Friday Watch

Evening Headlines 
Bloomberg:  

• Islamic State Says It Destroyed Ancient Relics in Mosul Museum. Islamist militants used sledgehammers and drills to smash ancient artifacts and statues in Iraq’s northern city of Mosul, saying the relics were against the teachings of Islam, according to a video by Islamic State. The five-minute video, posted on websites used by the jihadist group, shows several bearded men inside what’s identified as the Mosul Museum, breaking up large sculptures. In another scene, a man drills through the statue of a winged bull, an Assyrian protective deity, that was almost 3,000 years old. 
• Easy Money Outweighs Fed to Fuel Record Debt Flows to Asia Haven. This year was tipped to be the one when U.S. interest-rate increases would suck money from emerging markets. It’s not turning out that way in Asia. Unprecedented economic stimulus from Europe to Japan has prompted investors to pump a combined $14.4 billion into Indian, South Korean and Indonesian local-currency government debt this year, the most on record for the three markets, exchange data show. That’s helped cut the average yield on emerging-market sovereign notes in Asia by 21 basis points to 4.19 percent, compared with the 4.72 percent for developing nations globally.  
• Asian Stocks Head for Biggest Monthly Gain Since September 2013. Most Asian stocks rose, with the regional benchmark’s poised for its biggest monthly advance since September 2013, as health-care and consumer shares climbed. About three shares rose for every two that fell on the MSCI Asia Pacific Index, while added less than 0.1 percent to 146.35 as of 9:07 a.m. in Tokyo. The gauge is on track for a 4.3 percent gain this month and a 0.9 percent weekly advance after Greece and its creditors this week brokered a deal to extend bailout funding for four months and Federal Reserve Chair Janet Yellen damped concerns of an imminent rate increase.
• Oil Sails From Russia to Asia Faster on Smaller Ships. With supertankers booked solid carrying cheap crude, smaller vessels are taking advantage of the opportunity by hauling record volumes of Russian oil to Asia. 
• Gold Heads for Weekly Climb on Signs China Demand Increasing. Gold headed for its first weekly advance in more than a month on signs demand in China is picking up and as investors assess the outlook for U.S. interest rates. Bullion for immediate delivery added as much as 0.2 percent to $1,211.76 an ounce and traded at $1,210.20 at 10:13 a.m. in Singapore, according to Bloomberg generic pricing. Gold is up 0.7 percent this week, the first gain since the period to Jan. 23. Prices are set to drop 5.7 percent in February.  
• Aluminum Premiums in Europe Decline by Most in at Least 17 Years. The premium aluminum buyers in Europe pay to obtain the metal had the sharpest three-month drop in at least 17 years, according to researcher Harbor Aluminum. The fee added to London Metal Exchange prices dropped to $300 a metric ton as of Thursday, with some “distressed” selling at as low as $250 a ton, according to Jorge Vazquez, managing director at Harbor Aluminum in Austin, Texas. That’s down from $425 to $445 on Nov. 25, and the sharpest three-month drop since the data begins in 1998, Vazquez said.  
• Goldman(GS) Sells Record Default-Swap-Tied Note as Risky Bets Revive. Goldman Sachs Group Inc. sold its largest note ever tied to an index of credit-default swaps on high-yield bonds earlier this month, as investors go coupon-hunting in risky debt. On Feb. 18, the investment bank issued 30 million Swiss francs ($31.6 million) of five-year securities linked to the Markit iTraxx Europe Crossover Series 22 Index, its biggest such deal since Bloomberg began collecting the data in 2000. Sales of notes tied to the Crossover index, which tracks 75 European companies with an average rating five levels below investment grade, more than doubled to $171.6 million in February from the same period last month.

Wall Street Journal:

• Presidential Hopefuls Court the GOP Base. Republican presidential aspirants tout their conservative credentials at annual CPAC event. For conservative Republicans, the most wide-open presidential contest in decades has created a wealth of contenders, a field of would-be candidates eager to tout their credentials in pushing the GOP to the political right. Many of them began making their appeals Thursday at the annual gathering of the Conservative Political Action Conference that has become a landmark on the campaign calendar.
• Wealthy Jeb Bush Supporter Aims to Push Him to Combat Climate Change. As Jeb Bush wins support from donors who favor moderate positions on social issues such as gay marriage, the potential 2016 Republican presidential candidate is also getting pushed on the environment and climate change. At least one wealthy Republican donor who supports Mr. Bush, Andrew Sabin, aims to push the former Florida governor to adopt a platform that would take steps to combat climate change and environmental degradation if elected president.
• Biggest U.S. Health Insurer Tightens Rules on Hysterectomy Coverage. UnitedHealth(UNH) to require doctors to get authorization before performing most types of procedure; decision marks another blow to laparoscopic power morcellator, which can spread hidden cancer.
• Resale Prices Tumble on Electric Cars. Tax credits on new models, worries about battery life undercut efforts to peddle used Nissan Leaf. Nissan Motor Co. ’s Leaf electric car has been a big seller for Atlanta car dealer Pat Hoban over the past three years, thanks to its low monthly lease price. But as those car leases are beginning to expire amid cheap gasoline, the vehicle is becoming a bit of a headache.
• Welcome to the Obamanet. The FCC snatches political control over more of the economy.
  
