Bull Radar

Style Outperformer:

• Large-Cap Growth (-.01%)

Sector Outperformers:

• 1) Oil Service +2.08% 2) Oil Tankers +1.78% 3) Gold +1.55%

Stocks Rising on Unusual Volume:

• BHI, DO, PHG, ARGN, AIXG, AEIM, BSQR, AERL, BLUD, MRVL, RBN, KBH and GT
  

Stocks With Unusual Call Option Activity:

• 1) VCI 2) LIZ 3) RRC 4) TJX 5) GNW
  

Stocks With Most Positive News Mentions:

• 1) SYNT 2) FISV 3) BKE 4) PSS 5) UNT
  

Friday Watch

Evening Headlines
Bloomberg:

• Bond Sales Set Record as GE(GE) Leads $48.2 Billion. Company bond sales in the U.S. surged to the most on record this week and relative yields on investment-grade debt shrank to the narrowest since May as investors boosted bets that economic growth is gaining momentum. Issuance soared to $48.2 billion, eclipsing the $46.9 billion raised in the week ended May 8, 2009, as General Electric Co.’s finance unit sold $6 billion of notes in the largest sale in 11 months, according to data compiled by Bloomberg. Investment-grade bond spreads narrowed to 162 basis points, or 1.62 percentage points, the tightest since May 4, 2010, Bank of America Merrill Lynch index data show.
• Belgium's Leaders Seek Exit From Political Impasse as Bond Spreads Widen. Belgium’s political leadership cast about for solutions to the impasse that has left the country without a full-time government and pushed up the costs of servicing Europe’s third-highest debt burden. Belgian bonds tumbled yesterday after the failure to restart seven-party talks to form a government almost seven months after inconclusive federal elections heightened the risk of a downgrade in the country’s sovereign-debt rating. “We’re back into a serious crisis,” Elio Di Rupo, head of the French-speaking Socialists, the second-biggest force in parliament, told RTBF television late yesterday. “People have really had enough -- this situation is intolerable.” The constitutional feud between the Dutch-speaking north and Francophone south leaves Belgium with a caretaker administration to confront the budget deficit as concern mounts that Europe’s sovereign-debt crisis will escalate. Belgian 10-year bond yields rose 12 basis points to 4.07 percent yesterday, pushing the extra yield over German bonds up by 15 basis points to 115 basis points. The spread, a gauge of the risk of investing in Belgium, has risen from 79 basis points on election day June 13. Belgium’s debt was 98.6 percent of gross domestic product in 2010, trailing only Greece’s 140.2 percent and Italy’s 118.9 percent among the 17 countries using the euro, according to European Commission estimates.
• Copper Heads for First Weekly Decline in Six Amid China Tightening Concern. Copper in London headed for the first weekly drop in six as concerns that China is set to further tighten monetary policy in the first quarter curbed demand, while rising inventories signaled adequate supply. “Market sentiment on China commodities in 1Q11 will be largely driven by potentially further tightening of monetary policies,” Goldman Sachs Group Inc. analysts Julian Zhu and Steven Tao wrote in a report today. “Potential tightening measures are likely to cause further near-term pressure on Chinese commodities.”
• House Budget Chief Says No U.S. State Bond Bailouts. U.S. Representative Paul Ryan, the Budget Committee chairman in the House of Representatives, said Republicans won’t save states from defaulting on debts. “We are not interested in a bailout,” the Wisconsin Republican said today in Washington. Ryan said some states are “already telling us” that, when asked what his response would be if he was told they were in danger of defaulting. U.S. states face a combined $140 billion in deficits in the next fiscal year, the Washington-based Center on Budget and Policy Priorities said Dec. 16. State tax collections remain below pre-recession levels, according to the Nelson A. Rockefeller Institute of Government in Albany, New York. No state has defaulted on its debt since Arkansas did in 1933. “Should taxpayers in frugal states be bailing out taxpayers in profligate states?” Ryan asked during a forum near the Capitol. “Should taxpayers in Indiana, who have paid their bills on time, who have done their job fiscally, be bailing out Californians, who haven’t? No, that’s a moral hazard we are not interested in creating.”
• Republicans Say Higher U.S. Debt Limit Depends on Specific Spending Cuts. Republicans in the U.S. Congress told President Barack Obama and Democrats they won’t agree to raise the government’s debt limit unless specific limits are set on spending. Any increase must be “accompanied by meaningful action by the president and Congress to cut spending and end the job- killing spending binge,” House Speaker John Boehner said in a statement today after the Obama administration asked Congress to boost the debt ceiling by March 31. Boehner, of Ohio, and House Budget Committee Chairman Paul Ryan, of Wisconsin, said that a default on government debts isn’t an option. Still, Ryan suggested Republicans may use the debt-ceiling issue as leverage to attach conditions that would force Obama to sign them into law or force a default. “Republicans are not interested in just a naked debt- ceiling increase,” Ryan said at a Washington forum on economic policy. “Nobody likes brinksmanship, but what we really don’t want is runaway spending.” Republicans “want to do something that gets us pointed in the right direction,” he said.
• Goldman Sachs(GS) Efforts to Burnish Image May Be Undermined by Facebook Deal. Just as Goldman Sachs Group Inc. prepares to unveil business standards aimed at improving its reputation after settling fraud charges last year, the Facebook Inc. stock sale to clients shines new light on the firm’s potential conflicts of interest.
