Overallotment: April 8

• U.S. to ask taxpayers to invest in the bank bailouts they are financing [in other news, Barney Frank to hold hearings on making shorting an act of treason](NYT)
• One REIT that is not undergoing massive dilution, HPT, is instead suspending all 2009 common stock dividends [stock likely to skyrocket] (PR)
• The investment banking game of musical chairs (FT)
• Taxes to spike in at least ten more states (WSJ)
• Hong Kong prepares to dump US dollar for Yuan (Bloomberg) [HT Steve]
• Elizabeth Warren's report on the first six months of TARP (US Senate)
• Japan implementing a $154 billion stimulus package, a whopping 3% of GDP (Bloomberg)
• Euro weakening for fundamental reasons? What is wrong with it - can't it just be like the U.S. market for once? (Bloomberg)
• The Moody's flamethrower takes out Mizuho next (Bloomberg)
• Economic collapse for dummies (Melting Pot Project)
• Obama falls short of dealing with deficit [but long in exacerbating it] (WSJ)
• The accelerating rate of unemployment (Global Economic Analysis)

Robert Savage (GS) market recap:

Green shoot fans beware … it is snowing in NYC today. While we certainly aren't botanists, snow flurries on April 8th simply cannot be the greatest of signs. We headed into today focused on fixed income – Fed minutes, a $35bn 3-year note auction, and another round of Fed purchases all on the docket. The minutes did not add much new information, but many seemed relieved that the decision to buy treasuries was not more hotly debated. Likewise, both the 3-year note auction and the Fed short-dated treasury purchases were both non-events. When you add it all together, you get a small rally in treasuries as the Fed's continued concerns over downside risks appear to be the most important headline. You can also easily chalk up the rally to cleaner positioning or to the rally in UK gilts. In other news, equities traded up 1% on a combination of M+A activity, a new uptick rule proposal, and the news that the Treasury would give TARP funds to life insurers. In FX, most crosses traded in narrow ranges as flows were dominated by those who needed to trade rather than those initiating new risk. Perhaps the biggest story in FX today came from our GS strats who have both updated our EUR forecast (1.40, 1.45, and 1.45 in 3, 6, and 12-months respectively) and become more bullish carry. One final development worth keeping an eye on, USD funding continues to improve. The short-term FX forwards market was one of the first shoes to drop back in August 07, so improvement here bodes well. Expect another quiet day tomorrow; the Bank of England rate decision and the US trade balance are the key events.