Today's Headlines

Bloomberg:

• Egypt's President Mubarak May Step Down as Army Meets. Egyptian President Hosni Mubarak may announce today whether he will step down as the army discusses measures “to safeguard the interests” of the country after more than two weeks of protests demanding his ouster. Mubarak will decide “within hours” whether to resign, Cabinet spokesman Magdi Rady said in a telephone interview today. He will give an evening address from the presidential palace in Cairo, state television said. Egypt’s top military body decided today it will stay in permanent session in response to the “legitimate” demands of the Egyptian people, according to a statement read on state television described as “Declaration 1.”
• U.S. Jobless Claims Fall to 383,000, Lowest Level Since July 2008. The number of Americans filing first-time claims for unemployment insurance fell to the lowest level since July 2008 last week, showing further strength in the labor market after the jobless rate declined to a 21-month low. Applications for jobless benefits decreased by 36,000, more than forecast, to 383,000 in the week ended Feb. 4, Labor Department figures showed today. Economists forecast claims would fall to 410,000, according to the median estimate in a Bloomberg News survey. “The labor market is improving,” said Brian Jones, an economist at Societe Generale in New York who projected claims would drop to 385,000. “Fingers crossed, if the weather can hold off this week, we should get a pretty decent snap back in non-farm payrolls and maybe another drop in the jobless rate.” The four-week moving average, a less volatile measure, fell to 415,500 from 431,500 the prior week. The four-week moving average, a less volatile measure, fell to 415,500 from 431,500 the prior week. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.1 percent.
• Portugal Leads Rise in European Sovereign Credit-Default Swaps. Portugal led an increase in the cost of insuring European government debt, according to CMA. Credit-default swaps on Portuguese sovereign debt jumped 12 basis points to 442, helping push the Markit iTraxx SovX Western Europe Index of swaps on 15 governments up 1.5 basis points to 169.5. Contracts on Greece increased 14 basis points to 829, Italy climbed 4 to 177, Spain rose 4.5 to 240 and Ireland was 4 higher at 564.
  
• Fed's Warsh Resigns; Bernanke Adviser Questioned Stimulus. Federal Reserve Governor Kevin Warsh, who was one of Chairman Ben S. Bernanke’s closest financial-crisis advisers before becoming the only governor to question the expansion of record monetary stimulus in November, resigned after five years at the central bank. Warsh, 40, a former investment banker who was the youngest- ever Fed governor when then-President George W. Bush appointed him in 2006, will leave “on or around March 31,” he said in a letter today to President Barack Obama that was released by the Fed in Washington. His departure may give Bernanke a stronger hand to complete or potentially expand $600 billion in Treasury purchases through June. “You lose a forceful internal advocate for ending QE and trying to renormalize policy quicker,” said Vincent Reinhart, the Fed’s director of monetary affairs from 2001 to 2007, referring to the stimulus program known as quantitative easing. His resignation opens a second vacancy on the seven-member Board of Governors and leaves Elizabeth Duke, a former community banker, as the only governor not appointed or reappointed by Obama.
• OPEC to Reduce Exports as Winter Demand Ebbs, Oil Movements Says. The Organization of Petroleum Exporting Countries will reduce oil shipments this month as demand for winter fuels in the northern hemisphere fades, according to tanker-tracker Oil Movements. Loadings will slip to 23.79 million barrels a day in the four weeks to Feb. 26, down 0.6 percent from 23.94 million barrels a day in the period to Jan. 29, the tanker-tracker said today in a report. Global crude demand will slide by 0.4 percent in the second quarter while refiners perform seasonal maintenance, according to OPEC. Exports from Middle Eastern producers, including non-OPEC members Oman and Yemen, will fall by 1.6 percent to 17.58 million barrels a day, Oil Movements’ data show. A total of 484.73 million barrels of crude will be on board tankers in the month to Feb. 26, down 0.3 percent from the Jan. 29 figure of 486.08 million, according to Oil Movements, which calculates shipments by keeping a tally of tanker-rental agreements.
• CFTC's Gensler Backs End-User Exemption in Swaps Margin Rules. U.S. Commodity Futures Trading Commission chairman Gary Gensler said regulators shouldn’t impose margin requirements on firms that use derivatives to hedge business risks, aligning himself with lawmakers and companies that have urged restraint in Dodd-Frank rulemaking. “Proposed rules on margin requirements should focus only on transactions between financial entities rather than those transactions that involve non-financial end-users,” Gensler said today in testimony prepared for a House Agriculture Committee hearing.
• Goldman(GS) Advises Keeping Soybean, Cotton, Corn Bets. Investors should maintain bets on higher prices for soybeans, cotton and corn, Goldman Sachs Group Inc. said after the U.S. Department of Agriculture lowered stockpile estimates.
• Cotton Surges to Record for Second Day on U.S. Export Sales. Cotton futures climbed to a record for the second straight day after exports jumped from U.S., the world’s leading shipper. In the week ended Feb. 3, export sales rose 26 percent from a week earlier, the U.S. Department of Agriculture said today. Global output will be 115.25 million bales in the year ending July 31, down 0.2 percent from a January forecast, with demand at 116.55 million, the USDA said yesterday. Prices have more than doubled in the past 12 months. Cotton for March delivery advanced 6.76 cents, or 3.7 percent, to $1.8734 a pound at 10:12 a.m. on ICE Futures U.S. in New York. Earlier, the most-active contract jumped by the exchange limit of 7 cents to an all-time high of $1.8758. The price gained 7.6 percent in the previous three days.
• Corn Jumps to 30-Month High on Export Demand. Corn rose to a 30-month high for a second day on signs that global demand is increasing for supplies from the U.S., the world’s largest grower and exporter. The U.S. Department of Agriculture reported export sales in the week ended Feb. 3 were 51 percent above the average during the prior four weeks. The USDA said yesterday that U.S. inventories before the harvest will be equal to about 18 days of consumption, on par with the record low in 1996. Before today, prices jumped 95 percent in the past year. Corn futures for March delivery rose 5 cents, or 0.7 percent, to $7.03 a bushel at 10:51 a.m. on the Chicago Board of Trade, after reaching $7.045, the highest price for the most- active contract since July 2008.
• Wheat Hoarding Likely to be 'Widespread,' Prompting Price Gains, UN Says. Global wheat harvests may trail demand for a second year, spurring hoarding and further price gains, said the United Nations. “Whenever you get the market as tight as we are now, hoarding becomes widespread,” Abdolreza Abbassian, a senior economist at the UN Food and Agriculture Organization, said in an interview by phone from Rome. Wheat in Chicago, the global benchmark, soared 72 percent in the past year as drought and floods ruined crops.
• American Eagle(AEO) Gains on Speculation U.S. Teen-Clothing Retailer is Target. American Eagle Outfitters Inc. rose the most in almost two years in New York trading on speculation the Pittsburgh-based teen-clothing retailer may be a takeover target. The shares rose $1.36, or 9.3 percent, to $16.05 at 1:47 p.m. in New York Stock Exchange composite trading.
• Budget Deficit in U.S. Rose to $49.8 Billion as Spending Grew. The U.S. government posted a wider budget deficit in January as spending climbed from a year earlier when outlays were depressed by the New Year’s holiday. The gap totaled $49.8 billion last month, lower than the median forecast of economists surveyed by Bloomberg News, compared with a $42.6 billion shortfall in January 2010, figures from the Treasury Department showed today in Washington. An 11 percent increase in spending exceeded a 10 percent gain in revenue that reflected growing income tax receipts as the economy improved.
• Dish(DISH) Shares Jump After Credit Suisse Says AT&T May Bid. Dish Network Corp., the second- largest U.S. satellite-television provider, rose as much as 8.2 percent after Credit Suisse Group AG said AT&T Inc. may make a bid to buy the company.