• Apple's(AAPL) iPad, Dow's(DOW) Soda Drive U.S. Fourth-Quarter Profits to 19-Year High. U.S. corporations are set to report their most profitable fourth quarter on record as companies from Apple Inc. to Dow Chemical Co. feed the demand for iPads, caustic soda and capital goods that’s bolstering the economy. Earnings per share for all Standard & Poor’s 500 Index companies are expected to have risen about 20 percent to $22.05 for the three months ended Dec. 31, according to analysts’ estimates compiled by Bloomberg. Profits excluding the financial industry may have climbed 12 percent, forecasts indicate.
• Australian Floods May Slow Economy, Extend Rate Pause. Northeastern Australia’s worst floods in half a century are likely to slow the nation’s economy and prompt the central bank to refrain from raising interest rates as inundated coal mines reduce export income. Disruption to mining and damage to crops in Queensland will damp national growth by 0.2 percentage point this quarter, according to the median of eight estimates in a Bloomberg survey. The Reserve Bank of Australia, which meets Feb. 1, may discuss what could prove to be a “significant impact” on the economy, board member Donald McGauchie said this week. “The RBA is likely to tread more carefully than it otherwise might have,” said Stephen Walters, chief economist for Australia at JPMorgan Chase & Co. in Sydney, who abandoned his call for a February rate increase and now sees no move until May.
• China May Scrap Loan Quota, Rely on Reserve Ratios, Mizuho Says. Chinese officials may be moving toward scrapping the nation’s lending quota and instead relying on adjusting banks’ reserve requirements to limit credit growth, Mizuho Securities Asia Ltd. said. Shen Jianguang, a Hong Kong-based economist for Mizuho, commented late yesterday in an e-mailed note on a China Securities Journal report that the central bank may make monthly adjustments to requirements for individual lenders. “Clearly the central bank is trying again to scrap the loan-quota system,” said Shen, who has worked for the European Central Bank and the International Monetary Fund. The expanded use of reserve ratios “could be an effective measure to curb bank lending, but the implementation will be difficult.”
• AIG Set to Issue 75 Million Warrants as Dividend to Shareholders. American International Group Inc., the insurer bailed out by the U.S. government, plans to issue 75 million warrants to shareholders this month as it works to regain independence and repay the $182.3 billion rescue.
• Gold Set for the Longest Losing Run Since 2009 on U.S. Recovery. Gold dropped for a fifth straight day, the longest losing streak since August 2009, as signs that the U.S. economy is recovering strengthened the dollar and curbed demand for a haven. Silver, platinum and palladium all declined. Bullion for immediate delivery lost as much as 0.3 percent to $1,367.53 an ounce and traded at $1,368.40 at 10:26 a.m. in Seoul. The price has tumbled 3.7 percent this week after advancing 30 percent in 2010.
• Facebook is Said to Plan to Start Reporting Finances by 2012. Facebook Inc. plans to start reporting its financial results by April 2012, even if it hasn’t held an initial public offering, according to a document sent to prospective investors. The company would be forced to make the disclosures because it expects to have 500 or more shareholders by the end of this year, a threshold that makes reporting results necessary under U.S. Securities and Exchange Commission rules, said a person who reviewed the document.
• Samsung Profit Falls More Than Estimated After Television Prices Decline. Samsung Electronics Co., the world’s largest maker of televisions and flat screens, posted a steeper earnings decline than analysts estimated after TV prices dropped during the year-end shopping season. Operating income fell 13 percent to 3 trillion won ($2.7 billion) from 3.44 trillion won a year ago, the Suwon, South Korea-based company said in a statement today. The preliminary results lagged behind the 3.3 trillion won average of 13 analyst estimates compiled by Bloomberg in the past 28 days. Sales rose 4.5 percent to 41 trillion won. The stock fell to a two-week low as the results fueled concern about the company’s TV and display businesses.
• Asia Bond Risk Reaches One-Month High on EU Burden-Sharing Plan. The cost of protecting bonds in the Asia-Pacific region with credit-default swaps jumped to the highest in a month after European Union proposals that may force senior bondholders to share in the losses of failing banks.
• Illinois Plans Pension Bond as Taxable Yield Soars to Record: Muni Credit. Illinois, whose lawmakers are tackling a $13 billion budget gap, faces rising borrowing costs for a proposed $3.7 billion pension bond as yields on comparably rated taxable debt reach at least an 11-month high. Since touching a low of 5.38 percent Oct. 6, interest rates for taxable A rated bonds have risen 87 basis points to 6.25 percent, according to Standard & Poor’s, which gives the state its fifth-highest grade, A+. At the same time, the premium the state pays on 30-year tax-exempt securities widened to 91 basis points yesterday, the most in a month, as lawmakers prepared to meet to resolve the financial challenges, said Gary Pollack, who helps oversee $12 billion as head of bond trading at Deutsche Bank AG’s private wealth management unit in New York. “The market is punishing the state of Illinois for its lack of fiscal solutions,” said Pollack.

