Wednesday Watch

Evening Headlines

Bloomberg:

• Huawei's Work in Iran May Violate U.S. Sanctions, Lawmakers Say. Six U.S. lawmakers urged the State Department to investigate whether Huawei Technologies Co. violated U.S. law by supplying sensitive technology to Iran. Huawei, China’s largest maker of phone equipment, said Dec. 9 it would voluntarily restrict business in Iran because of that country’s “increasingly complex situation.”
  
• Denny's Will Raise Menu Prices in 2012 to Offset Food Costs. Denny’s Corp., a family restaurant chain with about 1,600 locations, will raise menu prices this year to help make up for higher commodity costs and maintain profit margin, Chief Executive Officer John Miller said.
• Bank Earnings Jump 57% in Analyst Forecasts Proved Wrong in 2011. Analysts’ failure to foresee declining earnings per share for the biggest U.S. banks last year hasn’t stopped them from predicting an even bigger profit surge for 2012. The six largest lenders, including JPMorgan Chase & Co., Bank of America Corp. and Goldman Sachs Group Inc., may post an average profit increase of 57 percent this year, according to 184 analysts’ estimates compiled by Bloomberg. A year ago, analysts predicted profit at the banks would climb 32 percent in 2011. Instead, earnings per share probably fell 18 percent as the economic recovery analysts counted on never took hold.
• Pimco Total Return Lost $5 Billion to Withdrawals Last Year. Bill Gross’s Pimco Total Return Fund had $5 billion in client redemptions last year as the world’s largest mutual fund trailed rivals, its first year of withdrawals in records going back to 1993, according to Morningstar Inc. Clients pulled $1.35 billion from the fund in December, according to Chicago-based research firm Morningstar. Pimco Total Return, managed by Gross out of Newport Beach, California, returned 4.2 percent in 2011, trailing 69 percent of peers, according to data compiled by Bloomberg.

Wall Street Journal:

• Santorum and Romney Battle for Lead in Iowa. Former Massachusetts Gov. Mitt Romney and former Pennsylvania Sen. Rick Santorum were locked in a near dead heat in the first presidential nominating contest of 2012, as Iowa voters split their support Tuesday night among candidates with distinctly different viewpoints. With most returns in, the two candidates were just a handful of votes apart, with both receiving about 25% of the vote.
• Live Blogging the Iowa Caucuses.
  
• China Home Prices Fall Again. Average housing prices in 100 major cities in China fell in December compared with November, marking the fourth consecutive sequential decline, China Real Estate Index System said Wednesday. The data provider said a survey of property developers and real-estate agencies showed the average home price in December was 8,809 yuan ($1,400) a square meter, down from 8,832 yuan in November. The survey, which the company compiles together with online real-estate brokerage SouFun Holdings Ltd., is considered a key indicator following a decision to scrap a national property price index in February 2011. China Real Estate Index System said property prices in 60 cities fell in December compared with the previous month, whereas 37 cities posted a rise, and prices in three cities were unchanged. Compared with a year earlier, the average price of a new property in December was up 2.86% from 8,564 yuan in December 2010, a slower increase than November's 4.06% year-on-year rise. The National Bureau of Statistics is scheduled to issue December data for residential property prices in 70 major cities on Jan. 18.
• France Looks to Neighbor in Plan to Raise Sales Tax. French President Nicolas Sarkozy's government said on Tuesday that it would borrow yet another page from Germany's economic textbook in a bid to make France's products more competitive and finance the nation's wide-reaching and heavily indebted social-welfare system.
• Some Venture Funds Hit 'Pause' on Big Deals. Over the past year, Marc Andreessen invested in a series of high-profile Web companies, including Facebook Inc., Twitter Inc. and Groupon Inc. Now the Silicon Valley venture capitalist is hitting the pause button on such big-name deals.
• Big Banks Lower Outlook for Asia. Bowing to increased competition and weaker markets, investment banks are lowering expectations and cutting costs in Asia, a region that has been a crucial source of growth for the industry in recent years. Senior bankers in Hong Kong, who are emerging from several weeks of tense budget meetings for 2012, say they are feeling pressure from their bosses to justify heavy investment across the region as trading volumes there and around the world shrink and banks struggle with tighter regulations, the fallout from Europe and weak economies world-wide.

