decreased the Big Three's market share in its home market, and forced them to restructure and lower legacy pension/health care costs, in order to complete in what truly is now a global auto manufacturing market place.

And up ahead that global market place is set for another turn: A substantially lower-priced car. Nissan said it has plans to build and sell a $3,000 car for the Indian market.

Nissan officials argue that to be considered a major auto player in emerging-market India, a car's price can not go far beyond $3,000.

India has more than 45 million drivers of scooters and motorcycles, and Nissan hopes to attract a sizable number to its new auto line.

MAJOR PAPERS:

• Barron's Online's (subscription required) "Weekday Trader" wrote that there is currently little to get revved up about with Harley Davidson Inc (NYSE: HOG), as its fundamentals have deteriorated, leaving little upside for the stock over the next year, according to Citigroup Analyst Greg Badishkanian.
• The Wall Street Journal (subscription required) reported that Bristol-Myers Squibb Company (NYSE: BMY) will name James Cornelius, who has been interim CEO since last September, as the permanent CEO of the company.
• Comcast Corp (NASDAQ: CMCSA) is pushing into Web TV, a space currently being dominated by Google Inc's (NASDAQ: GOOG) YouTube, reported the Wall Street Journal.

OTHER PAPERS:

• According to the Detroit Free Press, Chrysler Group suitors must submit new bids next week to make the cut and continue talks with DaimlerChrsyler AG (NYSE: DCX); one or two "preferred bidders" are expected to emerge.
• The L.A. Times reported that employees of Fremont General Corp (NYSE: FMT) are suing over losses on company stock in their retirement plans which they say should have been foreseen and prevented.

Apple Inc. (NASDAQ: AAPL) -- May OTM puts more expensive than calls, suggesting downside Hedging. AAPL is expected to report EPS of 64 cents after the close tonight. AAPL call option volume of 56,543 contracts compares to put volume of 25,270 contracts. AAPL May 105 calls have traded 172 times on transaction volume 20,030 contracts. AAPL May 85 puts have traded 133 times on transaction volume of 8,659 contracts according to Track Data. AAPL May 85 puts are bid 55 cents, above its theoretical value of 42 cents. AAPL May 105 calls are bid 45 cents, below its theoretical value of 49 cents. AAPL options suggest downside hedging tendencies.

Navistar Intl. (NASDAQ: NAVZ) -- elevated implied volatility suggests Risk as NAVZ at record High. NAVZ, a truck, bus, engine manufacturer, is recently up $1.13 to $57.93. MAN AG, Hino, F, Fiat, Isuzu, PCAR, OSK, General Motors (NYSE: GM), DaimlerChrysler (NYSE: DCX) and Iveco have been frequently mentioned as interested in doing acquisitions, partnerships or bolt-on deals. NAVZ over all option implied volatility of 46 is above its 26-week average of 41 according to Track Data, suggesting larger price risks.

Option volume leaders today are: Intel Corp. (NASDAQ: INTC) and Apple Inc. (NASDAQ: AAPL).

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Toyota Motor Corp. (NYSE: TM) finally become the world's top auto seller this past quarter, toppling General Motors Corp. (NYSE: GM).

If production numbers are any indication, General Motors is fighting a losing battle to regain its top spot.

In 2006, General Motors outproduced Toyota by pumping out 9.18 million vehicles compared with Toyota's 9.018 million. In the first quarter of this year Toyota edged out General Motors with 2.37 million vehicles, slightly above General Motors' 2.34 million.

It should really come as no surprise that Toyota overtook GM, which showed international sales of "only" 2.26 million vehicles in the quarter. Toyota has been expanding while America's powerhouse automakers General Motors, DaimlerChrysler AG's (NYSE: DCX) Chrysler and Ford Motor Company (NYSE: F) have been closing factories and laying off workers.

Over the past few years Toyota has been chipping away at General Motors and everyone knew it was just a matter of time before it overtook the company's sales numbers. The true winner won't be really decided until the end of the year, but it seems rather impossible at this point that General Motors is going to be able to be able to fend off its Japanese rival.

Not sure what General Motors can do between now and the end of the year to hang onto the top annual seller of autos, but it sure isn't looking too good at this point.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that the UAW and representatives of Kirk Kerkorian, which made a $4.5B proposal for DaimlerChrysler AGs (NYSE: DCX) Chrysler unit, met to discuss the potential of an employee stock ownership plan and other alternatives to a takeover of the struggling automaker.
• A $25B deal to take SLM Corporation (NYSE: SLM), known as Sallie Mae, private will most likely remain under the scrutiny of a federal regulator, reported the Wall Street Journal.

OTHER PAPERS:

• The Washington Post reported that the FDA knew years in advance about contamination problems at a Georgia peanut butter plant and on California spinach farms that led to disease outbreaks, documents and interviews show.
• According to an examination by the San Jose Mercury News, a criminal case against Apple Inc (NASDAQ: AAPL) CEO Steve Jobs in the stock-options backdating investigation looks unlikely.
• According to Cinco Dias, Gottschalks Inc (NYSE: GOT) has hired UBS AG (NYSE: UBS) to explore options of a possible sale or a merger.

