Today's Headlines

Bloomberg:

• EU Pledges Tougher Stress Tests, Seeks Bonus Curbs. Europe’s next wave of bank stress tests will be tougher than exams last year, taking sovereign- debt risk and liquidity into account, the region’s financial- services chief said. “We need more stringent and more reliable tests,” European Union Financial Services Commissioner Michel Barnier told reporters following a meeting of EU finance ministers in Brussels today. “There was a general agreement that they should be marked by total transparency taking into account sovereign risk.”
• EU Seeks Stronger Safety Net as AAA Nations Mull Cost. Germany pushed back at European Union calls for a rapid reinforcement of the safety net for debt-strapped countries, saying the rally in southern European bond markets buys time to craft a new strategy. German Finance Minister Wolfgang Schaeuble said there is no urgent need to act, eyeing a late-March deadline to strengthen the 750 billion-euro ($1 trillion) rescue fund, hammer out a permanent anti-crisis tool and tighten fiscal rules for the 17- nation euro area. “We still have a continuing crisis,” EU Economic and Monetary Commissioner Olli Rehn told reporters after the bloc’s finance ministers met in Brussels today. “We’ve had some respite in the last couple of days, but we cannot afford any kind of self-complacency.”
• International Buying of Long-Term U.S. Assets Climbs More Than Estimated. Global demand for U.S. stocks, bonds and other financial assets rose in November from a month earlier as purchases from private investors offset a record level of sales from foreign government buyers, the Treasury Department reported. Net buying of long-term equities, notes and bonds totaled $85.1 billion during the month, the highest since August, compared with net buying of $28.9 billion in October, according to data released today in Washington. Net foreign purchases of equities were $13.3 billion in November after net purchases of $16.0 billion in October. Investors purchased a net $4.7 billion in U.S. corporate debt in November after buying $1.1 billion in October.
• Gold Advances as This Month's Drop Stokes Demand From Individual Investors. Gold rose in New York as this month’s price drop stoked demand from individual investors for bars and U.S. Mint coins. Australia’s Perth Mint reported stronger demand as prices fell below $1,400 an ounce, Barclays Capital analyst Suki Cooper said in an e-mail today. Gold for February delivery added $7.70, or 0.6 percent, to $1,368.20 an ounce at 12:11 p.m. on the Comex in New York.
• Corn Futures Climb to 3-Month High on Rising Demand for Shrinking Supply. Corn futures rose, extending a rally to a 30-month high, as buyers snapped up supplies from shrinking stockpiles. Output in the U.S., the world’s largest grain exporter, dropped 4.9 percent last year, leaving supply before the 2011 harvest at the lowest in 15 years, the Department of Agriculture said last week. The agency also cut its forecast for global inventories to 127 million metric tons, the lowest since 2007. “Prices have not risen high enough to slow demand,” said Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago. “The attitude among consumers is that you have to buy the breaks to accumulate tightening inventories.” Corn futures for March delivery jumped 8.5 cents, or 1.3 percent, to $6.5725 a bushel at 10:24 a.m. on the Chicago Board of Trade.
• Burberry Surges as Retailer Forecasts Higher Profit After Revenue Advances. Burberry Group Plc, the U.K.’s largest luxury retailer, surged in London trading after reporting that three-month sales rose 27 percent and saying that adjusted full-year profit will exceed its previous estimate.
• Citigroup(C) Profit Misses Analysts' Estimates on Credit Spreads. Citigroup Inc., the third-largest U.S. bank, posted a profit of $1.31 billion that missed analysts’ estimates as revenue from stock and bond trading fell more than at JPMorgan Chase & Co.
• EBay(EBAY) Options Trading Most Bearish in Seven Years Before Earnings Results. EBay Inc. options traders are making the most bearish bets in seven years on the owner of the largest online-commerce marketplace, which analysts say will rally, before the company reports quarterly results tomorrow. The ratio of outstanding puts to sell EBay stock versus calls to buy rose to 1.23-to-1 last week, the highest since July 2003. The total open interest for puts increased 15 percent in the past month to a two-year high of 465,492 contracts.
• Xilinx(XLNX) Short Selling Climbs to a 25-Month High Before Release of Earnings. Short sellers have increased bets against Xilinx Inc.’s stock to the highest level in 25 months as the company, which reports quarterly results tomorrow, rallied to prices last seen in March 2005. Bearish wagers against the San Jose, California-based company rose to 14 percent of shares outstanding, the most since October 2008, according to data compiled by Data Explorers, a New York-based research firm.

