bp

MAJOR PAPERS:

• According to senior industry sources, the Financial Times reported that the Ministry of Defense could ask General Dynamics Corporation (NYSE: GD) to provide the vehicle design for a new generation of armored vehicles for the army. It is unclear whether General Dynamics, in competition with Nexter and Artec, will be awarded the contract or will be named the preferred bidder.
• Following the collapse in March of The Bear Stearns Companies Inc (NYSE: BSC), the Financial Times also reported that the SEC will soon require Wall Street banks to publicly disclose more details about liquidity and capital positions. Cox also urged lawmakers to pass legislation that would allow the SEC, or another regulator, the "explicit mandate to supervise" investment banks.

OTHER PAPERS:

• According to the New York Times, Citigroup Incorporated (NYSE: C) will move senior investment banker Alberto Verme to Dubai by the end of the month in the hopes of establishing a stronger foothold in the region, a crucial area for global banks.
• The New York Times also reported that several large oil companies, including BP Plc (NYSE: BP), ConocoPhillips (NYSE: COP) and Chevron Corporation (NYSE: CVX), agreed to pay nearly $423M in cash in order to settle a lawsuit that alleged water contamination from methyl tertiary butyl ether, a gasoline additive. Under the terms of the deal, the oil giants also agreed to pay 70% of the future cleanup costs for the next 30 years. Exxon Mobil Corporation (NYSE: XOM) and several other companies named in the suit did not agree to the deal.

British Petroleum (NYSE: BP) shares are falling today after the US Energy Department reported that domestic gasoline inventories rose unexpectedly last week and crude-oil stockpiles gained more than expected. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on BP.

After hitting a one-year high of $79.77 in November, the stock hit a one-year low of $57.85 in January. This morning, BP opened at $72.73. So far today the stock has hit a low of $72.17 and a high of $72.82. As of 12:00, BP is trading at $72.30, down $0.54 (-0.7%). The chart for BP looks bullish and steady, while S&P gives the stock its highest 5 Stars (out of 5) strong buy rating.

For a bearish hedged play on this stock, I would consider a July bear-call credit spread above the $80 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in two and a half months as long as BP is below $80 at July expiration. BP would have to rise by more than 10% before we would start to lose money. Learn more about this type of trade here.

TheStreet.com's Jim Cramer says there's some reason for caution, but no reason to get out of the market here.

There all right there. Don't you feel it? Hundreds of stocks at resistance. Hundreds have formed a nice base. The Transports and the Dow are moving in synch. The earnings period surprisingly great, with so many companies not stung by the raw costs. Three straight up weeks, with all the commodity stocks showing signs of rolling over; most at crucial "must hold" levels except for gold, which has already crashed, making the inflation case much dimmer in the eyes of the traders.

Yet, you simply can't read the papers. They are too awful. The cost to the consumers for everything from food to gasoline is humongous and going higher, according to all the food execs I had on last week. We are getting nowhere near a bottom in housing. The layoffs, while not significant in the Labor Report on Friday, sure seem endless. The two major presidential candidates from the Democratic side want to tax the oil companies into oblivion, the leaders of the last year. Exxon (NYSE: XOM) (Cramer's Take) blew the quarter. So did GE (NYSE: GE) (Cramer's Take).

Too far, too fast, based on those grim items.

To me, this is the first week since the Bear Stearns (NYSE: BSC) (Cramer's Take) bottom that I think seems aimless.

But perhaps there's a "split the difference" way to approach this week: options expiration.

Earlier today, my colleague Douglas McIntyre argued that the Rockefeller family shouldn't "bite the hand that feeds" it at Exxon Mobil Corp. (NYSE: XOM), a company founded by ancestor John D. Rockefeller. I couldn't disagree more.

The family is advocating a series of proposals such as creating an independent chairman and pushing the world's largest oil company to be more environmentally friendly seem pretty sensible to me. First of all, corporate governance experts advocate separating the role of chairman and chief executive as a good idea for all companies, not just successful ones. This is a good way to prevent a company from falling under the control of an imperial CEO.