Wall Street Journal:

• Egypt Military Signals Move for Control. The fate of Egyptian President Hosni Mubarak remains in the balance as initial reports saying the embattled leader is expected to announce he will step aside were denied later Thursday by the country's Information Minister, adding to the uncertainty as thousands gathered in central Cairo's Tahrir Square. Meanwhile, the army moved to assert control over the country, after more than two weeks of massive protests against Mr. Mubarak's rule.
• Egypt CDS Rallies on Mubarak Exit Chatter. News that Egyptian President Hosni Mubarak may step down has sparked a recovery in U.S. shares and contributed to a rally in Egypt’s sovereign credit-default swaps. But undercurrents of concern about a potentially messy transition are also evident. The cost to insure $10 million of five-year Egyptian debt through credit-default swaps dropped to $335,000 as President Mubarak’s departure looked increasingly likely. That insurance cost $385,000 earlier in the day. Prior to the crisis, Egyptian CDS traded at $312,000.
• Advertisers Weigh AOL(AOL), Politics. AOL Inc. bought the Huffington Post in a bid to draw more readers and advertisers. But some Madison Avenue executives are expressing concerns about the liberal-leaning nature of the site and its potential to taint the broader AOL brand.
• Chinese Economist Warns of Risks in Freddie Mac, Fannie Mae Bonds. A popular Chinese economist on Thursday said China should be aware of risks in its holdings of debt issued by U.S. government-controlled mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC), and suggested that China sell the securities soon.
• On the Runway: Six Trends to Watch. Designers' Plans For Fall Include Tunics, Long Skirts, Lace, Heirloom Looks—And Some Surprises.

CNBC.com:

• Wall Street Whistleblowers Ready to Cash In.

Business Insider:

• Jim Chanos: The Muni Situation is Ominous, and These States are Basically Insolvent. He doesn't sound like he's quite on board with the big doom predictions, but Jim Chanos is clearly more in the Meredith Whitney camp than many of the other investors who have chimed in on the muni question.
• The World is About to Hit Its Oil Price "Recession Threshold". (chart)
  

Zero Hedge:

• Stratfor Reports Mubarak Has Already Left Country, Speech Prerecorded.

LA Times:

• California Plans $2-Billion Program to Help Distressed Homeowners.

Politico:

• Senator Jon Kyl Announces His Retirement From Senate. Arizona Sen. Jon Kyl announced Thursday that he would retire after his current term, creating the fifth open seat Senate race of the 2012 cycle. Speaking at a press conference in Phoenix, the Senate’s second-ranking Republican said, “There’s more to life than being a United States senator. I never anticipated I would be in public service for 26 years.”