Dow Jones:

• CFTC Won't Delay Position Limits. The Commodity Futures Trading Commission has rejected a request by two trade groups to delay its implementation of position limits aimed at curtailing bets in the commodities markets, according to two people familiar with the matter.

Zero Hedge:

• MBIA Wins Summary Judgment Against Countrywide; Bad News For Bank of America(BAC).
• On The German Triple-C Issue: Culture, Clausewitz and Clausius.
• US Closes 2011 With Record $15.22 Trillion In Debt, Officially At 100.3% Debt/GDP, $14 Billion From Breaching Debt Ceiling.

CNBC:

• Firearms Sales Ring in 2012 With a Bang. Uncertainty in a presidential election year. Warriors returning from the battlefields. The comeback of the hunter. These are just some of the reasons that gun experts and advocates cite as reasons why firearms makers are ringing in 2012 like gangbusters. According to the FBI, more than 1.5 million instant criminal background checks were conducted in December for firearms purchases, topping November’s record.
• Investors Steer Clear of Chinese IPOs in US. The value of Chinese companies delisting from U.S. exchanges in 2011 exceeded the amount Chinese companies raised via initial public offerings in the U.S., a stark sign of how high-profile fraud allegations and slowing growth have made many foreign investors bearish on Chinese groups.

IBD:

• Mattress Maker Select Comfort(SCSS) Sees Strong Growth. There's nothing like the promise of a comfortable night's sleep to get consumers to shell out big bucks for a mattress. Reinforce that promise with a TV ad campaign and spruced-up products, and you've got the makings for hefty sales and profit gains. Look no further than Select Comfort for proof.

NY Times:

• Hedge Funds End 2011 On A Very Bad Note. When the history books are written, 2011 may go down as the dark ages for hedge funds. Last year was dismal for hedge fund performance, according to an index maintained by Eurekahedge, an independent information firm that specializes in hedge fund data. Amid political uncertainty, the debt-ceiling debate in Congress and mounting fears of a European financial crisis, the Eurekahedge index, which measures average returns, dropped 4.1 percent for the year. Even as losses mounted, investors continued to flock to hedge funds. In 2011, the industry started more than 1,100 portfolios, the second-highest number in the history of the index, the firm said. In total, $67 billion flowed into hedge funds in 2011, bringing the overall industry size to $1.72 trillion, the report said. The year was especially rough for some of the biggest names in the hedge fund pantheon.
• Online Sales Buoy UPS(UPS) and FedEx(FDX). With sales rising to a record $35.3 billion in November and December — a 15 percent increase from a year ago, according to the research service comScore — online retailers are celebrating.

CNN:

• Bailout Concerns Mounting For Federal Housing Agency. Concerns are growing that the Federal Housing Administration will need to be bailed out by taxpayers. The agency's latest monthly outlook report revealed a spike in serious delinquencies for FHA-insured loans, posing a further threat to the agency's already depleted cash reserves.

Rasmussen Reports:

• Election 2012: Generic Republican 47%, Obama 43%.

Reuters:

• Regulators Inching Forward on Dodd-Frank Rules. U.S. regulators have only met roughly a quarter of pre-2012 deadlines included in the controversial Dodd-Frank financial reform law, according to a report released on Tuesday. A year and a half after Congress passed Dodd-Frank, regulators are struggling to keep pace with deadlines for hundreds of rules they are tasked with writing to help stabilize markets after the 2007-2009 financial crisis. According to the report by the law firm Davis Polk, a total of 200 deadlines have passed as of the end of 2011, and regulators missed 149 of them. There are 400 total rulemaking requirements in Dodd-Frank, the report says.
• MF Global Sold Assets to Goldman(GS) Before Collapse: Sources. MF Global unloaded hundreds of millions of dollars' worth of securities to Goldman Sachs in the days leading up to its collapse, according to two former MF Global employees with direct knowledge of the transactions. But it did not immediately receive payment from its clearing firm and lender, JPMorgan Chase & Co(JPM) , one of the sources said. The sale of securities to Goldman occurred on October 27, just days before MF Global Holdings Ltd filed for bankruptcy on October 31, the ex-employees said. One of the employees said the transaction was cleared with JPMorgan Chase. At the same time MF Global, which was run by former Goldman Sachs head Jon Corzine, was selling securities to Goldman to raise badly needed cash, the futures firm was also drawing down a $1.2 billion revolving line of credit it had with JPMorgan, according to one of the former MF Global employees.
• Acme Packet(APKT) Forecasts Weak Q4; Shares Fall. Acme Packet Inc forecast a fourth quarter that lagged analysts' estimates and cut its 2011 outlook on concerns of crippled capital spending budgets at its telecommunication customers in North America. Shares of the network infrastructure provider, which have lost almost two-thirds of their value since touching a year-high of $84.50 on April 29, fell to $25.12 in trading after the bell. They closed at $31.81 on Tuesday on Nasdaq.
• Euro Short-Squeeze Rally Stalls, Debt Auctions Loom. A short-squeeze rally in the euro stalled in Asia on Wednesday ahead of debt auctions in Germany, with market players dubious about the euro zone's plans to fend off a sovereign debt crisis as some countries face huge debt refinancing needs. The euro is losing momentum after posting its biggest one-day rally in nearly two months on Tuesday as investors trimmed heavily bearish positions in the common currency after upbeat data bolstered risk appetite. "This seems like just a temporary risk-on trade, helped by easing in dollar funding pressure after the year-end, some good economic numbers and a lack of bad news out of Europe," said Minori Uchida, a senior analyst at Bank of Tokyo-Mitsubishi UFJ. "The fact is that the euro has still many hurdles to clear. We think the euro will likely head to $1.25," Uchida said, noting Italy's huge debt refinancing burden.