Also, I can't understand why McIntyre thinks that "developing new forms of alternative energy is essentially the job of smaller companies which will eventually compete with Exxon for business." Other oil companies including BP Plc. (NYSE: BP) are moving headlong into alternative energy. Even Exxon, which argues that wind, solar and biofuels will account for 2% of global energy demand by 2030, isn't totally opposed to the idea of alternatives to oil.

According to a statement on its Web site, "ExxonMobil is taking to address the risk of climate change. These included working to improve energy efficiency and fuel economy, and groundbreaking research into low-emissions technologies." The company, of course, argues that the world will need petroleum-based energy for some time to come.

Finally, the idea that shareholders should just sit back and let management do whatever it wants couldn't be more wrong. Companies are owned by shareholders and are supposed to be working in their best interests. Despite record profits, Exxon shares have barely budged this year. If the Rockefellers think the company can do better, the company should at least hear them out.

MOST NOTEWORTHY: BP, LMI Aerospace and Smith & Nephew were among today's noteworthy upgrades:

• Credit Suisse upgraded BP (NYSE: BP) following the company's strong Q1 report.
  
• Wachovia upgraded LMI Aerospace (NASDAQ: LMIA) based on valuation and potential catalysts that include a production rate hike decision on the Boeing 737, an option on the 767 wing modification program, and Q1 earnings.
  
• Wachovia upgraded Smith & Nephew (NYSE: SNN) based on growth opportunities, strong reconstruction product cycle, and potential share gains, among other reasons.

OTHER UPGRADES:

• UBS upgraded James River Coal Co. (NASDAQ: JRCC) based on higher long-term coal prices.
  
• Merriman upgraded Denny's Corp. (NASDAQ: DENN) because they believe that franchise growth initiative will reinvigorate the franchisees and put the company in a better position to beat estimates over the next year. The firm thinks investors need to refocus on the company's core operating profitability.

Cowen & Co kept its "outperform" on Flextronics (NASDAQ: FLEX) after the company offered an upbeat forecast according to the AP.

Merrill Lynch downgraded Blackstone (NYSE: BX) from "buy" to "neutral," according to Briefing.com. According to the news service Wachovia downgraded CBS (NYSE: CBS) from "outperform" to "market perform."

BP plc (NYSE: BP) was raised to "outperform" at Credit Suisse according to a report from 24/7 Wall St.

Douglas A. McIntyre

Before the bell: Street awaits Fed (V, DB, GM)

Merck & Co. (NYSE: MRK) shares are dropping over 8% in premarket trading after it said its cholesterol pill Cordaptive failed to win approval from the U.S. Food and Drug Administration, less than a week after it was recommended for marketing in the European Union. While Merck intends to submit more data to the FDA, it is unclear it will succeed given even some European doctors said more research is needed on one of the drug's main components safety.

Who said higher oil prices aren't good? If you ask Royal Dutch Shell (NYSE: RDS.A) and BP (NYSE: BP), high oil prices are fantastic as the two oil giants beat forecasts when posting quarterly earnings Tuesday, reporting that net income, excluding unrealized gains from changes in inventory values, rose 12% to a record $7.8 billion and 48% to $6.6 billion respectively. Shell shares are climbing 5.7% in premarket trading and BP's over 4.8% as it seems investors think oil above $100 a barrel is here to stay.

Archer Daniels Midland Co. (NYSE: ADM), the world's largest grain processor, said third-quarter profit rose 42% to $517 million or 80 cents per share, topping analyst estimates of 69 cents per share, as it traded more grains and crushed more soybeans. Sales climbed 64% to $18.7 billion. Seems that being in agriculture lately is a positive and ADM shares are rising 3.75% in premarket trading.