Reuters:

• Might Barbie and GI Joe Slug it Out Over LeapFrog(LF)?
• Private Equity to Cook Up Red Robin(RRGB) Deal? Casual dining chain Red Robin Gourmet Burgers Inc may have put itself on private equity's M&A menu by agreeing to amend its takeover defences and consider any offers -- as demanded by two of its biggest shareholders. A private equity buyout looks more probable, given the brand's niche positioning in the restaurant space.
• Pro-Reform Saudi Activists Launch Political Party. Saudi Islamists and opposition activists have launched a political party in a rare challenge to the absolute monarchy, asking King Abdullah for a voice in the Gulf Arab state's governance, its organizers said Thursday. The move was apparently prompted by popular revolts in the Arab world that toppled Tunisia's president last month and have loosened the grip of Egypt's autocratic leader. But it was more an act of protest than an effective start-up of a political party since Saudi Arabia has no elected parliament and parties and public dissent are banned by the Al Saud monarchy, which rules the world's No. 1 oil exporting country in alliance with Sunni Muslim clerics.

Frankfurter Allgemeine Zeitung:

• Holders of bonds in indebted euro-area governments should be forced to take losses of 30 to 40% to help Europe overcome its debt crisis, Harvard University professor Kenneth Rogoff was quoted as saying. Countries such as Greece and Portugal should be urged to leave the euro regino for 10-15 years to help solve Europe's debt crisis, Rogoff said.

ShanghaiDaily.com:

• Shanghai New Home Sales Tumble 25%.

Bear Radar

Style Underperformer:

• Large-Cap Growth (-.32%)

Sector Underperformers:

• 1) Internet -1.83% 2) Gold -1.38% 3) Homebuilers -.95%

Stocks Falling on Unusual Volume:

• TRGL, GPI, NXY, CSCO, CS, NOK, MFC, CCIH, AKAM, EZCH, GSIC, ATVI, TQNT, NUAN, ASYS, HTHT, CHBT, AXTI, IFF and TAP
  

Stocks With Unusual Put Option Activity:

• 1) AKAM 2) CSCO 3) GT 4) AEO 5) ATVI
  

Stocks With Most Negative News Mentions:

• 1) FLO 2) MDTH 3) RGCO 4) XRAY 5) LTM

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth (+.50%)

Sector Outperformers:

• 1) Road & Rail +.66% 2) Oil Service +.64% 3) Steel +.36%

Stocks Rising on Unusual Volume:

• WFMI, ECA, ESV, TGA, CLB, DOW, MIPS, ARRS, PRU, EQIX, PBR, IPGP, ARTC, SCSS, DIOD, SFSF, NTES, TLEO, JDSU, SSYS, LUFK, MMYT, FORR, DISH, SBGI, HWKN, OPEN, HGR, ECA, BCA, ENS, SCI and DFZ
  

Stocks With Unusual Call Option Activity:

• 1) EZCH 2) GME 3) WFMI 4) AEO 5) SFSF
  

Stocks With Most Positive News Mentions:

• 1) WTS 2) ARII 3) TLEO 4) TMK 5) NOC

Charts:

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

Thursday Watch

Evening Headlines
Bloomberg:

• U.S. Joins Egyptian Protesters in Criticizing Suleiman's Offers. Egyptian Vice President Omar Suleiman said negotiations he has opened with opposition movements are the only alternative to the “chaos” of regime change, as the government’s limited concessions drew criticism from protesters and the Obama administration. “There will be no overthrow of the regime because this will lead to chaos, which will take the country into the unknown,” Suleiman told local media chiefs yesterday, the official Middle East News Agency reported. The talks that began this week, involving the Muslim Brotherhood and other groups, “are the first way to achieve stability in the country and to get out of the current crisis peacefully.” In Washington, the Obama administration echoed the criticism of the protesters that Suleiman isn’t responding quickly enough. The Egyptian government has yet to reach the “minimum threshold” of accomodating demands of the country’s citizens, White House press secretary Robert Gibbs said. Egyptian authorities must make “immediate and irreversible progress” toward a transition of power and expand the scope of negotiations, Gibbs said at today’s briefing.
• Weber's Withdrawal Throws Open ECB Race as Debt Crisis Persists. The campaign for the top job at the European Central Bank was thrown open as the sudden and unexplained withdrawal of German front-runner Axel Weber cleared the way for a slew of candidates to replace Jean-Claude Trichet. Central bankers Mario Draghi of Italy, Luxembourg’s Yves Mersch and Erkki Liikanen of Finland saw their chances of winning Europe’s top economic post rise as did Germany’s Klaus Regling, who runs the region’s bailout fund. Trichet’s non- renewable eight-year term expires in October.
• PetroChina Buys Encana's Cutbank Stake for $5.4 Billion. PetroChina Co., the nation’s biggest energy producer, agreed to buy a 50 percent stake in Encana Corp.’s Cutbank Ridge assets for C$5.4 billion ($5.4 billion), giving the Chinese company its first gas asset in North America. The acquisition would give PetroChina daily production of 255 million cubic feet of natural gas from 635,000 acres in the Canadian provinces of Alberta and British Columbia, Encana said in a statement yesterday. The companies will also form an equal venture to increase output, the Beijing-based producer said in a statement today. The deal would bring the total value of energy acquisitions by Chinese companies since last year to about $46 billion.
• Billionaire Ambani's Wealth Eroded as 'Panic' Starts Rout. Billionaire Anil Ambani blamed “vicious and illegal” trading for a one-day stock rout that wiped out $2.6 billion in the market value of his six publicly traded companies. The plunge, led by a 19 percent drop in Reliance Infrastructure Ltd., dragged the benchmark Sensitive Index to a seven-month low yesterday. The group said “unscrupulous corporate rivals” spread rumors that led to “panicked” sales, according to an e-mailed statement. It’s a familiar refrain for investors. Three weeks ago, Ambani criticized media reports based on unidentified sources and rumors in a press conference where he said he had agreed not to trade in shares for a year after an investigation by the stock market regulator. Since then, the combined value of his listed companies has plunged by 29 percent to $16.8 billion, according to data compiled by Bloomberg.
• North Korea Says 'No Need' for More Talks With South. North Korea said it won’t continue talks with South Korea after their first meeting in four months collapsed yesterday without an agreement on holding higher-level discussions to defuse tensions. “We no longer feel the need to deal with the traitor group, which has no interest in improving relations,” North Korea’s delegation to this week’s military talks said today in a statement carried by the official Korean Central News Agency. “It is our tradition to respond to dialogue with dialogue and confrontation with confrontation.”
• Wells Fargo's(WFC) Former CFO Atkins to Receive $22 Million After Stepping Down. Wells Fargo & Co.’s former finance chief Howard Atkins may be eligible to receive more than $22 million in compensation and benefits upon his official retirement in August. Atkins will be paid about $9.25 million in deferred compensation and pension benefits, according to the company’s most recent proxy filing and an analysis conducted by Equilar Inc., a Redwood City, California-based executive-pay researcher. He may get another $13.2 million in restricted stock and options that will vest over the next few years, Oscar Suris, a Wells Fargo spokesman, said today in a telephone interview. Atkins, the chief financial officer at Wells Fargo since 2001, resigned yesterday, and will take an unpaid leave of absence until his retirement becomes effective Aug. 6.
• China's Stock Market Slump to Persist, JPMorgan(JPM) Says. Chinese stock market losses will persist until the government restricts lending, according to Adrian Mowat, JPMorgan Chase & Co.’s chief Asian and emerging- market strategist. “It will last until we see evidence that loan growth is beginning to slow and we haven’t seen that,” Mowat said in an interview with Bloomberg Television today, when asked how long China’s stock market slump will continue. on concern accelerating inflation will prompt tighter monetary policies. in the China Daily. “I think it’s with us, certainly for the foreseeable future.” The Shanghai Composite Index has tumbled 12 percent from a Nov. 8 highChina should focus on higher inflation and slow economic growth or rising prices may “ruin the country’s economic and social prospects,” Ma Jun, Deutsche Bank AG’s chief economist for Greater China, wrote in a commentary“What I’d like to see in China is them pulling back on fixed-asset investment and really the best way to tell that is if loan growth is slowing down,” Mowat said. “For now, I see emerging markets going lower,” Mowat said. JPMorgan, which is “bearish” on emerging markets versus developed markets, will recommend buying developing nations’ stocks again when the MSCI Emerging Markets Index drops to between 935 to 990, he said. The gauge fell 1.1 percent to 1,098.13 in recent trading, a sixth day of declines. “What we are looking for to change that view is for the markets to price in higher interest rates broadly in emerging markets,” said Mowat, 44.

Wall Street Journal:

• Germans in Talks to Buy Big Board. NYSE(NYX), Deutsche Börse Near $25 Billion Tie-Up; Deal Would Symbolize a Diminished Role for New York in Finance. After 219 years as the citadel of American capitalism, the New York Stock Exchange was near an agreement to be acquired by Deutsche Börse AG in a deal that would create the world's largest financial exchange. For New York, the move is symbolic of the city's fading dominance on the world stage as other countries are drawing investors directly to their markets. Antitrust experts cautioned that the proposed deal could face tough regulatory scrutiny in Europe, as the new behemoth would dominate share and derivatives trading in the European Union—and in Washington, where tempers may rise over a crown jewel of the economy falling into foreign hands. The exchanges, which are presenting the deal as a merger of equals, said the combination would leave 60% of the company in the hands of Deutsche Börse shareholders, with NYSE Euronext shareholders holding the remaining 40%. The combined company, with a putative market capitalization of some $25 billion as of Wednesday, would be incorporated in the Netherlands and split its headquarters between Frankfurt and New York. Deutsche Börse Chief Executive Reto Francioni would become chairman, and NYSE Euronext chief Duncan Niederauer would be the new company's CEO under a board drawn equally from both companies. The plan drew a cautious, low-key response from American politicians and regulators faced with control of an iconic U.S. institution. The Justice Department, the Securities and Exchange Commission and the U.S. Committee on Foreign Investment all would have a role in signing off on any deal. For those who remember the glory days, when the New York Stock Exchange was the unchallenged center of world finance, there was trouble containing the dismay.
• Democrats Can't Filibuster ObamaCare Repeal. Senate Majority Whip Dick Durbin likes to taunt his Republican colleagues, arguing that ObamaCare can't be repealed because 60 votes are required to end debate in the Senate on any measure. Though Republicans will likely win control of the Senate in 2012, Mr. Durbin is right that they probably won't get to 60 senators. That would require the GOP to win back more than half the Democratic seats up next year. Rep. Jim Moran (D., Va.) recently called GOP promises of repeal "a political scam on their base. . . . It can't happen." Not so fast. Keith Hennessey, a former White House colleague of mine, says Democrats are wrong. He argues that Republicans can repeal health-care reform with a simple Senate majority.
• Former Sun CEO Worries About Region's Prospects. Even as Silicon Valley's unemployment rate eases and many local technology companies post positive financial results, Scott McNealy is pessimistic. Santa Clara County's jobless rate fell to 10.4% in December from 11.3% a year earlier. But Mr. McNealy, the co-founder and former chief executive of computer maker Sun Microsystems Inc., doesn't think Silicon Valley's emerging sectors such as social networking and "green" technology are going to make up for jobs lost as sectors such as software and computers consolidate. He recently discussed Silicon Valley's jobs picture:
• Israel Braces for a New Egypt. Israelis are bracing for a more adversarial regime in Egypt, one they expect could lead their country to expand its army, fortify the two countries' desert frontier and possibly re-invade the Palestinian-ruled Gaza Strip. Three decades after Israel settled into a "cold peace" with Egypt—breaking its encirclement by hostile Arab states but failing to win much popular sympathy from Egyptians—Israeli officials are reviewing the ways the U.S.-backed transition in Cairo could affect the Jewish state.
• Twitter as Tech Bubble Barometer. As Internet valuations climb and bankers and would-be buyers circle Silicon Valley in an increasingly frothy tech market, many eyes are on one particularly desirable, if still enigmatic, target: Twitter. Executives at both Facebook Inc. and Google Inc.(GOOG), among other companies, have held low-level talks with those at Twitter Inc. in recent months to explore the prospect of an acquisition of the messaging service, according to people familiar with the matter. The talks have so far gone nowhere, these people say.
• Oil Firms Hit by Hackers From China, Report Says. Hackers who appear to be based in China have conducted a "coordinated, covert and targeted" campaign of cyber espionage against major Western energy firms, according to a report expected to be issued Thursday by cybersecurity firm McAfee Inc. Law-enforcement agencies said they are investigating the incidents, which McAfee said have been going on at least since late 2009 but may have started as early as 2007. The company said the attacks, which they dubbed "Night Dragon," were still occurring.
• Suspicion of Forex Gouging Spreads. Some of the nation's largest investment firms have been overcharged by banks for currency trades, bank insiders and others claim, broadening the scope of alleged abuses in pockets of the $4 trillion foreign-exchange market. BlackRock Inc., the world's largest fund manager, became concerned at the rates it and its clients were charged for some currency trades by custody banks including Bank of New York Mellon Corp. according to an internal BlackRock investigation about a year ago and people familiar with the firm.

CNBC:

• Market Pro: Is Exchange Merger Un-American? In a live interview on CNBC’s Fast Money, Joe Saluzzi Of Themis Trading tells us “I think they’re going to have major issues.” And not just run of the mill regulatory issues; he thinks there are serious patriotic issues. “This is an American institution where companies come to raise capital.... this is an infrastructure of a country. You just can't give that away. What's good for a public corporation is not necessarily good (for the public.)" On top of that, he thinks the deal could raise issues of national safety. “Their facility in Mahwah, NJ is considered critical infrastructure by homeland security. Who’s going to run that?”
• New Drilling Method Opens Vast Oil Fields in US. A new drilling technique is opening up vast fields of previously out-of-reach oil in the western United States, helping reverse a two-decade decline in domestic production of crude. Companies are investing billions of dollars to get at oil deposits scattered across North Dakota, Colorado, Texas and California. By 2015, oil executives and analysts say, the new fields could yield as much as 2 million barrels of oil a day—more than the entire Gulf of Mexico produces now. This new drilling is expected to raise U.S. production by at least 20 percent over the next five years. And within 10 years, it could help reduce oil imports by more than half, advancing a goal that has long eluded policymakers."That's a significant contribution to energy security," says Ed Morse, head of commodities research at Credit Suisse.

NY Post:

• 24-Hour 3D Channel Set to Launch Sunday. Sony, Discovery and IMAX are launching the first 24-hour 3D channel this Sunday, according to two separate sources. The channel just struck its first carriage agreement with DirecTV and is set to officially announce the venture today. The service, called 3net, will air shows about the 3D experience along with spectacles from space such as "Hubble 3D," narrated by Leonardo DiCaprio, and "Wildebeest Migrations."

Business Insider:

• Steve Jobs Spotted At Apple(AAPL) HQ With A Big Smile, And A Spring In His Step. Here's some good news about Steve Jobs.

IBD:

• Are Buyers Sniffing Around Emergency Medical Services(EMS)?

New York Times:

• As Investors Become Savvy, An Intermediary Loses Favor. After the financial crisis, the Alberta Teachers’ Retirement Fund decided to reassess its strategy. At the time, the Canadian pension had roughly $150 million, or 3 percent of its assets, devoted to private equity, with the bulk in so-called funds of funds that invest across several different portfolios. Alberta Teachers’ quickly found the approach too expensive and pulled its money from such intermediaries.

Forbes:

• Ex-WikiLeaker Claims Defectors Took Control Of Leaks From Assange. When former WikiLeaks spokesperson Daniel Domscheit-Berg walked away from WikiLeaks in September of last year, he may have taken more than just a few engineers with him: He now claims that WikiLeaks’ defectors also took the keys to Julian Assange’s kingdom.