Hong Kong Economic Journal:

• Emperor Sees 30% Drop in Hong Kong Home Prices in 2012. Prices of properties in outlying areas of Hong Kong may decline more sharply than those in more central locations, citing Donald Cheung, executive director at Emperor International. Home prices may fall between 20% to 30%, Cheung said.

Economic Daily News:

• Container-shipping cos. will find it difficult to make profits this year on oversupply of vessels and the global slowdown, citing Evergreen Group Chairman Chang Yung-fa.

South China Morning Post:

• Shenzhen 'wants to kill' HK Factories. Manufacturers angered by the decision to implement pay rise next month, after municipal authorities had earlier offered to shelve any increase. Shenzhen's minimum wage will rise from next month, ending a one-month delay to the increase rather than a year-long grace period that angry Hong Kong manufacturers had asked the municipal authorities for in December.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 196.0 -7.5 basis points.
  
• Asia Pacific Sovereign CDS Index 157.0 -5.0 basis points.
• FTSE-100 futures -.13%.
  
• S&P 500 futures -.02%.
  
• NASDAQ 100 futures -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (UNF)/1.09
• (RECN)/.12
• (SONC)/09
• (MOS)/1.30

Economic Releases
10:00 am EST

• Factory Orders for November are estimated to rise +2.0% versus a -.4% decline in October.

Afternoon:

• Total Vehicle Sales for December are estimated to fall to 13.5M versus 13.59M in November.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The weekly retail sales reports, weekly MBA mortgage applications report and the Citi Entertainment/Media/Telecom Conference could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by financial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Rising into Final Hour on Euro Bounce, Better Economic Data, Short-Covering, Fund Inflows

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Below Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 22.82 -2.48%
  
• ISE Sentiment Index 91.0 -36.36%
  
• Total Put/Call .79 -7.06%
  
• NYSE Arms .87 -36.39%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 118.01 -1.64%
  
• European Financial Sector CDS Index 250.42 -10.22%
  
• Western Europe Sovereign Debt CDS Index 374.17 +5.22%
  
• Emerging Market CDS Index 295.65 -3.69%
  
• 2-Year Swap Spread 48.0 +1 bp
  
• TED Spread 58.0 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -103.0 +15.5 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 170.0 +7 bps
  
• China Import Iron Ore Spot $138.30/Metric Tonne -.1%
  
• Citi US Economic Surprise Index 65.0 -4.4 points
  
• 10-Year TIPS Spread 2.00 +4 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +132 open in Japan
• DAX Futures: Indicating -6 open in Germany

Portfolio:

• Higher: On gains in my Tech, Medical, Retail and Biotech sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 breaks convincingly above its 200-day moving average as it approaches the high-end of its recent range, despite Eurozone debt angst, global growth fears, technical resistance and high energy prices. On the positive side, Coal, Alt Energy, Oil Service, Steel, Networking, Homebuilding, I-Banking and Bank shares are especially strong, rising more than +3.0%. Cyclical shares are relatively strong and (XLF) has traded well throughout the day. Copper is rising +2.79% and Lumber is gaining +.84%. Major Asian indices are up 1-3% in the new year already, while European shares have risen 2-4% so far. The Bloomberg European Bank/Financial Services Index rose +1.9% today. The euro is surging today as year-end bets against the currency hit a new record. The rise comes despite a think tank’s warning that a Eurozone collapse will commence this year.The Germany sovereign cds is falling -1.8% to 101.83 bps, the Italy sovereign cds is falling -2.26% to 491.83 bps and the China sovereign cds is falling -4.5% to 142.08 bps. Moreover, the European Investment Grade CDS Index is falling -2.89% to 163.49 bps. On the negative side, Utility, Hospital, Restaurant, Telecom, Disk Drive and Education shares are lower-to-flat on the day. Oil is surging +4.2%, the UBS-Bloomberg Ag Spot Index is rising +.88% and Gold is jumping +2.7%. The 10-year yield is rising +8 bps to 1.96%. The Spain sovereign cds is gaining +1.86% to 400.83 bps, the US sovereign cds is jumping +4.57% to 51.18 bps, the UK sovereign cds is gaining +1.72% to 99.17 bps and the France sovereign cds is rising +.02% to 218.33 bps. The Italian/German 10Y Yield Spread is rising +.22% to 502.13 bps(still near the highest since Dec. 1995). The Western Europe Sovereign CDS Index is still approaching its all-time high. The TED spread continues to trend higher and is very near the highest since May 2009. The 2Y Euro Swap Spread is near the highest since Nov. 2008. The 3M Euribor-OIS spread is very near the highest since February 2009. The 3M EUR/USD Cross-Currency Basis Swap is rising +9.2% to -103.50 bps, which is back to early-Nov. levels. The Libor-OIS spread is now at the widest since May 2009, which is also noteworthy considering the equity surge off the recent lows. Overall, European credit gauges are still performing very poorly given that the European debt crisis “can-kicking” solution is supposedly at hand, which remains a large red flag. China Iron Ore Spot has plunged -23.6% since Sept. 7th of last year. Today’s gains are paced by many of last year’s worst performers(coal, steel, homebuilders and Banks) and there are few high-volume big-gainers for a 200+ DJIA day. Overall, today’s rally looks like many of the big headfakes over the last few months. For a sustainable equity advance into the new year, I would still expect to see meaningful European credit gauge improvement, subsiding hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. One of my longs, (GOOG), is breaking out technically to a multi-year high on volume. While the stock is extended short-term, I see substantial outperformance for the shares over the intermediate-term. I expect US stocks to trade mixed-to-lower into the close from current levels on Eurozone debt angst, global growth fears, rising energy prices, technical resistance, profit-taking and more shorting.

Today's Headlines

Bloomberg:

• Monti Prescribes 'Aspirin' for Debt Ache. Prime Minister Mario Monti is prescribing more “aspirin” to revive an Italian economy that’s probably in a recession and tackle almost half a trillion euros in debt sales after the worst year on record for Italian bonds. At a year-end press conference in Rome on Dec. 29, Monti pledged to ready measures to spur competition and growth in the euro region’s third-biggest economy before a meeting of European finance ministers on Jan. 23. The plan comes after he spent his first month in office enacting 30 billion euros ($39 billion) in austerity and growth measures aimed at taming Italy’s surging borrowing costs. “Monti has taken only one aspirin, now he needs to take two,” Marc Chandler, chief currency strategist at Brown Brothers Harriman & Co. in New York, said by phone. Still, “investors are underestimating Italian resolve and European resolve to keep Italy in the monetary union” as well as “the range of tools Italy still can have with a strong leadership,” he said. The key to the euro’s survival may lie with Italy, the region’s second-biggest debtor after Greece. The nation must repay about 130 billion euros in debt in the first quarter with its 10-year bond yield close to the 7 percent level that led Greece, Ireland and Portugal to seek bailouts. The $2.3 trillion economy probably entered a recession in the three months through December, its fourth since 2001, according to the government.
  