The three things that do the most to push up oil are weakness in the dollar, the dynamics of supply and demand, and natural disasters or manmade disturbances in the pumping of crude. Add to that, if OPEC is right, rampant and wide-spread speculation by traders.

The supply of crude out of the UK has been, for the time being, interrupted by a strike. According to Reuters, the strike over pensions began at a Grangemouth refinery in Scotland, operated by BP (NYSE: BP).

The strike raises the issue of whether Western governments should allow workers in oil fields and on pipelines to strike at all. The availability of oil and the huge jump in price to $120 makes a strong case for calling it a "strategic asset." The term has been applied to crude for many years, but it did not mean much when prices were lower and there was, at least from the standpoint of perception, ample supply.

The government of the U.S. needs to intervene and send the strikers back to work, or replace them, if necessary. Oil at $120 has as much chance of wreaking the economy as the credit crisis. The U.S., Europe, and Japan can only handle the pressure of so much commodity inflation. At some point, fighting inflation will become more important than cutting interest rates. Then, even Solomon will not be able to decide what to do.

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

Monday, April 28

• PDUFA date for Genentech, Inc. (NYSE: DNA) and Roche Holding Ltd. (OTC: RHHBY)'s supplemental Biologics License Application for Herceptin for label expansion to include AC followed by docetaxel in treatment of adjuvant HER2+ breast cancer.
• PDUFA date for Shire plc (NASDAQ: SHPGY) and New River Pharma's supplemental New Drug Application for Vyvanse (NRP-104) treatment of Attention Deficit Hyperactivity Disordre, or ADHD, in adult patients 18-55 years old; the drug is already approved for pediatric ADHD ages 6-12.
• Verizon Communications Inc. (NYSE: VZ) to report Q earnings; conference call at 8:30am.
• Tyson Foods, Inc. (NYSE: TSN) to report Q2 earnings; conference call at 9:00am.

Tuesday, April 29

• Two-day FOMC meeting beginning at 8:30am.
• PDUFA date for Merck & Co., Inc. (NYSE: MRK)'s New Drug Application for Cordaptive (MK-0524A) adjunctive therapy to diet for treating elevated LDL Cholesterol, low HDL Cholesterol and elevated triglycerides levels.
  
• PDUFA date for Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP)'s supplemental New Drug Application for dose of 8mg treatment of Irritable Bowel Syndrome with Constipation; already approved for Chronic Idiopathic Constipation at 24ug dosage.
• BP plc (NYSE: BP) to report Q1 earnings; conference call at 10:15am.
• United States Steel Company (NYSE: X) to report Q1 earnings; conference call at 2:00pm.

Hexcel Corporation (NYSE: HXL) is a leading advanced structural materials company. It develops, manufactures and markets lightweight, high-performance materials, including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems, adhesives and composite structures. The firm's materials are found in such diverse products as aircraft components, bullet-resistant vests, auto parts, golf clubs, window blinds and printed circuit boards. Customers include General Electric (NYSE: GE), Raytheon (NYSE: RTN) and Boeing (NYSE: BA). BP plc (NYSE: BP) is a major competitor.

The company surprised the Street earlier in the week, when it reported Q1 EPS of 23 cents and revenues of $344.5 million. Analysts had been expecting 20 cents and $314.1 million. The CEO noted that sales for commercial aerospace were up sharply, across the board. Management also guided FY08 EPS to the high end of the range 90-95 cents (93 cent consensus).

Petroleo Brasileiro (NYSE: PBR), also known as Petrobras, is a petroleum company that finds, produces, refines, purchases and transports oil and gas products. It's domestic Brazilian operations involve more than 100 production platforms, sixteen refineries, almost 20,000 miles of pipeline and more than 6,000 gas stations. Subsidiaries invest in fuel alcohol, fertilizer and power generation endeavors. The firm's foreign units conduct exploration, production and supply operations throughout the Americas and Africa. The Brazilian government owns 32% of Petrobras and controls 56% of its voting shares. BP plc (NYSE: BP), Chevron (NYSE: CVX) and Exxon Mobil (NYSE: XOM) are competitors.