Wall Street Journal:

• In Europe, Angst Fills Sovereign Bond Gap. The cost of insuring some European government debt against default hit a record after regulators issued proposed rules on bank bailouts that would hurt bondholders. The move higher reflects a widening gap between what the market is saying and how the major ratings companies judge these countries. "Further downgrades are certain, and we have not seen the last screen shot of this movie yet," said Lena Komileva, head of G-7 market economics at Tullett Prebon, a brokerage firm in London. The costs of insuring against a default by Western European sovereign borrowers in the credit-default-swap market surged, briefly touching a record on Thursday, according to data provider Markit. Swaps prices for Spain, Belgium and Ireland closed at records, according to Markit. The gap between yields on most European sovereign bonds and relatively safe German debt also widened. The angst among investors seemed inspired by a European Union proposal that bondholders should share the future cost of bailing out European banks. In the case of a government bailout, the plan said that senior bondholders would suffer losses before a taxpayer-funded bailout. Theoretically, this should be a boon to government bonds, as it would take some of the burden of bailouts away from the government. But investors may have feared that the proposal was a hint that bondholders also might be forced to take haircuts on sovereign debt in the future, as well. Even before Thursday's flare-up, the credit-default-swap and bond markets already suggested high and rising investor worry about the credit-worthiness of not only financially strapped nations on the periphery of the euro zone, but some core nations, too. The credit-default-swaps market suggests that Portugal, Ireland, Italy, Greece and Spain still are all rated too highly by the three leading global rating firms, Fitch Ratings, Moody's Investors Service and Standard & Poor's. Italy should be rated BB by this measure, and other countries in financial distress like Portugal, Spain, Greece and Ireland should be rated B, according to an analysis by Markit. Credit-default-swaps prices also suggest European nations such as Belgium, France and the U.K. also might be at risk of a ratings downgrade of at least one notch. The latter two nations have AAA ratings by all three ratings companies. Downgrades could raise government borrowing costs and add to market anxiety. A downgrade to junk status would force some investors to sell out because they can hold debt rated only as investment grade. "Markets see the agencies are behind the curve," said Win Thin, a currency strategist at Brown Brothers Harriman. "I think it's hard to say the CDS market is being wrong or unfair or irrational," said William Porter, head of European credit strategy at Credit Suisse.
• Bond Buyers' Eyes Are on Illinois. Lawmakers Edge Toward Income-Tax Increase That Could Cheer Investors. As Illinois lawmakers huddle behind closed doors this week trying to find ways to plug the state's $13 billion deficit, municipal-bond investors are sizing up how to wager amid the state's woes. Investors who have been skeptical about the state's ability to right its finances got a ray of good news late Thursday, when the governor and key Democratic leaders reached an agreement that would raise the state's income-tax rate.
• Goldman's(GS) NYSE Floor Operations Struggle as Market Changes. A looming $300 million write-down in the value of Goldman Sachs Group Inc.'s market-making operations on the floor of the New York Stock Exchange is just another example of how rapidly evolving changes in stock trading have affected Wall Street.
• Microbes Mopped Up After Spill. Bacteria Swiftly Devoured Methane Unleashed Into the Gulf of Mexico, Study Says. Bacteria made quick work of the tons of methane that billowed into the Gulf of Mexico along with oil from the Deepwater Horizon blowout, clearing the natural gas from the waterway within months of its release, researchers reported Friday.
• President Revs Up Campaign to Make Peace With Business. President Barack Obama put into overdrive Thursday his fledgling efforts to call a truce with American business. In the latest in a series of conciliatory moves, Mr. Obama appointed Bill Daley, a Chicago political operative turned financier, as his chief of staff, and brooked a simmering trade dispute with Mexico.
• Two Banks Gain Access Within China. J.P. Morgan Chase & Co.(JPM) and Morgan Stanley(MS) have both won approval for securities joint ventures in mainland China, the first U.S. firms to gain such access in six years.
• Fulfilling Our Duty as Muslim-Americans by Qanta A. Ahmed. There's no reason we should object to Congress investigating Islamist radicalism.

MarketWatch:

• Inflation May Hurt Chinese Stocks in 2011. Inflation concerns may lead to a downturn in the stock market, according to Nomura Securities. Wu Haifeng, head of the A-shares research department at Nomura, said inflation expectations will likely to drag down the stock markets.

Business Insider:

• Here's How The Mac App Store Will Help Apple(AAPL) Sell More Macs.
• National Enquirer: John Edwards Has Proposed to Rielle Hunter. Oh man. If true, this was disgustingly fast.