  The Federal Communications Commission’s decision Thursday to regulate the Internet as a public utility is a depressing moment for American innovation and economic liberty. The FCC is grabbing political control over a vibrant market that until now has been driven by inventors and consumers. 

Fox News:

• Intel chief says 2014 deadliest year for terror ever recorded, in counter to upbeat Kerry. The top U.S. intelligence official on Thursday gave a drastically different assessment than Secretary of State John Kerry of the terror threat -- declaring 2014 the deadliest year for global terrorism ever recorded, after Kerry claimed that threat was diminishing. Director of National Intelligence James Clapper, testifying on Capitol Hill, catalogued the growing terror-fueled violence in stark terms.

MarketWatch.com:

• There’s more to oil’s Thursday plunge than record-high supplies.

Zero Hedge:

• Greece Warns It May Default On IMF Loan Next Week.
• Greenspan: "The Stock Market Is Great", But The Economy Feels Like In "The Late Stages Of The Great Depression".
• Crude Carnage Sends Stocks Lower Despite Last-Hour Buying-Panic. (graph)
• EU Fixed? Spanish Credit Risk Up 30% Since Greek Elections. (graph)
• 3 Things - High Yield Warning, Yellen's Employment & Economy.
• ECB Warns UK: Excluding Russia From SWIFT "Could Undermine Confidence In The Whole System".
• 2 Years Of Abenomics Later: Joblessness Jumps As Retail & Household Spending Slump. (graph)
• Meet Londoner Mohammed Emwazi - ISIS Chief Executioner 'Jihadi John'.
• Gas Prices Hit 2-Month Highs, Rise At Fastest In a Decade. (graph)

Business Insider:

• Japan's Shinzo Abe doesn't know what to say in what may be his most important statement of the year.
• North Korea's nuclear weapons program is booming.
• Greek protesters have been throwing fire bombs in anti-government riots.
• Hedge manager sues the US government over a 'reckless' raid that shut down his $4 billion firm.
• Russia is bent on 'creeping annexation' of its neighbors.
• Chinese banks loaned $22 billion to prop up Latin American countries amid the oil crash.

Reuters:

• J.C. Penney(JCP) shares tumble after surprise miss on profit. Shares of department store chain J.C. Penney Co Inc tumbled 12 percent in after-hours trade on Thursday after it posted a surprise quarterly loss and forecast small margin improvements this year. J.C. Penney said sales at stores open more than a year rose 4.4 percent in the holiday quarter, the high end of its guidance for 3.5 to 4.5 percent growth, driven by demand for men's apparel, jewelery, and home goods.
• Investors tell hedge funds they want lower fees -survey. Institutional investors are sending a strong message to hedge funds after last year's largely lackluster returns: charge us less and perform better. Nearly one quarter of 134 investors polled by Preqin Ltd said fees would be a key issue in 2015, the research group wrote in its first-half outlook, released on Thursday.

Rheinische Post:

• EU's Schulz Criticizes Greek Call for Debt Cut. Greek Finance Minister Yanis Varoufakis undermines trust by calling into question agreements made with European counterparts only few days ago and coming up with new demands, EU Parliament President Martin Schulz says in an interview.

ekathimerini:

• Greek Gov’t raises concern over payment to IMF in March. The Euro Working Group discussed Greece’s imminent funding problems on Thursday amid mounting concern about how the country will meet its obligations next months. Earlier in the day, Minister of State for Coordinating Government Operations Alekos Flambouraris suggested that Greece might delay payment to the International Monetary Fund if it cannot find the necessary money.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.25% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 100.0 -.75 basis point.

• Asia Pacific Sovereign CDS Index 61.0 -2.75 basis points.

• S&P 500 futures -.15%.

• NASDAQ 100 futures -.10%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GDP)/-.45
• (RDC)/.89
•  (ISIS)/.04

Economic Releases
8:30 am EST 

• 4Q GDP is estimated to rise +2.0% versus a prior estimate of a +2.6% gain.
• 4Q Personal Consumption is estimated to rise +4.3% versus a prior estimate of a +4.3% gain.
• 4Q GDP Price Index is estimated unch. versus a prior estimate of unch.
• 4Q Core PCE is estimated to rise +1.1% versus a prior estimate of a +1.1% gain.

9:00 am EST

• ISM Milwaukee for February is estimated to rise to 54.0 versus 51.60 in January.

9:45 am EST

• Chicago Purchasing Manager for February is estimated to fall to 58.0 versus 59.4 in January.

10:00 am EST

• Pending Home Sales for January are estimated to rise +2.0% versus a -3.7% decline in December.
• Final Univ. of Mich. Consumer Sentiment for February is estimated to rise to 94.0 versus a 93.6 prior estimate. 
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Mester speaking, UK GDP report, (WFM) investor conference, (ETN) analyst conference and the (G) analyst day could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and consumer shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 50% net long heading into the day.