Investors came to attention earlier in the week, when the head of Brazil's National Petroleum Agency said that Petrobras and partners Repsol-YPF (NYSE: REP) and BG Group had made what may be the world's biggest oil discovery in at least 32 years. The Carioca find was said to contain up to 33 billion barrels of oil and gas. That would make it the third largest oil field in the world, with a capacity topping all the proven reserves in the United States (29.9 billion barrels). Petrobras officials have been cautious in their appraisals, saying that further drilling would be needed before any meaningful estimate of volumes could be made. The CEO said they would have a clearer idea of size in two to three months.

50 Most Innovative Companies
The companies that make up BusinessWeek's annual ranking nurture cultures that value creative people in good times and bad. The top company by industry include Apple, Pfizer, Goldman Sachs, Disney, Toyota, GE, Marriott, Wal-Mart and BP.
The World's Most Innovative Companies


Airline Gate-to-Gate Times Slowest in 20 Years
Air travel is slower than at any time in the past two decades, a USA TODAY analysis shows. Here are the top 10 major routes where flight times have increased, gate to gate.
http://money.aol.com/news/articles/_a/air-trips-slowest-in-past-20-years/20080418074309990001 Air trips slowest in past 20 years - USATODAY.com


10 Things Your Airline Won't Tell You
Your hard-earned air miles are worth less all the time. We love to sock you with hidden fees. Customer service isn't always our top priority. Go inside the airline industry and see their secrets.
10 Things Your Airline Won't Tell You (10 Things: Personal Finance) at SmartMoney.com


Are There Too Many Women Doctors?
As an MD shortage looms, female physicians and their flexible hours are taking some of the blame.
Are There Too Many Women Doctors?


Squeezed Lenders Abandon Students
The exodus of lenders means students must be vigilant about securing loans. Here's how.
Squeezed Lenders Abandon Students (Consumer Action: Personal Finance) at SmartMoney.com


The Brothers Behind Ultimate Fighting
Two casino tycoons turned a violent fight club into a billion-dollar sports empire.
The Brothers Behind Ultimate Fighting - Forbes.com
Also: Ultimate Fighting Superstars

BP (NYSE: BP) closed at $67.29. WTI Crude futures are recently up 0.30% to $115.23 according to Bloomberg. BP is a holding company operating through three business segments: Exploration and Production, Refining and Marketing and Gas & Power and Renewable. BP May option implied volatility of 27 is near its 26-week average according to Track Data, suggesting non-directional price movement.

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

Genentech (NYSE:DNA) was cut to "market weight" from "overweight" at Thomas Weisel according to MarketWatch.

Broadpoint upgraded Aventine Renewable Energy (NYSE:AVR) to "neutral" from "under-perform" according to Briefing.com. The news service also reports that JP Morgan upgraded BP (NYSE:BP) to "overweight" from "neutral."

Harley-Davidson's (NYSE:HOG) sales will be hurt in Q1 by an overall 7 percent and 9 percent motorcycle sales drop nationwide according to Wachovia research quoted by the AP.

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

U.S. lawmakers are going to get their chance today to ask executives from five of the world's largest oil companies what their take is on current gasoline prices.

Executives from the top three American oil companies -- Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX) and ConocoPhillips (NYSE: COP) -- will be present at today's hearing, as well as executives from BP (NYSE: BP) and Royal Dutch Shell (NYSE: RDS.A). While the executives are predictably going to blame the current high gasoline prices on surging oil, it will still be interesting to see just how hard lawmakers hit the executives.

For the executives, it can't be a good feeling to be walking into today's hearing. The hearing is being called "Drilling for Answers: Oil Company Profits, Runaway Prices and the Pursuit of Alternatives." The hearings will be chaired by Rep. Ed Markey of Massachusetts, who in the past has been a vocal critic of the oil industry.