Wall Street Journal:

• UN Sees Risk of Double-Dip Recession as Europe Pursues Austerity. The United Nations said the pursuit of austerity measures by a number of European countries could push the euro zone back into recession in 2011, with the U.S. and Japan facing a smaller risk of a renewed downturn.
• IBM(IBM) Ready for Close-Up. Amid Push Into Analytics Software, Company Will Make Case on 'Jeopardy!'
• GameStop(GME) Expands Digital Strategy by Opening Doors to an Android Storefront. GameStop is expanding from primarily selling games in retail stores found in malls around America to a digital strategy that includes a new mobile component starting today.

CNBC:

• Meredith Whitney Upgrades JPMorgan to 'Buy'.
• Why Obama May Be Wall Street's New Best Friend.
  

Business Insider:

• Charlie Gasparino Rips Meredith Whitney, And Accuses Her of Costing Taxpayers Millions. The latest attacker is Charlie Gasparino, who accuses her of causing a muni market panic, thus costing taxpayers millions.
• The Entire European Sovereign Debt Crisis in One Simple Flowchart.
• ECB Allows Ireland to Counterfeit 51 Billion Euros.
  

Zero Hedge:

• Forget Food Riots in Africa, Simon Black Says the Canary in the Inflationary Coal Mine is in Southeast Asia.

New York Times:

• F.C.C. Approves Comcast(CMCSA)-NBC Deal.

Forbes:

• Google(GOOG): Street Gets Buillish Ahead of Earnings.

cnet:

• CDMA iPhone Shipments Could Top 12 Million in '11. Apple's CDMA-compatible iPhone isn't on the market yet, but estimates for the number of units shipping in 2011 are apparently on the rise. Pegatron, the Taiwan-based company that is manufacturing the CDMA iPhone for Apple to sell through Verizon, is expecting to ship 12 million to 15 million units in 2011, component makers told DigiTimes. That's up from previous internal estimates of 10 million CDMA iPhones for 2011, the Taiwan-based tech news site reported Tuesday. Piper Jaffray analyst Gene Munster recently pegged the number of iPhones Verizon would sell the first year at 9 million, which is below Pegatron's first estimate.

Politico:

• Senator Kent Conrad Won't Seek Reelection. North Dakota Sen. Kent Conrad will not seek reelection in 2012, handing Republicans a prime opportunity for a pick-up in a red-leaning state. “After months of consideration, I have decided not to seek reelection in 2012. There are serious challenges facing our State and nation, like a $14 trillion debt and America’s dependence on foreign oil. It is more important I spend my time and energy trying to solve these problems than to be distracted by a campaign for reelection,” Conrad said.

Reuters:

• Bangladesh Halts Trading After Stock Market Fall. Trading in Bangladesh shares was halted for the day on Tuesday, for the second time this month, after the benchmark index fell 3.2 percent.
• U.S. Architecture Billings Highest Since Nov. '07. An index of spending on U.S. architecture services, a leading indicator of nonresidential construction activity, reached its best level since November 2007 last month, suggesting a U.S. building recovery is gaining traction, an architects' trade group said on Wednesday. The December architecture billings index rose more than 2 points last month to 54.2, from 52.0, reflecting increasing demand for design services, according to the American Institute of Architects. A separate index of new project inquiries was up 1.2 points to 62.6, on a scale where any number above 50 indicates rising demand. "This is more promising news that the design and construction industry is continuing to move toward a recovery," said AIA Chief Economist Kermit Baker.
• Oil Trader Takes Control of 10 North Sea Cargoes. Oil trader Hetco has taken control of the first eight North Sea Forties crude oil cargoes loading in February and two Brent cargoes, giving it significant influence over the spot market, trade sources said on Tuesday.
• Delinquencies Continue Fall at Major U.S. Credit Card Cos.
  