Reuters:

• Cisco(CSCO) Spooks Street Again With Weak Outlook, Margins. Network equipment maker Cisco Systems Inc's CEO John Chambers spooked investors for the third time in as many quarters, warning of dwindling public spending and weaker margins from tough competition. Cisco shares fell 10 percent after hours on Wednesday.
• Fed's Lockhart Says QE3 May Not Be Needed. The U.S. economy may not need further help from the Federal Reserve when its $600 billion stimulus plan runs out in June, but that decision will hinge on the path of the economy, a top Fed official said on Wednesday. Atlanta Fed President Dennis Lockhart sounded skeptical about recent improvements in the economy, saying housing still posed a significant downside risk to growth and urging policymakers to stamp out even the smallest risk of deflation. But asked about whether the Fed would have to extend its bond purchases or quantitative easing into a third round, a prospect referred to on Wall Street as QE3, Lockhart told reporters it might not have to.
• Whole Foods(WFMI) Sales Jump As Well-Heeled Spend More. Whole Foods Market Inc raised its 2011 profit outlook after a sharp acceleration in sales, quashing fears of a growth slowdown and underscoring how better-off U.S. shoppers are spending more freely. The upscale grocer's results, which sent its shares climbing 9 percent, contrast sharply with retailers who serve a greater proportion of less-affluent customers.
• Akamai(AKAM) Cuts Prices to Ink Long-Term Media Deals. Internet delivery company Akamai Technologies Inc. forecast first-quarter results below Wall Street's expectations after it lowered prices to sign major media clients into long-term deals. Shares in Akamai slid over 11 percent in after-hours trade after the company, which helps Apple Inc and Netflix Inc deliver online content by avoiding congestion on the Web, forecast weaker first-quarter revenue than investors had expected.

Financial Times:

• SEC Probes ETF Use in Insider Trading. The Securities and Exchange Commission is investigating whether Wall Street traders are using exchange-traded funds as a means of disguising insider trading. ETFs have emerged as a possible mechanism for maximising gains in one stock while potentially masking trading patterns, people familiar with the matter say.

Economic Daily News:

• The dynamic random-access memory chip industry may face shortages in May, citing Japan's Elpida Memory Inc. President Yukio Sakamoto.

Sankei:

• Iran has paid North Korea a total of $2 billion for enriched uranium over the past three years, citing a person familiar with the matter. North Korea said in November that it has a uranium-enrichment facility to provide fuel for a light-water reactor.

China Daily:

• The Chinese provinces of Henan, Shandong, Jiangsu and Anhui seeded clouds with silver iodide in an effort to induce precipitation, citing local government officials. Henan shot silver iodide into clouds while planes were used in Shangdong to seed clouds with the compound. Anhui fired 67 rockets into the sky on Feb. 7 and Feb. 8 to seed clouds, according to the report.
• China should focus on higher inflation and slow economic growth or rising prices may "ruin the country's economic and social prospects," Ma Jun, Deutsche Bank AG's chief economist for Greater China, wrote in a commentary.
  

ShanghaiDaily:

• Food Prices May Increase China CPI in January to New High. ECONOMISTS forecast that the inflation figure for January, to be announced by the National Bureau of Statistics next Tuesday, may rebound to a new high fueled by food prices, despite the frequent tightening measures implemented. "For the January data, market attention will center on the headline CPI and new loans to judge the inflation pressure,'' said Wang Qing, an economist at Morgan Stanley. Wang expected the CPI, the main gauge of inflation, to climb 5.2 percent year on year in January to notch a new high. The Ministry of Commerce said prices of 18 vegetables it tracked reported an annual growth of 12.6 percent during the week from January 17 to 23, up 6.5 percentage points from the previous week. Wang forecast the government may raise rates three more times in the first half of this year together with multiple hikes in banks' reserve requirement ratio. Lou Zhengwei, Industrial Bank Co's economist, said the PBOC will order banks to put aside more money as reserves five times in the first six months of this year, and he echoed Wang's view that rates will be raised three more times.
  

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -2.0% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 107.0 +3.0 basis points.
  
• Asia Pacific Sovereign CDS Index 117.0 +2.5 basis points.
  
• S&P 500 futures -.07%.
  
• NASDAQ 100 futures -.48%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CBOE)/.29
• (GT)/-.07
• (ALXN)/.50
• (BWA)/.82
• (LH)/1.31
• (BG)/1.60
• (ATHR)/.50
• (CMG)/1.30
• (KFT)/.46
• (CEPH)/1.92
• (PNRA)/1.18
• (EXPE)/.36
• (WYNN)/.70
• (CPKI)/.09
• (DVA)/1.12
• (CAKE)/.35
• (BEC)/1.24
• (PM)/.96
  

Economic Releases
8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 410K versus 415K the prior week.
• Continuing Claims are estimated to fall to 3900K versus 3925K prior.

10:00 am EST

• Wholesale Inventories for December are estimated to rise +.7% versus a -.2% decline in November.

2:00 pm EST

• The Monthly Budget Deficit for January is estimated to widen to -40.5B versus -$38.3B in December.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Lockhart speaking, $16 Billion 30-Year Treasury Bond Auction, weekly EIA natural gas inventory data, (EBAY) investor day and the (STT) analyst forum could also impact trading today.
  

BOTTOM LINE: Asian indices are lower, weighed down by technology 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 100% net long heading into the day.

Stocks Slightly Lower into Final Hour on Profit-Taking, Emerging Markets Inflation Fears, More Shorting

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Slightly Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 16.47 +4.17%
  
• ISE Sentiment Index 98.0 -46.74%
  
• Total Put/Call .83 +1.22%
  
• NYSE Arms 1.31 +33.77%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 80.80 +1.56%
  
• European Financial Sector CDS Index 130.33 bps -1.37%
  
• Western Europe Sovereign Debt CDS Index 167.44 bps +1.99%
  
• Emerging Market CDS Index 214.38 +2.18%
  
• 2-Year Swap Spread 19.0 unch.
  
• TED Spread 18.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .13% -1 bp
  
• Yield Curve 285.0 -3 bps
  
• China Import Iron Ore Spot $186.40/Metric Tonne +.38%
  
• Citi US Economic Surprise Index +63.60 +.2 point
  
• 10-Year TIPS Spread 2.34% -2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -12 open in Japan
• DAX Futures: Indicating +6 open in Germany

Portfolio:

• Higher: On gains in my Retail, Ag and Tech long positions and emerging markets short positions
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades lower, despite buyout speculation, mostly positive earnings, fund inflows and lower energy prices. On the positive side, Ag, Computer, Semi, Telecom, Wireless, Restaurant and Road&Rail shares are higher on the day. (IYR) has traded relatively well throughout the day. The US Muni CDS Index is falling another -1.77% to 176.04 bps. Oil is falling -.38% despite euro strength and Mideast tensions. Lumber is rising +1.58%. The 10-year yield is falling -9 bps to 3.65%. On the negative side, Construction, Bank, Computer Service, Steel, Oil Service, Energy, Oil Tanker, Alt Energy and Coal shares are under pressure, falling more than 1.0%. The Hungary sovereign cds is up +3.50% to 284.58 bps, the Brazil sovereign cds is rising +3.05% to 118.17 bps and the Belgium sovereign cds is gaining +2.46% to 164.95 bps. Moreover, the Egypt sovereign cds is rising +4.51% to 354.94 bps. The gasoline crack spread is soaring +9.2% today and is at the highest level since Feb. 2009 despite US gasoline supplies at 20-year high levels. The UBS-Bloomberg Ag Spot Index is rising +1.37%. China's 1-Year Swap Rate is rising +28 bps to the highest level since June 27th, 2008. More emerging market indices are breaking down technically. The major US averages continue to display resilience as the bears are unable to gain meaningful traction with potential negative catalysts, once again. I expect US stocks to trade modestly higher into the close from current levels on earnings optimism, US fund inflows, buyout speculation and falling energy prices.

Today's Headlines

Bloomberg:

• Deutsche Boerse in Advanced Talks to Purchase NYSE Euronext(NYX). Deutsche Boerse AG is in advanced talks to buy NYSE Euronext in an all-stock transaction that would create the world’s biggest exchange operator. Duncan Niederauer, New York-based NYSE Euronext’s chief executive officer, will hold the same job at the combined company. Frankfurt-based Reto Francioni, CEO of Deutsche Boerse, will be chairman. Deutsche Boerse will own about 59 percent to 60 percent of the joined corporation.
• Emerging Markets Stocks Decline for Fifth Day on Inflation, Rate Concerns. Emerging-market stocks declined for a fifth day, heading for its worst losing streak since November, on speculation policy makers will take further steps to curb inflation after China raised borrowing costs yesterday. The MSCI Emerging Markets Index slipped 1.3 percent to 1,112.73 at 11 a.m. in New York. The Jakarta Composite index and South Korea’s Kospi index each lost 1.2 percent. Hungary’s BUX index slipped 1.4 percent and Brazil’s Bovespa declined 1.9 percent. China’s Shanghai Composite index retreated 0.9 percent as exchanges resumed trading following a week-long holiday. “Concerns are evident that inflation issues may jack up interest rates and emerging markets may not be able to enjoy such abundant liquidity,” said Lim Chang Gue, who helps oversee about $21 billion at Samsung Asset Management in Seoul. “There’s some portfolio rebalancing to developed markets where corporate earnings are improving.”
• Weber Throws ECB Race Open by Ruling Out Second Bundesbank Term. The race for the European Central Bank’s presidency was thrown wide open as Axel Weber told officials he may not seek a second term as head of Germany’s central bank, casting doubt over his future career plans. Weber told some Bundesbank officials in confidence that he’s not necessarily interested in another eight-year term when his current mandate ends in 2012, said an official who spoke on condition of anonymity. That may also call into question whether he’ll be available to succeed Jean-Claude Trichet as head of the world’s second-most powerful central bank. European Union leaders need to appoint a new ECB chief by the time Trichet’s term expires on Oct. 31 and economists had named Weber as a leading candidate to succeed him.
• U.S.-Bound Supertanker Hijacked by Pirates Off Oman. A 1,100-foot supertanker carrying Kuwaiti oil to the U.S. was seized by pirates off eastern Oman today, the first hijacking of a vessel that size since April. The Irene SL has 17 Filipinos, seven Greeks and a Georgian on board, according to a statement on the website of EU Navfor, the European Union’s anti-piracy force. It is carrying 270,266 metric tons of oil destined for the Gulf of Mexico, owner Enesel SA said in an e-mailed statement.
• India Sensex Slides to Seven-Month Low Amid GDP Growth Concern. India’s benchmark stock index sank to a seven-month low as investigators widened a corruption probe and Credit Suisse Group AG said investor confidence may be dented by concerns that economic growth will slow. “The market is in a bearish grip,” said Apurva Shah, head of research at Prabhudas Lilladher Pvt. in Mumbai. “High interest rates will surely slow economic growth next year. The corruption probe will slow decision-making in the government.” The Bombay Stock Exchange’s Sensitive Index, or Sensex, lost 182.93, or 1 percent, to 17,592.77 at the 3:30 p.m. close in Mumbai as 22 shares fell while eight rose. The gauge is down 14 percent this year, the second-worst performer after Egypt’s EGX 30 Index.

Wall Street Journal:

• Taiwan Says General Spied for China. Taiwan's Defense Ministry said it arrested a military general on suspicion of spying for China in the most high-profile cross-Strait espionage case in decades. Taiwan government officials and some experts said the case highlights a determined effort by China to infiltrate the island's military despite warming economic and political ties between the two sides.
• Nokia(NOK) Considers Adopting Microsoft(MSFT) or Google(GOOG) Phone Platforms. Nokia Corp. as soon as Friday could announce a partnership with Corp. or MicrosoftGoogle Inc. to adopt a new handset operating system.

Business Insider:

• Did Obama Just Came Up With A State Bailout That The GOP Can't Oppose?
• 10 Iconic American Factories That Have Closed in The Past Two Years.
• 10 Reasons Why It Has Become Soul-Crushingly Hard To Find a Job In America.
• Greece Will Default Unless It Can Make These 'Frightening and Unrealistic' Fiscal Adjustments.

Zero Hedge:

• Barclays Starts Unwinding Inverse Triple Leveraged ETFs.
• Portuguese 10 Year Bond Yield Hits Fresh Lifetime Highs. (graph)
• S&P Downgrades New Jersey General Obligation Debt From AA to AA-.
• Gasoline Inventories Jump to 20 Year High As Gas Price Surges. (graph)
  

Fox Business:

• JPMorgan(JPM) to Announce $1.5 Billion Commercial Mortgage-Backed Bond - Source. J.P. Morgan Chase & Co. will announce a $1.5 billion commercial mortgage-backed bond on Wednesday, said a person familiar with the matter. The bond will be sold via the private Rule 144a market. The deal comes right after the biggest commercial-mortgage-backed security to come to market since the financial crisis, a $2.2 billion deal, priced on Tuesday. That deal came via Deutsche Bank AG and UBS AG. Demand was strong enough that its biggest slice was priced to yield just 3.51%.

LA Times:

• Google(GOOG) Translate App Hits Apple's(AAPL) iPhone, iPod Touch.

Daily Caller:

• Ryan Confronts Bernanke Over Fed's Purchases of U.S. Debt, Raises Concerns About the Dollar. House Budget Committee Chairman Paul Ryan challenged Federal Reserve Chairman Ben Bernanke’s policy of so-called quantitative easing – the printing of new U.S. dollars to buy government debt – and raised concerns that a weakened dollar and inflation could cause the loss of the currency’s global reserve status. “There is nothing more insidious that a country can do to its citizens than debase its currency,” Ryan told Bernanke. “Chairman Bernanke: We know you know this. We know that you’re focused and concerned about this. The Fed’s exit strategy and future policy – it will determine how this ends.” Ryan said he believed a “course correction here in Washington is sorely needed.” “Endless borrowing is not a strategy,” he said. “My concern is that the costs of the Fed’s current monetary policy – the money creation and massive balance sheet expansion – will come to outweigh the perceived short-term benefits.” “It is hard to overstate the consequences of getting this wrong. The Dollar is the world’s reserve currency and this has given us tremendous benefits in the global economy,” Ryan said.

Politico:

• Jim Webb to Retire; Dems Eye Tim Kaine. First-term Sen. Jim Webb (D-Va.) announced Wednesday that he won’t seek reelection next year, a decision that offers Republicans a key pickup opportunity in a battleground state.
• GOP Cuts Target EPA, High Speed Rail.
  

Reuters:

• Three Killed in Egypt Desert Clash With Police. Three people were killed and several suffered gunshot wounds in clashes between security forces and about 3,000 protesters in a western province of Egypt, state TV and security sources said on Wednesday. The clashes in New Valley, a province that includes an oasis in Egypt's western desert, erupted on Tuesday and continued into Wednesday, according to security sources.

Kathimerini:

• Greece Finance Minister George Papaconstantinou will present an outline of extra fiscal measures for the medium term including at least 2 billion euros in deficit cuts in 2015. The aim is to show markets and European partners that Greece's fiscal overhaul will continue until all its finances are in order.

Cinco Dias:

• The Bank of Spain will demand audited versions of banks' and savings banks' core-capital, liquidity and real-estate risk, citing people with knowledge of the matter. The banks, which have just presented details of their real-estate investments and core capital to the country's stock market regulator, must present the required information to the central bank by March 4.

El Pais:

• Spain's central government will allow the regions to issue new debt to refinance themselves this year, including regional governments that exceeded the deficit limit, citing the government.

Iranian Press TV:

• China signed a $13 billion pact with Iran's Construction and Development of Transportation Infrastructures Co. to build a railroad network in the Middle Eastern country, citing a company statement.