Chinese Navy Celebrates

The Chinese navy has been marking its 60th anniversary.To celebrate,it held a parade of warships for hundreds of onlookers,including foreign dignitaries.Included in the parade were nuclear submarines,destroyers,frigates and support vessels,as well as navy jets.It was a considerable show of might,but most of the activity took place some distance from shore.The flotilla was a signal to the world that China can now project power internationally,not just near the homeland.The Chinese economy is still growing,providing the wherewithal to sustain deep water operations.This is a growing concern for both the U.S. Navy and China's neighbors.

Rating News

JP Morgan Chase has raised Shaw Group to overweight from neutral because of increasing favor toward nuclear power,and Shaw builds nuclear plants.Citigroup has upgraded Amazon to a buy rating,while RBC Capital Markets has repeated an outperform rating on Amazon.Standard and Poors has repeated a strong buy on eBay.

China Builds Navy Base

China is building a navy base on its southern island of Hainan,according to a Pentagon assessment.The base appears large enough to accommodate a mix of attack and ballistic missile submarines,as well as advanced surface combatant ships,the report states.It goes on to say that the port has underground facilities and would provide the Chinese navy with direct access to vital international sea lanes,and offers the potential for stealthy deployment of the submarines into the deep waters of the South China Sea.China is working toward building its first aircraft carrier,and is augmenting its fleet of attack submarines.China is also building up its stock of highly accurate cruise missiles.This military expansion is regarded as curious,since no one is directly threatening China at the moment.Just what these programs are for remains a puzzle to the Defense Department analysts.

Exxon Displaces Wal-Mart

Exxon Mobil displaced Wal-Mart as the number one earner on the Fortune 500 list.Exxon earned 443 billion dollars in 2008,while Wal-Mart brought home 405 billion.Microsoft was third on the list.Overall,the 500 firms posted an earnings decline of 85%-the worst in the list's 55-year history.

Frigate Participates

An Oliver Hazard Perry class frigate,the USS Halyburton(FFG40),participated in the anti-pirate operation off the coast of Somalia that freed Captain Richard Phillips,the merchant mariner who commanded the Maersk Alabama at the time it was attacked by the pirates.A replacement crew has since boarded the freighter in Mombasa,Kenya.The Perry class frigates are armed with a 76mm/62 caliber gun,as well as a Phalanx Close-In Weapon System and six torpedo tubes.They can sail at 29 knots and have a complement of 209.The Halyburton was built by Todd Pacific Shipyards,Seattle.She is homeported in Mayport,Florida.Frigates are among the smaller warships in service today.They are relied on for escort and patrol missions by many navies.The U.S. Navy has 30 of the frigates,keeping eight of them for reserve use.

Outperformers

Microsoft has been raised to outperform at RBC Capital Markets,with a price target of 27.00.Credit Suisse raised Pacific Gas and Electric to outperform,considering it the best regulated utility.FBR initiated coverage of Qualcomm as an outperform,with a price target of 50.00.

Gates Unveils 2010 Budget

Defense Secretary Robert Gates has released his 2010 defense budget proposal.Mr.Gates says he is just trying to get the irregular warfare guys to have a seat at the table.He is shifting the emphasis to less costly systems that are appropriate to today's low intensity conflicts,not tomorrow's wars.Mr.Gates dismissed the "exquisite" weapons that characterized Pentagon thought in recent times.He is also rolling back the number of contracts from 39% of defense work to the pre-9-11 figure of 26%,as defense projects are moved in house.The 2010 proposal calls for 31 new F/A-18 fighter jets for the Navy;increasing special operations forces by 2800;increasing the Marine Corps by 27,000;halting the DDG 1000 Zumwalt destroyer at three ships,while returning to the Arleigh Burke class destroyer;canceling the new light armored vehicles in favor of the Mine Resistant Ambush Protected vehicles;adding two billion more for surveillance systems;accelerating the production of F-35 fighters to 30 in 2010,up from 14 in 2009;and increasing the number of helicopter maintenance crews and pilots for Afghanistan service.The budget is for 534 billion dollars,an increase of 20 billion over 2009.

Technical Corner

Market technician Carter Worth of Oppenheimer has sells on United Parcel Service,Lowes and Coca-Cola.He has buys on Nvidia,Goldcorp and Pacific Gas and Electric.Mr.Worth is overweight tech and semiconductors,and is moving into Chubb and Morgan Stanley.

Destroyers on Station

Two U.S. Navy destroyers,USS John S. McCain(DDG56) and USS Chafee(DDG90),are believed to be sailing near North Korea in order to monitor a supposed satellite launch by the dictatorship.The destroyers joined warships from South Korea and Japan on similar missions.All the ships are able to track and shoot down ballistic missiles.U.S. Defense Secretary Robert Gates said the U.S. has no plans to intercept the North Korean launch,which is expected between 4 and 8 April,unless the missile goes off course and threatens Hawaii or something like that.Japan said it will fire at the missile only if it appears debris will hit Japan.The McCain and Chafee left the port of Busan,South Korea,where they had berthed following exercises with the South Korean navy.A U.S. Navy spokesman declined to reveal their destination.Both destroyers were built by General Dynamics.

New Price Targets

UBS has raised PepsiCo to a buy from neutral,with a 60.00 price target.Canacord Adams raised Google to a buy from a hold,with a 450.00 price target on stronger search results.RBC Capital Markets has initiated coverage of Hewlett Packard with a buy rating and a 40.00 price target.