Financial Times:

• OPEC Positions Itself to Keep Oil Bulls at Bay.

Bild Zeitung:

• The euro has lost an average of 22% of its purchasing power since the introduction of European Monetary Union in 1999, citing a poll that Allianz SE conducted. The purchasing power of one euro fell to about 82 cents in Germany, slightly below 81 cents in France, 76 cents in Italy and 71 cents in Spain.

Bear Radar

Style Underperformer:

• Small-Cap Growth (-.27%)

Sector Underperformers:

• 1) Airlines -2.60% 2) Banks -1.12% 3) Telecom -1.02%

Stocks Falling on Unusual Volume:

• VIP, PTRY, AVGO, NANO, CYMI, FNGN, JDSU, CMA, VGR, HLF and MMR
  

Stocks With Unusual Put Option Activity:

• 1) BSX 2) YRCW 3) BJ 4) YUM 5) EXC
  

Stocks With Most Negative News Mentions:

• 1) SUPX 2) LPX 3) JOBS 4) RRC 5) THI
  

Bull Radar

Style Outperformer:

• Mid-Cap Growth (+.15%)

Sector Outperformers:

• 1) Gold +1.58% 2) Restaurants +1.13% 3) Defense +1.10%

Stocks Rising on Unusual Volume:

• TZOO, TSS, VOD, TIE, SYMC, SRX, CCI, REP, XOM, GGAL, BFR, AZN, ASMI, SHPGY, IIVI, ATHN, TRMB, VOD, INFY, ACOR, FAST, MOLX, CHBT, MOLXA, EZCH, HOGS, MEOH, CTCM, GPRO, SYMC, CPRT, GRR, FEU, AKO/A, STD and ARW
  

Stocks With Unusual Call Option Activity:

• 1) STT 2) MTG 3) VOD 4) OIH 5) LRCX
  

Stocks With Most Positive News Mentions:

• 1) FLR 2) AMR 3) DISCA 4) EQIX 5) GD
  

Tuesday Watch

Weekend Headlines
Bloomberg:

• Spain Is forced to Offer Premium to Existing Debt to Sell New 10-Year Bond. Spain is having to offer a premium over its existing debt to sell new 10-year bonds as Europe’s sovereign deficit crisis pushes up borrowing costs. The nation, which is planning a gross 93.8 billion euros ($125 billion) of bond issuance this year, is selling the notes through a group of banks and canceled two auctions scheduled for Jan. 20, according to the Treasury’s website. The bonds will be priced to yield 225 basis points more than the mid-swap rate, said two people familiar with the matter, which equates to about 12 basis points over Spain’s existing 4.85 percent October 2020 securities. “Spain has a lot of issuance to do in 2011 and they want to secure as much funding as soon as possible in January,” said Michael Leister, a fixed-income analyst at WestLB AG in Dusseldorf, Germany. “There aren’t any other peripheral auctions this week,” reducing competition, he said.
• Apple's(AAPL) Jobs Takes Leave Amid Health Concerns. Apple Inc. Chief Executive Officer Steve Jobs took a leave of absence as his health deteriorates from battling a rare form of cancer and the effects of a liver transplant he had almost two years ago, according to a person with knowledge of the situation. Jobs has been unable to keep on weight as he undergoes treatment for his conditions, said the person, who requested anonymity because the matter is private. He took two previous leaves -- for cancer surgery in 2004 and the transplant in 2009. Chief Operating Officer Tim Cook will be responsible for the day-to-day operations, with Jobs continuing as CEO, Apple said today, citing an e-mail to employees from Jobs. “I love Apple so much and hope to be back as soon as I can,” Jobs, 55, said in the e-mail. Jobs said he will continue to “be involved in major strategic decisions for the company.” U.S. stock futures on the Nasdaq-100 Index, of which Apple comprises 21 percent, fell 1.3 percent in electronic trading as of 11:30 a.m. U.S. markets are closed today for a holiday. Apple shares slid 6.7 percent to 242.50 euros ($322.31) in Frankfurt.
• EU Seeks to Bolster Crisis Safety Net as AAA Nations Weigh Cost. Euro-area finance ministers pledged to strengthen the safety net for debt-strapped countries and indicated they don’t face pressure for immediate moves to tame the fiscal crisis. “We shall improve our current existing financial backstops so that the so-called market forces cannot have even the slightest doubt about our capacity to act even in the most stressed scenarios,” European Union Economic and Monetary Affairs Commissioner Olli Rehn told reporters after euro ministers met in Brussels late yesterday. Finance ministers from six countries with AAA credit ratings met earlier in the day to discuss ways of getting the 750 billion-euro ($1 trillion) rescue fund to its full potential instead of setting aside some of the money as collateral. Boosting the fund’s size was ruled out for now. A strengthening euro, signs of economic buoyancy and successful bond auctions in Portugal, Spain and Italy bought time for European governments to weigh how to stiffen the firewall against the year-old debt crisis that threatens to undermine the euro.
• Default Swaps Outshine Bonds at Highlighting European Stress: Euro Credit. Credit-default swaps are a better gauge of euro region creditworthiness than bonds as the European Central Bank’s 74 billion euros ($98 billion) of debt purchases make investors skeptical about what is driving spreads narrower.
• Elpida Leads Chipmakers Higher on Speculation Industry Headed for Recovery. Elpida Memory Inc. led shares of computer-memory chipmakers higher after the Nikkei newspaper reported that the Japanese company plans to raise prices, fueling speculation the industry is headed for a recovery. Elpida, the world’s third-largest maker of the chips, rose as much as 4.5 percent to 1,136 yen at the midday break on the Tokyo Stock Exchange. Samsung Electronics Co. and Hynix Semiconductor Inc., the industry’s two biggest producers, climbed in Seoul trading, while Nanya Technology Corp. and Powerchip Technology Corp. advanced in Taipei.
• Hedge Funds Raise Oil Bets as Prices Reach 27-Month High: Energy Markets. Hedge funds raised bullish bets on oil by the most in five weeks as crude reached the highest level in more than two years amid signs that the global economic recovery is gaining momentum. The funds and other large speculators increased net-long positions, or wagers on rising prices, by 12 percent in the seven days ended Jan. 11, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the biggest advance since the week ended Dec. 7.
  
• Oil Falls After Trans Alaskan Pipeline Restarts. Oil declined in New York after the operators of a pipeline from Alaska restored flows to the U.S., the world’s biggest crude-consuming nation.
• Hedge Funds Reduce Bullish Gold Bets as 'Big Boys Are Starting to Get Out'. Hedge funds reduced their bullish bet on a gold rally to the lowest level since July 2009 after the metal climbed for 10 straight years. The funds and other large speculators held net-long positions, or wagers on rising prices, totaling 144,236 contracts in the week ended Jan. 11 on the Comex in New York, U.S. Commodity Futures Trading Commission data showed on Jan. 14. The holdings fell 9.1 percent from a week earlier following a 6.7 percent drop in the previous week. “There’s been a lot of profit in gold, and people are getting nervous that there might not be more,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois. “The big boys are starting to get out. They know that these prices aren’t cheap in anybody’s mind.” Holdings in 10 exchange-traded products backed by gold fell for the fourth straight week to 2,077.81 metric tons.
• Stainless steel and heat-resisting crude steel production climbed 29% in the first nine months last year from the same period a year earlier, the International Stainless Steel Forum said. In China, production climbed 27%.
• Bank of Ireland Said to Weigh Plans to Avoid Government Control. Bank of Ireland Plc, ordered by regulators to raise 2.2 billion euros ($2.9 billion) by the end of next month, is weighing plans to avoid ceding majority control to the government, two people with knowledge of the talks said.
• Treasury 2- to 30-Year Yield Curve Widens to Record on Inflation Prospects. The difference between 2- and 30- year Treasury yields widened to a record as investors demanded higher compensation when buying longer-term securities on concern a strengthening U.S. economy will spur inflation. The so-called yield curve steepened to 3.96 percentage points yesterday, compared with an average of 2.07 percentage points the past 10 years. Treasuries fell yesterday as reports showed retail sales and industrial production both rose in December. The Federal Reserve will buy up to $21.5 billion in Treasuries next week, including inflation-indexed securities.
• China Plans U.S. Television Campaign During Hu Jintao's Visit. China plans to air television commercials in the U.S. during President Hu Jintao’s trip, the first state visit since 2006, to help improve the nation’s image. The commercials, featuring Chinese celebrities including basketball player Yao Ming and astronaut Yang Liwei, will air during Hu’s tour from Jan. 18 to Jan. 21, said Wang Lijun, a spokeswoman for producer Shanghai Lowe & Partners.
• Fed's Plosser Won't Rule Out a Rate Rise as Economic Growth Gains Traction. “If economic growth in the United States continues to gain traction and the prospects begin to look ever better, it might be time for us to begin thinking about how do we begin to gradually take our foot off the accelerator,” Plosser said today to reporters after a speech in Santiago. Asked if the recovery may improve enough this year that he’d want to begin a policy tightening, he said, “It might. I’m not going to rule that out.” “It could end earlier if economic conditions call for it, but right now I’m not sure that that’s the most likely outcome,” he said to reporters. “It obviously creates challenges for some countries because of appreciating currencies. But I think that will pass. Those are short-run issues.”
• Tunisia Revolt Threatens Rulers Sharing Ben Ali's Regime Model. The violent ouster of Tunisia’s Zine El Abidine Ben Ali last week may undermine rulers across the region who share his authoritarian regime model.
• Goldman(GS) Halts Facebook Offering in U.S., Citing Rules. Goldman Sachs Group Inc. halted an offering of Facebook Inc. shares to U.S. investors on concern that “intense media attention” on the deal may violate rules limiting marketing of private securities. Instead, the sale, first reported Jan. 2, will be restricted to non-U.S. investors, the New York-based bank said in an e-mailed statement today.
• Rich Americans Raise Consumer Spending With Little Help From Middle Class. Rich shoppers are driving an increase in consumer spending, bolstering a recovery that masks reluctance among less affluent Americans to join in.
• Citigroup(C) 46% Gain Masks Flawed Mortgages Freddie Mac Calls Not Acceptable. As Vikram Pandit celebrates his first full-year profit as head of Citigroup Inc., an old nemesis clouds the bank’s future: defective mortgages. Three years after bad home loans helped trigger the recession and six weeks after the government cashed in the last of its $45 billion Citigroup investment, the New York-based bank is still selling mortgages that violate quality standards, according to an internal Freddie Mac review obtained by Bloomberg.

Wall Street Journal:

• Release Nears for Giffords. Search Begins for a Rehabilitation Center; Fight Likely to Keep Trial in Arizona. U.S. Rep. Gabrielle Giffords could leave her Tucson hospital within weeks or even days as she continues to recover from the shooting here nine days ago, her doctors said Monday. Her family has begun to search for a rehabilitation center for the congresswoman to continue her treatment, doctors said.
• Hu Highlights Need for U.S.-China Cooperation, Questions Dollar. Chinese President Hu Jintao emphasized the need for cooperation with the U.S. in areas from new energy to space ahead of his visit to Washington this week, but he called the present U.S. dollar-dominated currency system a "product of the past" and highlighted moves to turn the yuan into a global currency.
• PBOC Adviser Zhou: Excessive Money Supply Root of High Inflation. China's high inflation is mainly due to excessive money supply, and thus can't be solved simply by raising interest rates, Zhou Qiren, an academic adviser to the People's Bank of China, said in an interview with the China Reform magazine. The central bank has had to print lots of yuan to buy foreign exchange in China to maintain a relatively stable exchange rate between the yuan and the U.S. dollar, which has depressed the value of money held by ordinary people, Zhou said in the latest edition of the magazine.
• U.S. Near Approving Comcast's(CMCSA) NBC Deal.
• Obama Launches Rule Review, Pledging to Spur Jobs, Growth. President Barack Obama plans a government-wide review of federal regulations, aiming to eliminate rules that stymie economic growth. In an article published in the opinion pages of The Wall Street Journal, Mr. Obama said he intends to issue an executive order initiating a review to "make sure we avoid excessive, inconsistent and redundant regulation," focusing on rules that "stifle job creation and make our economy less competitive." He also suggested future regulations must do their job "while promoting economic growth."

Bloomberg Businessweek:

• Shanghai Prepares for Property Tax to Curb 'Speculative' Buying. Shanghai, China’s financial center, will this year prepare for a trial property tax, becoming one of the first cities in the nation to introduce the measure aimed at curbing “speculative” investment. Mayor Han Zheng announced the move in a speech to the Municipal People’s Congress yesterday, without giving details of how much the tax would be or when it would be implemented. Shanghai and southwestern Chongqing are the two cities that will begin trials of a property tax, according to a Jan. 10 report by Nomura Holdings Inc., which expects China to selectively introduce a tax rate of about 0.8 percent. “We will step up macro-control measures, prioritize the supply of non-luxury residential units to be owned and occupied by ordinary citizens, and prepare for the trial reform on property tax as required by the central government,” Han said.
• South Korea Calls for UN Action on North Korea Uranium Program. South Korean President Lee Myung Bak called for United Nations action on North Korea’s uranium- enrichment program that provides the country with another means of making nuclear weapons.

CNBC:

• China Cuts 2011 Lending Target by 10%: Report.

IBD:

• Consumers Keep Chip Slowdown at Bay, Helping Equipment Maker. They're snapping up smart phones and tablet computers, which are each packed tightly with semiconductors and the latest flash memory chips. That has chipmakers busy. And chipmakers retooling for the new orders are keeping the capital-equipment makers, such as Lam Research (LRCX), buzzing.

NY Times:

• G.E.(GE) to Share Jet Technology With China in New Joint Venture.
• A Deep Bench of Leadership at Apple(AAPL).
  
• U.S. Bills States $1.3 Billion in Interest Amid Tight Budgets. As if states did not have enough on their plates getting their shaky finances in order, a new bill is coming due — from the federal government, which will charge them $1.3 billion in interest this fall on the billions they have borrowed from Washington to pay unemployment benefits during the downturn.
• Lawsuit Loans Add New Risk for the Injured. The business of lending to plaintiffs arose over the last decade, part of a trend in which banks, hedge funds and private investors are putting money into other people’s lawsuits. But the industry, which now lends plaintiffs more than $100 million a year, remains unregulated in most states, free to ignore laws that protect people who borrow from most other kinds of lenders. Unrestrained by laws that cap interest rates, the rates charged by lawsuit lenders often exceed 100 percent a year, according to a review by The New York Times and the Center for Public Integrity. Furthermore, companies are not required to provide clear and complete pricing information — and the details they do give are often misleading. A growing number of lawyers, judges and regulators say that the regulatory vacuum is allowing lawsuit lenders to siphon away too much of the money won by plaintiffs.

NY Post:

• Cuomo Threatening NY Gov't Shutdown. Albany's new sheriff is ready to lay down the law. Gov. Cuomo is threaten ing to shut down state government in early April if the Legislature refuses to pass a new budget that slashes spending by an unprecedented $10 billion, The Post has learned.

Business Insider:

• Barry Rosenstein and Jana Partners: Returns and Stock Holdings.
• China Is Only Attacking The Symptoms And Will Overheat Until It Explodes.
  

Zero Hedge:

• More Austerity Casualties: Solar Stock Subsidies.

Boston Globe:

• $1 Billion Effort Yieldds No Bioterror Defenses. The Pentagon is scaling back one of its largest efforts to develop treatments for troops and civilians infected in a germ warfare attack after a $1 billion, five-year program fell short of its primary goal. Even the heavy infusion of research cash and a unified effort by university labs and biotech companies from Boston to California were insufficient to break through limitations of genetic science, according to government officials and specialists in biological terrorism. Instead, the Pentagon’s next $1 billion for the Transformational Medical Technologies program will focus on better ways to identify mutant versions of Ebola, Marburg, and other deadly viruses. Those are among the genetically modified agents that officials fear could be used by terrorists or rogue states against urban or military targets.

Orange County Register:

• Construction Jobs Outlook Slightly Better.

denverpost.com:

• Colorado Part of "New Gold Rush" for Rare-Earth Metals.

AppleInsider:

• Apple(AAPL) Seen Selling 100 Million iPhones, 40 Million iPads in 2011. Any drop in Apple's share price tomorrow "presents a buying opportunity ahead of earnings," according to the latest analyst to weigh in on the impact Steve Jobs' leave of absence may have on investors, noting an improved outlook for iOS and more favorable component costs than previously expected. Morgan Stanley analyst Kathy Huberty filed a brief noting "We are buyers on any meaningful pullback of Apple's share price. We expect the company to report strong December quarter results Tuesday night and continue to believe our bull case of CY11 $25 EPS (vs. consensus of $20.68) is increasingly likely on the back of stronger than expected iPhone/iPad shipments and gross margins."
• Apple's(AAPL) App Store On Pace to Surpass Total iTunes Music Sales by March. The average iOS device has seen more than 60 applications from the App Store downloaded on to it, putting Apple's digital download destination for the iPhone and iPad on pace to eclipse the iTunes Music Store this March. Horace Dediu of Asymco this week published a detailed look at the growth metrics of Apple's App Store, and compared them with the iTunes Music Store. The analysis came after Apple began its countdown to 10 billion App Store downloads, a milestone that will likely be achieved this month. The App Store will reach the 10 billion mark, not including software updates, in less than half the time it took the iTunes Music Store to reach that total.

Lloyd's List:

• SITC Chief Urges Chinese Owners to Rein in Fleet Growth. SITC International chairman Shaopeng Yang has warned that some Chinese shipping companies are expanding too fast on the back of easy money and a misguided belief that China’s economy will grow indefinitely at current rates.

PIMCO:

• Europe is Running Fast to Stand Still by Mohamed A. El-Erian. The sequencing of Europe’s debt crisis is depressingly similar – the plot stays the same, with a slightly different cast depending on the country in the spotlight. Yet, judging by the run-up to the meeting of European Union finance ministers in Brussels on Monday, European officials seem intent on repeating it over and over again.

Rasmussen Reports:

• Most Still Favor Repeal of Health Care Law, Say It Will Increase Deficit.

Politico:

• Repeal Vote Just The First Step for Republicans on Health Care. The real work begins immediately afterward, with Republicans using every legislative and political tool at their disposal to wage a two-year campaign against the overhaul.
• Health IT Gets $27 Billion Stimulus Spark. The Obama administration’s health information technology guru is lauding the efforts of 100 hospitals trying to achieve the “meaningful user” status of health IT, but questions remain about how insurers and other stakeholders can safeguard patient data.
• U.S. Eases China Rhetoric, Critics Ratchet It Up. The day before Chinese President Hu Jintao arrives in Washington for a state visit, a bipartisan group of senators relaunched their effort to pass legislation designed to force President Barack Obama to take action against China for alleged currency manipulation and discrimination.

Telegraph:

• Yukos Warns BP(BP) Investors Rosneft Assets Are 'Stolen'. The oil company formerly run by imprisoned oligarch Mikhail Khodorkovsky has fired off a warning to BP shareholders, saying their deal with the Kremlin is founded on “illegal auctions, bogus bankruptcy fire sales and expropriations”.
• Hedge Funds Bet China is a Bubble Close to Bursting. The world is looking to China as a springboard out of recession - but some hedge funds are betting the country's credit and growth levels cannot be sustained.
• German Coalition Split on Increasing EU's Bail-Out Fund. Important members of Chancellor Angela Merkel's coalition in Germany are resisting plans for an increase in the EU's bail-out fund to protect Spain from contagion, complicating a crucial meeting of EU finance ministers on Monday.

Daily Mail:

• 'Your're Dead': Arizona Shooting Victim Sectioned After 'Death Threat' Against Tea Party Leader.

El Mundo:

• The International Monetary Fund has sent a special unit to meet with the Bank of Spain, the Spanish Treasury and the nation's largest banks to evaluate the country's solvency, citing people familiar with the matter. Once the evaluation is concluded, the IMF may offer Spain a flexible line of credit, an instrument offered to Mexico, Poland and Colombia in the past. Unlike a bailout, a flexible line of credit is a deposit that can be used by countries experiencing temporary financing problems.

Cinco Dias:

• Spanish banks have a total $107 billion of debt coming due in 2011, citing people in the financial markets. Banco Santander SA hsa 27.4 billion euros of debt due, while Banco Bilbao Vizcaya Argentaria SA has 11.9 billion euros due.
  

Der Spiegel:

• The European Commission regards an exacerbation of tensions in the region's sovereign debt markets as "unavoidable" in the first months of 2011, citing a strategy paper. Officials are trying to forge a comprehensive plan in response to the region's fiscal crisis that includes an increase of the effective size of the rescue fund to $589 billion and allowing the institutions to buy bonds of distressed countries to alleviate the European Central Bank, Spiegel said. The plan also includes debt buybacks and lower interest rates on rescue loans. Aid should be made available to struggling banks, citing the paper.

Nikkei:

• Elpida Memory Inc. will seek to raise prices of DRAM chips by 10%.

Xinhua:

• Beijing will act "firmly" to curb rising property prices this year, including increasing housing supply.

21st Century Business Herald:

• China should speed up the pace of raising interest rates "when necessary" to eliminate negative real rates, citing central bank adviser Xia Bin.

China Business News:

• China may consider measures to restrict commodity investors to curb excessive speculation, citing Shang Fulin, chairman of the China Securities and Regulatory Commission. The watchdog may match in commodity markets requirements applied to stock-index-futures investors.
  

The Standard:

• China Rate Hike Seen Imminent. Such a move to rein in liquidity and curb mounting inflation will follow an increase in banks' reserve requirement ratio. The central bank announced on Friday a 50 basis points hike in reserve requirements, effective Thursday, when key economic data for December and the fourth quarter will be released. Beijing is expected to raise interest rates for the first time this year by 25 basis points just before or immediately after the Lunar New year. HSBC chief economist Qu Hongbin said it is "very necessary" to implement a rate hike before the Lunar New Year, as inflation risk has become a practical and major problem. Citi Investment Research economist Shen Minggao agreed: "A rate hike is likely before the Lunar New Year, if the government finds that the consumer price index rose sharply in January." He estimates the CPI to rise over 5 percent this month. CITIC Bank International China economist Liao Qun also forecasts the CPI to be around 5 percent in January and rise more than 5 percent in February, due to higher food prices caused by the cold weather and the holiday.

Weekend Recommendations
Barron's:

• Made positive comments on (VOD), (MS) and (RRD).

Citigroup:

• Reiterated Buy on (MRVL), boosted estimates, target $29.

Night Trading

• Asian indices are -.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 108.25 -.25 basis point.
• Asia Pacific Sovereign CDS Index 110.50 +1.0 basis point.
• S&P 500 futures -.25%.
• NASDAQ 100 futures +.91%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (FRX)/.98
• (MMR)/-.28
• (FAST)/.45
• (C)/.08
• (CREE)/.58
• (IBM)/4.08
• (WDC)/.58
• (LLTC)/.58
• (DAL)/.24
• (AAPL)/5.39
• (AMTD)/.25
• (SCHW)/.11
  

Economic Releases
8:30 am EST

• Empire Manufacturing for January is estimated to rise to 13.0 versus a reading of 10.57 in December.

9:00 am EST

• Net Long-Term TIC Flows for November are estimated to rise to $40.0B versus $27.6B in October.

10:00 am EST

• The NAHB Housing Market Index for January is estimated to rise to 17.0 versus 16.0 in December.

Upcoming Splits

• (TEF) 3-for-1
  

Other Potential Market Movers

• The CIBC Institutional Investor Conference, weekly ABC consumer confidence reading and (SFD) investor day could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as more economic optimism, buyout speculation, technical buying, less financial sector pessimism, diminishing eurozone sovereign debt angst and mostly positive earnings reports offsets profit-taking, more shorting and China inflation worries. My intermediate-term trading indicators are giving mostly bullish signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 1,293.24 +1.71%*



The Weekly Wrap by Briefing.com.

*5-Day Change