Zero Hedge:

• As ACA Sues Goldman(GS) Over Abacus, A Question Emerges: Did The SEC Hide a Damning Piece of the Prosecution Against Goldman?
• Printing a Recovery. Counterfeiting is an effective way to stimulate the economy, but the costs can be quite high.

IBD:

• One-Stop Shop for Beauty Care Strikes a Chord With Consumers. As of Dec. 20, she had made three trips to the store, where she bought a few perfume and bath gift sets for friends. The weekend before, she received an offer from Ulta Salon, Cosmetics & Fragrance (ULTA) that she couldn't refuse: a 20%-off coupon for most items.

New York Times:

• SEC Questions Goldman Sachs(GS) on Facebook Offering. The Securities and Exchange Commission has contacted Goldman Sachs about the private offering of Facebook shares to Goldman Sachs’s clients, according to a document sent to potential investors.
• U.S. Cautions People Named In Cable Leaks. The State Department is warning hundreds of human rights activists, foreign government officials and businesspeople identified in leaked diplomatic cables of potential threats to their safety and has moved a handful of them to safer locations, administration officials said Thursday.
• The Touch, the Feel - Of Rayon? Rising cotton prices are pushing a forgotten retro staple back onto the fashion runway: Rayon. Cotton prices surged 91% in 2010, leaving designers and clothes makers scrambling to find lower-cost alternatives.

NYDailyNews.com

• Ellen Weiss, NPR Exec Who Fired Juan Williams, Resigns.

Washington Times:

• Best Health Care Political Pull Can Buy. Barring law's repeal, medicine will serve large dose of special interests.

Politico:

• Bill O'Reilly to Interview Obama Before Super Bowl.
• A Banker for White House Chief of Staff. Just a year or two ago, a lukewarm glass of water and a stern talking-to from President Barack Obama was the most a bank executive could hope for when visiting the White House. Now Obama has chosen one to run the place.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty percent (40%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -16 (see trends).

USA Today:

• Exchange Traded Fund Assets Top $1 Trillion for First Time.

Reuters:

• Schumer Says Obama Should Push China on Trade. A top Democrat in the Senate said on Thursday that President Barack Obama should back a bid to crack down on China's trade practices -- or get Beijing to take action on its own. Charles Schumer, a member of the Democratic leadership, said he expects his bill, to pressure China to let its currency rise, will enjoy bipartisan support in the new Congress that convened this week and expressed hope it will become law. "It's one of the things that's seriously on the table," Schumer told Reuters in a brief interview on Capitol Hill. "I'd like to see (Obama) either support our legislation or get China to do it on its own."
• Citigroup(C) Seeks Buyers for CitiFinancial - FT. Citigroup is seeking buyers for CitiFinancial, the largest consumer finance company in the United States, in a deal that could raise hundreds of millions of dollars, the Financial Times reported.
• Equity Fund Infows $9.27 Billion in W/E January 5 - Lipper.
• Liz Claiborne Cuts H2 Operating Income Growth Forecast. Liz Claiborne Inc (LIZ) cut its adjusted operating income growth forecast for the second half of 2010 as lower traffic and an aggressive promotional environment hurt December sales at the clothing maker. Shares of the owner of the Juicy Couture, Lucky Brand, Kate Spade and Mexx chains fell nearly 20 percent to $5.54 in extended trade, after closing at $6.90 on Thursday on the New York Stock Exchange.
• Schnitzer Steel(SCHN) Q1 Results Lag Street. Schnitzer Steel Industries Inc's (SCHN) first-quarter profit lagged analysts' estimates, partly hurt by weak demand at its steel manufacturing business, and the company forecast sequentially lower ferrous sales volumes in second quarter. Shares of the company were down 5 percent at $65.10 in extended trade, after closing at $68.87 on Thursday on Nasdaq.

Financial Times:

• S&P Plans Threaten Banks With Downgrades. Half the world’s largest banks could see their credit ratings downgraded under proposals from Standard & Poor’s to significantly revise the way it rates the sector. The credit rating agency on Thursday published proposals aimed at making its ratings more transparent and shifting its analysis of a bank’s earnings to focus on their ability to protect bank capital and cover losses. It said its own tests of the new criteria would have only a “modest” impact on the banks it rates. But of the large banks in the test sample, the agency warned that “roughly half” would see a one-notch downgrade.
• US Considers Three-Tier Prop Trading Fight. US regulators want to use techniques pioneered in the fight against money-laundering to crack down on “proprietary trading” by banks as part of new financial reforms, according to bankers and officials. The question of how to define trading done with banks’ own funds is one of the thorniest for the US authorities in the post-crisis regulatory overhaul as it is difficult to differentiate such activities from market-making on behalf of clients.

TimesOnline:

• The euro's survival in its present form "can no longer be taken for granted," Thomas Mayer, chief economist of Deutsche Bank AG said, citing an interview. Mayer said European Union policymakers have to move faster to reform the euro region to avoid its falling into another crisis.