WEBSITES:

• Digitimes.com reported that Koninklijke Philips Electronics (NYSE: PHG) has decided to withdraw from the Taiwan handset market.

My distinguished colleague and fellow bloggist Douglas McIntyre wrote an elegant piece about some stocks he thought should be sold -- or at least be considered for sale. I respectfully and wholeheartedly disagree with Douglas.

He thinks that Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG) and DaimlerChrysler (NYSE: DCX) have all run too much and are vulnerable to falling. I witnessed many a portfolio manager in the early to mid 1990's who missed the greatest move in technology because they were constantly afraid of something terrible happening to the earnings estimates. I also witnessed many portfolio managers selling Cisco, Microsoft and Oracle way too early because they "were expensive." These guys made anywhere from 30-50% profits, but completely missed the next 2,000%.

I am not implying that Apple, Google or Daimler have a 2,000% move coming their way. Not at all. The 1990's will probably never be replicated. But the principles of growth investing do not and have not changed. Google is a verifiable monster. It is no longer "the next..." anything. It already IS. Now, we'll be looking for the "next Google."

Main market news here.

Palm Inc. (NASDAQ: PALM) was upgraded to Equal Weight from Underweight at Lehman Brothers. The analyst also increased the target price from $12 to $19, saying the smart phone market will get a boost from Apple Inc.'s (NASDAQ: AAPL) iPhone and that competitive trends are softer. PALM shares are up nearly 2% in pre-market trading.

While KKR is leading a consortium of Canadian pension funds for possibly taking BCE Inc. (NYSE: BCE) private, Citigroup, Inc. (NYSE: C) is leading the financing for another group led by Ontario Teachers' Pension Plan.

Yesterday, General Motors (NYSE: GM) reported global sales rose 3% in the first quarter but its market share fell slightly. GM still expects an agreement for Delphi Corp. is possible even as a prospective investor may not participate. GM also downplayed challenges it faces in China with its partner there, SAIC, and the development of its own brand.

Google Inc. (NASDAQ: GOOG) shares are up 4.2% in pre-market trading after beating Street's estimates yesterday yet again. With analysts unable to say much more than they already have, some chose to concentrate on the TAC number, or Traffic Acquisition Cost and the higher payments to partners.

Oracle Corp. (NASDAQ: ORCL) shares are down 0.9% in pre-market, after rival SAP (NYSE: SAP) reported a 10% rise in quarterly profit.

DaimlerChrysler (NYSE: DCX) could wrap-up its intended Chrysler Group sale as early as next month, a source familiar with the situation said yesterday.

Netflix (NASDAQ: NFLX) was upgraded by Bank of America from Sell to Neutral. NFLX shares are up over 2% in pre-market.

The United Auto Workers is looking at a purchase of Chrysler [subscription] from parent DaimlerChrysler AG (NYSE: DCX).

The idea is not entirely insane. Employee stock ownership programs get tax benefits that could make any future profits from the company less likely to be taxed. Sam Zell is doing an ESOP-based purchase of The Tribune Co. (NYSE: TRB).

The UAW has a big chip. Chrysler has $15 billion in unfunded pension and healthcare programs.

When Wall Street looks at General Motors Corp. (NYSE: GM) and Ford Motor Co. (NYSE: F) ratio of stock price to revenue, the number is only .1x. That would put Chrysler's value at about $7 billion. Weigh that against the unfunded obligations, and a deal does not look so mad.

According to The Wall Street Journal, the idea is not entirely new: "A recent report by the Kelso Foundation, a pro-ESOP think tank, suggested GM use an ESOP to negotiate 20% wage decreases for the next 10 years from the UAW. In return, a UAW-run ESOP would get $20 billion in newly issued GM stock, equal to 50% of GM stock outstanding."

The UAW does not want private equity interests to buy Chrysler. The union is concerned that Wall Street money will simply break the company into pieces and gut the hourly work force. An ESOP may be a way around that.

Douglas A. McIntyre is a partner at 24/7 Wall St.

General Motors (NYSE: GM) continues its comeback from the dark days of 2006 while Ford Motor's (NYSE: F) re-shaping is taking more time. Both American car makers have faced tough times in recent years as gas prices shifted consumer demand away from the product mixes of these two companies. The problem caught them off guard, and combined with health care and pension responsibilities, the financial hurt mounted. But what about Chrysler Group, the smallest of the "big three?"

DaimlerChrysler (NYSE: DCX) purchased Chrysler some time ago, and since then, there have been ups and downs for the Chrysler Group. Its model makeup received some fine German engineering (the 300M) and Chrysler's cars have been put through a design shakeup that made them emerge rather nicely, if you ask me. But Chrysler Group, the small regional player that makes trucks, SUVs and minivans, wants to grow further. To do this, its chief wants to expand internationally using new partners.

The Chrysler Group may be sold by its Daimler parent soon, according to rumors and reports. Either an existing automaker or a private equity company may take the reins, but that doesn't dampen the need for Chrysler to stop in its tracks and do something to expand. Tom LaSorda, Chrysler's chief executive, is pressing ahead even as possible suitors are being lined up for the company. Will Chrysler become the part of the "three" from the big three again? It's got some catching up to do if that's the case.