• Merkel Resumes Debt Crisis Fight as Scrutiny of German President Increases. Chancellor Angela Merkel returns from a two-week break to the front line of the debt crisis amid a clamor over the conduct of Germany’s president that threatens to damage her own standing and detract from her efforts to defend the euro. Merkel, whose last official engagement was on Dec. 20, will resume her public duties in two days with the public spotlight on President Christian Wulff over a loan from a friend’s wife to buy a house and vacations at the homes of business people. Scrutiny of the mainly ceremonial president intensified yesterday after Bild, Germany’s biggest-selling newspaper, said that the president had attempted to stop the editor from publishing the loan story last month. “The president is Merkel’s creation and if he’s forced to leave in such an ignominious way it would weaken her,” Jan Techau, director of the Brussels-based European center of the Carnegie Endowment for International Peace, said by phone.
• Weidmann Says ECB as Lender of Last Resort Would Be 'Wrong'. Bundesbank President Jens Weidmann said it would be “profoundly wrong” for the European Central Bank to become a lender of last resort and step up its purchases of government bonds to contain the fiscal crisis. “It may appear tempting from the point of view of highly- indebted states and the banks that hold their paper if central banks assume their role of lender of last resort,” Weidmann wrote in an opinion piece for Germany’s Boersen-Zeitung newspaper published today. “However, the Eurosystem would throw its principles overboard and ignore the existing legal framework. This would be the profoundly wrong way.”
• Hungary Borrowing Costs Jump to 2009 High; Bond Risk at Record. Hungary sold three-month Treasury bills at the highest yield since 2009 at its first debt auction after passing laws that diminished the country’s chance of obtaining international financial aid. The cost of contracts to protect the nation’s debt climbed to a record. The government raised 45 billion forint ($190 million), the full amount planned, according to data from the Debt Management Agency published on Bloomberg. The average yield increased to 7.67 percent, the highest for three-month notes since August 2009, climbing from 7.43 percent at the last sale a week ago. “The country’s financing will be impossible over the longer term at such high yields,” Balint Torok, an analyst at Buda-Cash Brokerhaz Zrt., said in a telephone interview. “Investor confidence in Hungary is deteriorating further as the government isn’t showing enough commitment to reaching a deal with the IMF and EU.” The cost of insuring Hungarian bonds using credit-default swaps climbed to 651 basis points from 635 basis points on Dec. 30, data provider CMA said. Declines in 10-year forint-denominated bonds lifted yields 27 basis points to 10.36 percent, the highest since June 2009, according to generic prices compiled by Bloomberg at 5 p.m. in Budapest. The spread over similar-maturity Polish debt rose to 447 basis points, the biggest gap since April 2009.
• U.S. Factories Grow as Manufacturing Improves. U.S. factories expanded in December at the fastest pace in six months, adding to evidence manufacturing is improving from India to the U.K. entering 2012. The Institute for Supply Management’s factory index climbed to 53.9 last month from 52.7 in November, the Tempe, Arizona- based group’s data showed today.
• Construction Spending in U.S. Climbs 1.2%. Construction spending in the U.S. rose in November for a third time in four months, indicating the industry helped boost growth at the end of 2011. Building outlays increased (CNSTTMOM) 1.2 percent, exceeding the median estimate of 46 economists in a Bloomberg survey that called for a 0.5 percent gain, Commerce Department figures showed today in Washington. The October reading was revised down to show a 0.2 percent drop from a previously projected 0.8 percent increase, showing the initial data are susceptible to swings in direction.
• China's Wen Sees 'Relatively Difficult' First Quarter as Exports Weaken. Chinese Premier Wen Jiabao said business conditions may be “relatively difficult” this quarter and monetary policy will be fine-tuned as needed. “We see downside pressure on our economy and elevated inflation at the same time,” Wen said during a two-day trip to Hunan province, according to a statement on the government’s website yesterday. “We also face problems of weakening external demand and rising costs for companies.” “With an expected deceleration in property investment and exports, we expect to see more weakness in industrial activity.” Nomura Holdings Inc. said last month that China’s economic expansion may decelerate to 7.5 percent in the three months through March from 9.1 percent in the third quarter, as export growth slows and the government’s campaign to check property prices damps investment. The government seeks to stabilize growth and consumer prices (CNCPIYOY) to “promote social harmony,” Wen said. China’s money supply has “structural issues” and one can’t simply say that there is too much or too little lending or sufficient or insufficient liquidity, Wen said. The government will tighten or loosen policies according to the needs of different industries, he said. “Priority will be given to key projects and projects under construction, and we will limit industries suffering from overcapacity, those that cause heavy pollution and are energy intensive,” Wen said, reiterating existing government policy.
• Hedge Funds Had Second-Worst Year in 2011, Eurekahedge Says. The Eurekahedge Hedge Fund Index was down 4.1 percent in 2011, the Singapore-based data provider said in an e-mailed statement. Total asset flows for the year amounted to $67 billion, bringing the entire industry size to $1.72 trillion, it said.
• Oil Increases on Global Manufacturing, Iran Concerns. Oil climbed to a six-week high after manufacturing in the U.S. and Asia expanded in December and as concern persisted that further sanctions against Iran may disrupt shipments. Crude oil for February delivery rose $3.37, or 3.4 percent, to $102.20 a barrel at 11:52 a.m. on the New York Mercantile Exchange. The contract touched $102.88, the highest level since Nov. 17. Futures climbed 8.2 percent in 2011, the third consecutive annual increase. Brent oil for February settlement advanced $3.37, or 3.1 percent, to $110.75 a barrel on the London-based ICE Futures Europe exchange.
• Gold Rises Most in 10 Weeks on Iran Nuclear Concern: Wien Predicts $1,800. Gold futures headed for the biggest gain in 10 weeks on increased demand from investors after reports that Iran produced its first nuclear fuel rod and as the dollar weakened. Silver also gained. A domestically-made rod was inserted into the core of Tehran’s atomic research reactor after performance tests, the Iranian Students News Agency reported yesterday. Blackstone Group LP’s Byron Wien, who had correctly predicted last year’s gain in gold, said bullion will rally 15 percent in 2012 to $1,800 an ounce. “Fear trade is back because of Iran,” Adam Klopfenstein, a market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “Also, we are seeing buying across commodities because of the weaker dollar.” Gold futures for February delivery climbed 2.3 percent to $1,603.40 an ounce at 12:40 p.m. on the Comex in New York, heading for the biggest gain since Oct. 25. While prices rallied 10 percent last year, the 11th straight annual advance, the metal slumped 10 percent in December and touched $1,523.90 on Dec. 29, the lowest since July 7.
• WJB Capital Halts Brokerage Operations. WJB Capital Group Inc., a Wall Street firm with more than 100 employees, shut its brokerage operations amid “financial issues,” according to its main attorney. “A decision was made -- and I might say it was a very painful decision -- that it would terminate its broker-dealer operations, and it has done so,” Mark Skolnick, general counsel for the company at law firm Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow LLP, said today. The firm has some non- brokerage operations and is exploring “other possibilities,” he said. WJB Capital was “unable to resolve its financial issues in a manner that would have allowed it to continue its operations under the current economic climate and the constraints that would’ve been placed on the corporation and its investors,” Skolnick said.