China Business News:

• Research In Motion Ltd.(RIMM) will begin selling its 7-inch Blackberry Playbook "very soon", citing the company's China Chairman Gregory Shea. It didn't give a timeframe.

Evening Recommendations
Citigroup:

• Reiterated Buy on (MON), raised target to $82.
• Reiterated Buy on (CPO), target $51.
  

RBC Capital Markets:

• Rated (IPXL) Outperform, target $26.

Night Trading

• Asian equity indices are -1.0% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 108.0 +6.0 basis points.
  
• Asia Pacific Sovereign CDS Index 104.50 +3.0 basis points.
  
• S&P 500 futures unch.
  
• NASDAQ 100 futures +.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AZZ)/.76
• (GBX)/-.15
• (KBH)/-.17
• (PSMT)/.44
• (RBN)/.33
  

Economic Releases
8:30 am EST

• The Change in Non-farm Payrolls for December is estimated at 150K versus 39K in November.
• The Change in Private Payrolls for December is estimated at 175K versus 50K in November.
• The Unemployment Rate for December is estimated to fall to 9.7% versus 9.8% in November.
• Average Hourly Earnings for December is estimated to rise +.2% versus unch. in November.

3:00 pm EST

• Consumer Credit for November is estimated to fall to $.5B versus $3.4B in October.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Evans speaking, Bernanke's testimony before Senate Budget Panel and CES could also impact trading today.
  

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

Stocks Slightly Lower into Final Hour on Rising Euro Sovereign Debt Angst, Financial Sector Pessimism, Retail Sector Weakness, Profit-Taking

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Mixed
  
• Volume: Around Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 17.41 +2.29%
  
• ISE Sentiment Index 161.0 -21.46%
  
• Total Put/Call .76 +8.57%
  
• NYSE Arms 1.22 +91.91%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 85.30 +2.49%
  
• European Financial Sector CDS Index 176.17 bps +12.17%
  
• Western Europe Sovereign Debt CDS Index 204.17 bps +1.49%
  
• Emerging Market CDS Index 202.79 +3.70%
  
• 2-Year Swap Spread 25.0 +4 bps
  
• TED Spread 16.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .14% +1 bp
  
• Yield Curve 274.0 -2 bps
  
• China Import Iron Ore Spot $171.30/Metric Tonne +.18%
  
• Citi US Economic Surprise Index +18.90 unch.
  
• 10-Year TIPS Spread 2.40% -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating -15 open in Japan
• DAX Futures: Indicating +10 open in Germany

Portfolio:

• Higher: On gains in my Medical, Tech, Ag and Biotech long positions
  
• Disclosed Trades: Added (IWM)/(QQQQ) hedges, added to my (EEM) short
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is just mildly bearish as the S&P 500 trades slightly lower despite some equity weakness overseas, some disappointing retail sales reports, recent stock gains and rising euro sovereign debt angst. On the positive side, Homebuilding, HMO, Computer Service, Networking, Semi, Disk Drive, Computer, Software, Ag, Oil Tanker and Defense shares are especially strong, rising more than 1.0%. The MS Tech Index is strongly outperforming, rising +.7%. The 10-year yield is falling -6 bps to 3.40%. The euro currency continues to trade poorly and gold is falling another -.42%. On the negative side, Retail, REIT, Bank, Telecom, Paper, Gold, Oil Service, Energy and Coal shares are under meaningful pressure, falling more than 1.0%. Copper is down -1.91%. The Greece sovereign cds is climbing +2.79% to 1,061.23 bps, the Portugal sovereign cds is gaining +2.81% to 511.99 bps, the Russia sovereign cds is rising +3.1% to 141.31 bps and the China sovereign cds is rising +4.2% to 70.07 bps. The Eurozone Investment Grade CDS Index is jumping +4.35% to 88.84 bps. The Euro Financial Sector CDS Index is soaring out of its recent trading range to the highest level since June 8th of last year and the Western Europe Sovereign CDS Index is still near a record high. Moreover, the US Muni CDS Index is rising +3.31% to 227.31 bps. The AAII % Bulls rose to 55.88 this week, while the % Bears fell to 18.25, which is also a negative. The technical action in shares of (TGT) is also a bit of a concern. The large rise in the euro financial sector credit default swap index should be monitored closely. I suspect it is very near a point in which equity investors will begin to take notice. As well, if the decline in the euro currency were to become disorderly an adverse equity reaction would be likely. While a strong jobs report tomorrow would be a positive over the intermediate-term, it is possible it would result in equity weakness if the 10-year yield and US dollar were to rise too much as a result. Moreover, a strong number is widely anticipated and investors are still overly bullish. A jobs report right around estimates or just slightly higher would be the best outcome for stock investors, in my opinion. One of my longs, (VRX), boosted guidance today, which sent the stock soaring +18% on volume to the highest level since Sept. 2003. While the stock is extended short-term, I still see further meaningful upside in the shares from current levels over the intermediate-term. I expect US stocks to trade mixed-to-lower into the close from current levels on rising euro sovereign debt angst, retail sector concerns, increasing financial sector pessimism, more shorting and profit-taking.

Today's Headlines

Bloomberg:

• Fewer Americans Filed Jobless Claims Over Past Month. Fewer Americans filed claims for unemployment insurance payments over the past month, indicating the labor market is improving. The average number of applications for jobless benefits over the past four weeks dropped to 410,750, the lowest level since July 2008, Labor Department figures showed today in Washington. Claims for the week ended Jan. 1 rose by 18,000 to 409,000, in line with the median forecast of economists surveyed by Bloomberg News. “The recovery in the labor market is continuing to move along at a gradual pace,” said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut, who forecast claims would rise to 410,000. “Employers are getting to the point where they are becoming a little more confident about the strength of the recovery.” The unemployment rate among people eligible for benefits held at 3.3 percent in the week ended Dec. 25. Twenty states and territories reported a decline in claims, while 33 reported an increase.
• Portuguese, Spanish Government Bonds Decline Amid Debt-Auction Speculation. Portuguese and Spanish bonds declined amid speculation investors will demand higher yields to purchase European nations’ debt at auctions next week. The extra yield investors demand to hold Portuguese securities rather than benchmark German bunds widened to the most in a month as the IGCP debt office announced the sale of 2014 and 2020 debt, scheduled for Jan. 12. Belgian bonds tumbled after the nation’s political leaders failed to restart seven- party negotiations to form a government. German bunds rose. “The underlying story behind this slide in Portuguese government bonds is supply-related,” said David Schnautz, a fixed-income strategist at Commerzbank AG in London, who said he had heard speculation about the Portuguese sale before it was announced. “Next week we will keep on running at full steam in the primary market with supply from Spain and Italy,” he said. The yield on 10-year Portuguese bonds jumped 26 basis points to 7.17 percent as of 4:40 p.m. in London. The yield premium to bunds widened to 404 basis points, the most since Dec. 1. The 4.8 percent bond due in June 2020 fell 1.57, or 15.70 euros per 1,000-euro ($1,301) face amount, to 84.12. Portuguese credit-default swaps rose 7 basis points to 504, the highest since Nov. 30, according to CMA.
• Dollar Rises to Two-Week High on Signs Economic Recovery is Accelerating. The dollar advanced to a one-month high against the euro before tomorrow’s U.S. payrolls report, forecast to show employers added jobs for a third month and the unemployment rate eased to 9.7 percent. The euro dropped below the 200-day moving average versus the dollar as the European Union discussed spreading the cost of bank failures. “The dollar is really in demand,” said Kathy Lien, director of currency research at online trader GFT Forex in New York.
• OPEC to Cut Supplies By Most Since August, Oil Movements Says. The Organization of Petroleum Exporting Countries reduce supplies this month by the most since August as demand for winter fuels in the northern hemisphere passes its peak, according to tanker-tracker Oil Movements. Shipments will drop 1.3 percent to 23.6 million barrels a day in the four weeks to Jan. 22 from 23.91 million barrels in the period to Dec. 25, Oil Movements said today in a report. It’s the biggest decline since a 1.8 percent fall during the four weeks to Aug. 28.
• Oil Falls Below $90 as Dollar Gains Versus Euro on Payrolls Report Outlook. Oil fell below $90 a barrel in New York as the dollar strengthened against the euro before a U.S. payrolls report forecast to show tomorrow that employers added jobs for a third month. Oil tumbled as much as 2.7 percent as the greenback advanced to a one-month high against the euro, curbing commodities’ appeal as an alternative investment.
• Copper Declines as Inventory Gains in London, Shanghai Signal Ample Supply. Copper fell for the second time in three days on signs that more supplies are becoming available. Copper stockpiles in warehouses monitored by the London Metal Exchange are the highest since Sept. 24 after increasing for 16 straight days. Supplies monitored by the Shanghai Futures Exchange climbed 9.5 percent last week to the highest since June. Some investors may want to put more money into equities than metals this year as growth becomes more assured and “because metals have already put in a massive performance in anticipation of this growth,” according to William Adams of Basemetals.com in London.
• China Will Crack Down on 'Hot Money' Inflows, Currency Regulator SAFE Says. China’s currency regulator said it will continue to crack down on “hot money” inflows and step up monitoring of cross-border capital flows this year. The measures also underscore government concerns that the U.S. Federal Reserve’s expanded monetary stimulus may cause capital inflow into China, inflating asset values and adding pressure for the yuan to rise. China’s inflation reached a 28- month high of 5.1 percent in November. The bank reiterated that it will implement “prudent” monetary policy this year, and will use a combination of tools, including interest rates, reserve ratio requirements and open market operations, to adjust banking-system liquidity.
• Monsanto(MON) Profit Tops Estimates as Seed Sales Gain. Monsanto Co., the world’s largest seed company, posted higher first-quarter profit than analysts estimated on rising sales of corn and soybean seeds in Latin America and cotton seeds in Australia.
• Obama Said to Choose Daley as Next Chief of Staff. President Barack Obama will name William Daley, a JPMorgan Chase & Co.(JPM) executive and former commerce secretary, as his new chief of staff, administration officials said. Obama will make the announcement alongside Daley at 2:30 p.m. at the White House, the officials said, speaking on condition of anonymity. Daley, a Washington veteran with strong ties to business and part of the most powerful political dynasty in Illinois, joins the administration as Obama prepares an agenda for the second half of his term.
• Sperling is Said to be Obama's Choice for Economic Post, Replacing Summers. President Barack Obama will name Gene Sperling, a counselor to Treasury Secretary Timothy Geithner, as head of the National Economic Council, according to a person familiar with the matter. Sperling, 52, is returning to the post he held from 1997 to 2001 under former President Bill Clinton. He replaces Larry Summers, who was NEC director for the first two years of Obama’s presidency and left last month to return to Harvard University.
• Leonard Green, TPG Said to Be in Talks for Plams Casino Stake. Leonard Green & Partners LP and TPG Capital are in talks to take a controlling stake in the Palms Casino Resort, a Las Vegas celebrity hangout, as owner George Maloof seeks to restructure the property’s debt, people with knowledge of the matter said.
• Study Tying Vaccine to Autism Was 'Fraud,' U.K. Journal Says. A Lancet study linking vaccines for measles, mumps and rubella to autism was a fraud that endangered hundreds of thousands of children, according to a report in the British Medical Journal. Each of the dozen cases included in the study led by Andrew Wakefield at the Royal Free Hospital in London and published in 1998 in the Lancet was misrepresented or altered, journalist Brian Deer wrote today in the BMJ. There’s “no doubt” the fraud originated with Wakefield, BMJ editors concluded after reviewing Deer’s work. Today’s report is the latest to discredit Wakefield’s research.

Wall Street Journal:

• Packages Explode in Maryland State Buildings. Federal and state authorities were investigating reports of two explosions in the mailrooms of Maryland government office buildings Thursday, officials said. "DHS is aware and closely monitoring reports of an incident involving two packages that arrived at two Maryland state facilities," a federal Department of Homeland Security official said.

Zero Hedge:

• Baltic Dry Free Fall Continues: 4%+ Drop for 3rd Consecutive Day, At Lowest Since April 2009. (graph)
• Food Riots Commence as the Fed's Loose Money Policy Leads to First Violence of 2011.
  

New York Post:

• Ponzi Socialism by Charles Gasparino. Why Europe's Malaise Could Come Here.

New York Times:

• Postcrisis, a Struggle Over Mortgage Bond Ratings. Two weeks ago, Standard & Poor’s put out a news release warning that it was poised to lower its ratings on almost 1,200 complex mortgage securities. So what? Isn’t that dog-bites-man at this point? Well, two-thirds of these mortgage bonds were rated only last year, long after the financial crisis. And S.&P. was supposed to have taken the distress of the housing crash and credit crisis into account when it assessed them. But in December, the ratings agency acknowledged that it had made methodological mistakes, including not understanding who would get interest payments when.

Cult of Mac:

• Apple(AAPL) Puts Vacations on Hold, May Signal iPhone, iPad Launch. If you are looking for Apple to introduce a new product, a good time period may be between the last week of January and the first half of February. The Cupertino, Calif. company reportedly has cancelled vacations for its retail employees during that period, a possible signal a new product launch is imminent. Apple has ordered the so-called vacation “black-out” period of three weeks after retail managers began expressing “reluctance” to grant employee requests for days off for January, according to a blog citing “people familiar” with the firm’s retail plans. Additionally, Apple has taken the unusual step of retaining extra holiday retail staff usually let go after the Christmas shopping period, another signal a “major product launch” is in the offing.

TechCrunch:

• Google's(GOOG) AdMob Seeing 2 Billion Daily Mobile Ad Requests; 100 Million Android and iOS Monthly Requests. Google’s mobile ad network AdMob is releasing a number of staggering statistics today as the network begins its first full year under the Google umbrella. Google says that AdMob is receiving 2 billion ad requests per day, a data point which has quadrupled over the past year. To put that in perspective, as of May of 2010, AdMob was receiving 10 million monthly mobile ad requests. To give you a picture of the current pace of mobile advertising, Google receives more ad requests in a single day than AdMob received for the entire month of December 2007 (a growth rate of 30 times in just over three years).
• Apple's(AAPL) Mac App Store Opens With More Than 1,000 Apps.
  

The Detroit News:

• Poll: U.S. Car Firms to Gain Market Share. U.S. auto companies will boost market share during the next five years, according to a survey of global automobile executives released today. The 12th annual global automotive survey by KPMG LLP, the U.S. audit, tax and advisory firm, predicted growth among U.S. automakers would be spurred by product innovation, restructuring and continued improvement in product quality. When asked to predict global market share winners over the next five years, the executives picked Ford Motor Co(F). About 43 percent saw Ford gaining market share, compared with 29 percent in 2010 and 13 percent in 2009. That was above the 40 percent that predicted Toyota Motor Corp. would gain market share. Ford's market share grew to 16.7 percent in 2010 from 15.5 percent in 2009.
  

Real Clear Politics:

• The Ongoing Folly of Quantitative Easing.

Politico:

• Boehner Wants Cuts for Debt Limit. New House Speaker John Boehner demanded Thursday that President Obama "cut spending" in exchange for Republican votes on raising the debt limit. "The American people will not stand for such an increase unless it is accompanied by meaningful action by the President and Congress to cut spending and end the job-killing spending binge in Washington," Boehner said in a statement. Here's Boehner's full statement:
• GOP Restarts Anti-Health Law Agenda. Republicans reopened their battle against President Barack Obama’s health care law, using the first committee meeting of the new Congress Thursday to eviscerate the overhaul as a “job killer” and a “malignant tumor.” “We must pull it out by the roots,” said Rep. Steve King (R-Iowa) in his opening testimony at a Rules Committee. The Rules Committee meeting marked the starting round in the GOP’s bid to repeal the law, a central pillar of the party’s governing manifesto.
  

Reuters:

• December U.S. Retail Sales Show Shoppers Still Wary. December sales at stores open at least a year for the 28 major retailers tracked by Thomson Reuters rose 3.1 percent, below Wall Street's forecast of a 3.4 percent increase.
• Valeant Sees Strong Results, Shares Jump 15%. Valeant Pharmaceuticals International (VRX) on Thursday said it expected to report quarterly results that could exceed what analysts on average had expected and issued a 2011 outlook that topped their forecasts.
• US Seasonally Adjusted CP Market Shrinks. The U.S. commercial paper market shrank for a 10th consecutive week on a seasonally adjusted basis, Federal Reserve data showed on Thursday. On a seasonally adjusted basis it fell by $3.3 billion to $965.7 billion outstanding in the week to Jan. 5, the lowest on record based on Fed data going back to the beginning of 2001.

Telegraph:

• Europe Unveils Sweeping Plans to Govern Reckless Banks. Brussels has called for sweeping powers for regulators to seize failing EU banks, sack board members, and impose haircuts on senior bank debt, aiming to ensure that taxpayers are never again held hostage by high finance.

DigiTimes:

• CES 2011: Nvidia(NVDA) to Ship at Least 15 Million Tegra Series Processors in 2011. Nvidia, with orders from tablet PCs, smartphones and car electronics, is expected to have already landed orders for about 15 million Tegra-based processors in 2011. Tegra will become the new growth driver for the company in the future, according to sources from notebook players. At Consumer Electronics Show (CES) 2011, over 20 global IT brands including Samsung Electronics, Asustek Computer, Micro-Star International (MSI), Motorola, LG Electronics, Acer and High Tech Computer (HTC) will all display tablet PCs based on Nvidia's Tegra 2 processor. In addition, orders from China-based white-box tablet PC makers are expected to help the company ship over 10 million Tegra 2 processors to the tablet PC market in 2011. As for smartphone and car electronics, Nvidia has recently received orders from LG for its Optimus 2X dual-core smartphone, and has also landed orders from car brand Audi for in-car navigation and entertainment systems.

Bear Radar

Style Underperformer:

• Large-Cap Value (-.18%)

Sector Underperformers:

• 1) Telecom -3.05% 2) Gold -2.06% 3) Oil Service -1.74%

Stocks Falling on Unusual Volume:

• CHKP, CPX, RES, TGT, VZ, QDEL, KEYW, SHLM, ZUMZ, TKLC, MSM, GPS and STZ
  

Stocks With Unusual Put Option Activity:

• 1) GPS 2) MT 3) MNTA 4) FDO 5) KGC
  

Stocks With Most Negative News Mentions:

• 1) SNBC 2) WRB 3) PSE 4) AXS 5) ENP
  

Bull Radar

Style Outperformer:

• Small-Cap Growth (+.12%)

Sector Outperformers:

• 1) HMOs +2.15% 2) Agriculture +1.03% 3) Networking +.75%

Stocks Rising on Unusual Volume:

• NVDA, CNC, MIPS, RNOW, NETL, CI, SINA, TM, F, WG, TIE, LGCY, PZE, PNC, RECN, ARMH, CAGC, ADTN, SPMD, MIPS, OPEN, BSQR, ROST, CPWM, JDSU, RRGB, ULTA, AIXG, NTGR, ACOM, CIEN, CAVM, MFE and RT
  

Stocks With Unusual Call Option Activity:

• 1) TWX 2) AEO 3) STD 4) TGT 5) VRX
  

Stocks With Most Positive News Mentions:

• 1) ADTN 2) VZ 3) BKE 4) TISI 5) PTX