Wall Street Journal:

• Live Blogging the Iowa Caucuses.
• Europe at the Brink - A WSJ Documentary. (video)
• French, Spanish Bond Yields Rise. French government bond yields rose Tuesday as dealers tried to make room for bond supply later this week, with worries over the country losing its coveted triple-A rating also keeping investors cautious. Spanish bonds also suffered after the new government signalled that the budget deficit in 2011 would be higher than previously estimated, spurring investors to book profits after a recent rally. Italian bond yields meanwhile eased with traders citing purchases by the European Central Bank, although the 10-year yield was still just shy of the psychologically crucial 7% mark that in the past toppled Greece, Ireland, and Portugal.
  

MarketWatch:

• Ten Trends for Hedge Fund Flows in 2012.
• Hedge Funds Like These Biotechs.
  

CNBC.com:

• Total Signs $2.3 Billion Shale Deal With Chesapeake(CHK). France's Total signed a $2.3 billion deal with Chesapeake Energy and EnerVest that will see it expand its position in lucrative shale oil and gas basins in the United States.
• Greek, Italian Cash Heads for Hills, or Underground. Greeks and Italians are taking their money and running, moving it abroad or even burying it underground for fear the euro zone crisis will topple banks and wipe out what remains of their savings.
• Euro Break-Up Biggest Threat in 2012: CFOs Survey.
  

Business Insider:

• A Major Conflict Is Stirring Behind The Scenes In North Korea.
• Fed Announces Major Changes In Communication Strategy.
• Jeff Gundlach: 5 Key Factors Every Investor Should Consider In 2012.
• Starbucks(SBUX) Is Hiking Prices On A Bunch Of Its Drinks To Deal With Rising Costs.
• Byron Wien's 10-Predictions For 2012.
• The 10 Biggest Risks The World Is Facing In 2012.
  

Zero Hedge:

• Exposing American Banks' Multi-Trillion Umbilical Cord With Europe.
• Would A Ponzi By Any Other Name Smell As Bad?
  

LA Times:

• Bank of America(BAC) Severing Some Small-Business Credit Lines. Bank of America is demanding that some small-business customers pay off their credit line balances all at once instead of making monthly payments. Bank of America Corp., under pressure to raise capital and cut risks, is severing lines of credit to some small-business owners who have used them to stay afloat. The Charlotte, N.C., bank is demanding that these customers pay off their credit line balances all at once instead of making monthly payments. If they can't pay in full, they are being offered new repayment plans for as long as five years, but with far higher interest rates than their original credit lines had.
  

c/net:

• Hitwise: U.S. Google(GOOG)+ Traffic Leaps 55% in December.

Reuters:

• Exclusive: Pakistan Taliban Commanders "at each others throats". Al Qaeda, the Afghan Taliban and Pakistani militants have held a series of meetings aimed at containing what could soon be open warfare between the two most powerful Pakistani Taliban leaders, militant sources have said.

Financial Times:

• US and Europe Steel Prices Diverge Sharply. The $500bn-a-year steel market is one of the best barometers of the health of the manufacturing and construction sectors, and the rare split in transatlantic prices offers an insight into business sentiment in the US and Europe as companies prepare to report their annual results. The price of benchmark hot-rolled coil steel in the US Midwest rose to $756 a tonne in December, 12.5 per cent higher than in November, according to CRU, a leading consultancy. The price of the same type of steel in Germany dropped 7.8 per cent, while in Italy it fell 9.4 per cent. The difference between US and German steel prices is $128 a tonne, the largest gap since May 2008, the consultancy said. The split has averaged $20 a tonne over the past decade.

Telegraph:

• A Depressingly Familiar Story Of Denial From The Eurozone.
  

BBC:

• Greece Warns On Euro Exit If Bailout Not Signed. Greece may have to leave the eurozone if it fails to secure its latest bailout from the EU, IMF and banks, a government spokesperson has warned. "The bailout agreement needs to be signed otherwise we will be out of the markets, out of the euro," spokesman Pantelis Kapsis told Skai TV. The government is struggling with public opposition to new austerity measures, demanded by lenders. Analysts suggest the warning is designed to win support for the moves.

Channelnewsasia:

• Singapore Could See 2 Years of Sub-Par Growth. Singapore's economy is expected to enter a phase of slower growth. Deputy Prime Minister Tharman Shanmugaratnam said this is due to the recession in Europe and economic weakness in the US. He added that the expected slowdown may last for at least two years.

Bear Radar

Style Underperformer:

• Small-Cap Growth (+.89%)

Sector Underperformers:

• 1) Utilities -2.10% 2) Hospitals -1.71% 3) Restaurants -.82%

Stocks Falling on Unusual Volume:

• WMB, ZUMZ, GCO, FE, BWLD, PNRA, ESI, NI, AVAV, MDRX, AVEO, TRMB, PANL, THRX, QCOR, IRBT, SPRD, LNCR, SNDK, CPRT, MCHP, WSM, NEE and MTN
  

Stocks With Unusual Put Option Activity:

• 1) SO 2) OCR 3) RY 4) VMC 5) EBAY
  

Stocks With Most Negative News Mentions:

• 1) SO 2) FTEK 3) PEG 4) NEE 5) CEG
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume
  

Bull Radar

Style Outperformer:

• Small-Cap Value (+2.41%)

Sector Outperformers:

• 1) Coal +6.98% 2) Homebuilders +5.60% 3) Steel +4.41%

Stocks Rising on Unusual Volume:

• AIXG, C, BBL, BHP, BTM, SNP, PTR, BT, MAKO, RIMM, TEVA, BLT, IEO, SHG, TRIP, PHH, MJN, DVN, GCI and CHK
  

Stocks With Unusual Call Option Activity:

• 1) PAYX 2) KSS 3) SFLY 4) GILD 5) PANL
  

Stocks With Most Positive News Mentions:

• 1) WSO 2) CSCO 3) CYBX 4) CXW 5) FWLT
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume