Stocks Lower into Final Hour on Rising Eurozone Debt Worries, Emerging Markets Inflation Fears, Mideast Unrest, Rising Food/Energy Prices

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 16.68 +7.41%
  
• ISE Sentiment Index 89.0 -21.24%
  
• Total Put/Call 1.03 +5.1%
  
• NYSE Arms 1.20 -.04%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 90.0 +1.42%
  
• European Financial Sector CDS Index 99.25 +2.93%
  
• Western Europe Sovereign Debt CDS Index 186.50 +3.32%
  
• Emerging Market CDS Index 207.74 +1.67%
  
• 2-Year Swap Spread 19.0 unch.
  
• TED Spread 22.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .04% unch.
  
• Yield Curve 263.0 -1 bp
  
• China Import Iron Ore Spot $174.50/Metric Tonne -.46%
  
• Citi US Economic Surprise Index -49.10 -.1 point
  
• 10-Year TIPS Spread 2.29% -2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -57 open in Japan
• DAX Futures: Indicating -6 open in Germany

Portfolio:

• Slightly Lower: On losses in my Retail and Medical sector longs
  
• Disclosed Trades: Added (IWM)/(QQQ) hedges, added to my (EEM) short, added to my (SODA) long
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is just mildly bearish as the S&P 500 trades modestly lower despite rising eurozone debt worries, rising food/energy prices, emerging markets inflation fears, rising Mideast unrest and global growth concerns. On the positive side, Utility, Energy, Oil Service, Semi, Disk Drive, Computer Service, Biotech, Homebuilding and Food shares are higher on the day. Tech shares, in general, are outperforming. (XHB) has traded very well throughout the day. The euro looks like it is rolling over again at its 50-day moving average. Copper is rising +1.37%. The Saudi sovereign cds is falling -3.72% to 103.25 bps and the Japan sovereign cds is falling -1.3% to 82.82 bps. On the negative side, Education, Retail, REIT, Hospital, I-Banking, Bank, Steel and Alt Energy shares are under pressure, falling more than -1.0%. (XLF) has been heavy throughout the day. The US price for a gallon of gas is falling -.02/gallon today to $3.89/gallon. It is up .75/gallon in 93 days. The Spain sovereign cds is surging +7.17% to 259.88 bps, the Italy sovereign cds is gaining +4.06% to 158.87 bps, the UK sovereign cds is rising +3.7% to 59.17 bps, the Belgium sovereign cds is rising +3.83% to 146.42 bps and the US sovereign cds is rising +7.04% to 50.50 bps. Brazil's Bovespa and India's Sensex, which had been two of the world's worst performers, both had upside reversal's today. As well, the reversals higher in many commodities today are noteworthy given euro weakness and global growth worries. US stocks remain resilient despite a number of potential negative catalysts. However, the rising eurozone debt angst is a large negative. I added to one of my small long positions, (SODA), today. The stock has homerun potential over the longer-term, in my opinion. The fundamentals are strong, market opportunities are huge, valuation isn't too high, management is savvy and investor skepticism is high. The stock has a float of 8.8 million shares of which 3.36 million are sold short. I plan to build up my long position in this stock on any meaningful market-related decline in the shares from current levels. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting, buyout speculation and earnings optimism.

Today's Headlines

Bloomberg:

• Greece's Extension of Bond Maturities Would Amount to Default, Fitch Says. Greece’s credit rating was cut three levels by Fitch Ratings, which said that even a voluntary extension of its bond maturities being studied by European Union policy makers would be considered a default. Fitch cut its rating to B+, four levels below investment grade, from BB+ and said that the country could face a further reduction in its creditworthiness. The yield on Greek 10-year bonds rose 57 basis points to 16.6 percent, more than twice the level of a year ago when Greece accepted an EU-led bailout. “The rating downgrade reflects the scale of the challenge facing Greece in implementing a radical fiscal and structural reform program necessary to secure solvency of the state and the foundations for sustained economic recovery, Fitch said in an e- mailed statement.
• Payrolls Climb in 42 States, Led by NY, Texas. Payrolls grew in 42 U.S. states, while the unemployment rate fell in 39, indicating broad-based strengthening in the labor market. New York led the nation with a 45,700 increase in employment, followed by Texas with 32,900 more jobs. Joblessness decreased most in Nevada, even as it remained the state with the highest rate in the country at 12.5 percent, figures from the Labor Department showed today in Washington. The report signals the 244,000 workers added in April, as shown in the government’s May 6 report, were dispersed throughout the country. The data also suggest the unexpected increase in the unemployment rate nationally last month was limited in scope. “The job gains are now filtering through most sectors of the economy,” Eric Green, chief market economist at TD Securities Inc. in New York, said before the report. “You’re beginning to see small- and medium-sized businesses moving more firmly into hiring, which is driven by rising sales expectations and stronger domestic demand pulling consumption higher.
• Syrian Security Forces Kill Eight Protesters, Arabiya Says. Syrian security forces fired on anti- government protesters, killing eight people in cities including Homs, Daraa and al-Sanamin, Al Arabiya television said, citing witnesses.
  
• North Korean Leader Kim Jong Il, Not Son, in China, Chosun Says. North Korean leader Kim Jong Il visited China today, the Chosun Ilbo reported after saying earlier that it was his son and heir-apparent, Kim Jong Un, on the trip.
• Democrats who fail to back union positions may lose political support from the AFL-CIO, the nation's largest labor federation, President Richard Trumka said. "It doesn't matter if candidates and parties are controlling the wrecking ball or simply standing aside - the outcome is the same either way," Trumka said. Workers won't support lawmakers who aren't blocking efforts to roll back union rights, he said.
• LinkedIn(LNKD) Surges on Second Day After IPO. LinkedIn Corp. soared on its second trading day, after more than doubling yesterday in a show of strong demand for social-media stock and a comeback in venture- capital backed initial public offerings. LinkedIn, the largest professional-networking website, rose as much as 14 percent to $107 on the New York Stock Exchange, adding to a 109 percent surge yesterday.
  

Wall Street Journal:

• Obama: Differences With Israel Remain. President Barack Obama conceded that he has differences with Israeli Prime Minister Benjamin Netanyahu on a future state for Palestinians but that such disagreements happen "between friends."
  

MarketWatch:

• Salesforce.com(CRM) Shares Top New High on Results. Analysts remain bullish on cloud software maker despite valuation.

CNBC.com:

• Banks Are Winning the War Against Regulators. Europe’s banking regulator will unveil the results of a third round of stress tests of its banks in June, but analysts have little hope that the latest tests will calm investors’ nerves and believe banks are winning the battle with regulators over financial reforms.
• PBOC's Vicious Circle on Policy Means More RRR Hikes. China's central bank is caught in a vicious circle, one that means there will be no let up in its fight to keep sucking funds out of the banking system via further increases in already record high reserve requirements.
• Is Goldman's(GS) Lloyd Blankfein Being Investigated for Perjury?
  

Business Insider:

• Silicon Valley Guru Steve Blank Welcomes The New Bubble and Says Microsoft(MSFT) is Doomed.
• Netanyahu Officially Tells Obama That a Return to 1967 Borders Isn't Going to Happen.
• Chart of the Day: Netflix(NFLX) Now Has More Subscribers Than Comcast(CMCSA) and Every Other Cable Company.
• JPMorgan(JPM): Here's 3 Reasons Why Investors Should Relax About The End of QE2.
  

Zero Hedge:

• Goldman(GS) Warns That Spanish Bonds, EUR Poised for Technical Breakdown.

ABC News:

• On Arab Spring, Obama Spoke Too Soon.

AppleInsider:

• iPad 2 Constraints 'Significantly Improved' as Apple's(AAPL) Supply Woes Ease. Wu also increased his estimated iPhone sales to 17 million, up from 16 million. He said iPhone demand appears to be holding up better than expected, thanks to strong adoption of the white iPhone 4 and strong sales on Verizon. Wu also increased his projected Mac sales to 3.9 million from the quarter, up from 3.83 million. He is also assuming a new, higher gross margin of 39 percent, increased from 38.3 percent, due to improved iPad yields and higher iPhone sales. Finally, he's also increased Sterne Agee's 12-month price target for AAPL stock to $460, up from the previous prediction of $445.

Denver Post:

• U.S. Justice Department Weighs Investigation of Denver Law Enforcement. The U.S. Department of Justice is in the "threshold stage" of deciding whether to investigate Denver's law enforcement agencies for civil-rights violations.

Digital Journal:

• Enjoy The Crisp Taste of Soda Stream(SODA) Fountain Sodas at Home and Save.

Boy Genius Report:

• RIM's(RIMM) BlackBerry Playbook Sales Miss Targets by Over 90% at Major Retailer, 'Much Higher' Return Rate Than XOOM.

Politico:

• Republican 2012 Hopefuls Blast President Obama on Israel. Republican presidential hopefuls were quick to criticize President Barack Obama's speech on the Middle East Thursday, accusing him of betraying America's closest ally in the region with his call for a two-state solution to the Israeli-Palestinian conflict. Their condemnations came hot on the heels of Obama's late-morning speech, in which he advocated borders "on the 1967 lines with mutually agreed swaps."

Rasmussen Reports:

• 71% Say Middle East Peace Agreement Must Recognize Israel's Right to Exist. The latest Rasmussen Reports national telephone survey shows that 71% of Likely U.S. Voters believe that Palestinian leaders should be required to acknowledge Israel’s right to exist as a Jewish state. Just eight percent (8%) disagree and say this is not essential for a Middle Eastern peace agreement.

Reuters:

• SEC Taps Vanderbilt Professor for Top Economic Post. The U.S. Securities and Exchange Commission has tapped Vanderbilt University professor Craig Lewis as its new chief economist and head of the Risk, Strategy and Financial Innovation division.

Der Standard:

• French Finance Minister Christine Lagarde said Greece risks a default if it doesn't step up consolidation efforts. "Greece risks a sovereign default and finance ministers have expressed strong doubts about the sluggish progress," Lagarde said. Both issues "should be enough for now to stimulate the government in Athens to start privatizations." Lagarde said privatization efforts "too slow." At the same time there won't be a restructuring or a reprofiling of Greek debt.

Handelsblatt:

• Greece would recover more quickly from its debt crisis if it stopped using the euro and returned to its own currency, Hans-Werner Sinn, head of the Munich-based Ifo economic institute, was quoted as saying. Ditching the euro would open the way for Greece to have a devalued currency, and the European Union shou8ld let the Greek government take this step if it wants to, Sinn said.

China National Radio:

• China's inflation will remain at a high level in May on higher food prices, citing Yao Jingyuan, chief economist of the National Bureau of Statistics, in an interview. China needs to continue to take measures to curb inflation pressures, Yao said.

Bear Radar

Style Underperformer:

• Large-Cap Value (-.37%)

Sector Underperformers:

• 1) Banks -1.25% 2) Alt Energy -.94% 3) Steel -.90%

Stocks Falling on Unusual Volume:

• GPS, ARO, IMGN, ARUN, KIRK, NDSN, PLCE, ADSK, CCIH, LEAP, CYD and RL
  

Stocks With Unusual Put Option Activity:

• 1) BCS 2) ADSK 3) NBG 4) ANN 5) YGE
  

Stocks With Most Negative News Mentions:

• 1) TLB 2) PDCO 3) GS 4) SO 5) MEE
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth (-.56%)

Sector Outperformers:

• 1) Disk Drives +.85% 2) Homebuilders +.57% 3) Gold & Silver +.49%

Stocks Rising on Unusual Volume:

• RNOW, CRM, NG, STEC, BP, RMBS, KNXA, TRGT, RRGB, ACOR, STEC, FINL, ASPS, AKAM, HIBB, ZUMZ, WBMD, SFSF, WRLD, GILD, VRUS, NXPI, BKS, FL and APC
  

Stocks With Unusual Call Option Activity:

• 1) GFI 2) ARO 3) CRM 4) BRCD 5) MOTR
  

Stocks With Most Positive News Mentions:

• 1) ZUMZ 2) DLTR 3) CRM 4) SPLS 5) ACOR

Charts:

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

Friday Watch

Evening Headlines

Bloomberg:

• Strauss-Kahn Granted $1 Million Bail Pending Trial. Dominique Strauss-Kahn, the former International Monetary Fund chief charged with sexually assaulting and attempting to rape a hotel housekeeper, may be spending his last night in jail on Rikers Island after a judge said he can go free on bail while awaiting trial. Strauss-Kahn, 62, who was granted bail yesterday after his fifth night in custody, will be released when he meets the requirements set by the court, said William Taylor, his lawyer. Taylor said he thought Strauss-Kahn may be able to leave the prison today. The bail conditions imposed by New York state Supreme Court Justice Michael Obus include posting $1 million in cash and a $5 million insurance bond secured by his house. He must wear an electronic monitor and have an armed guard at all times. He won’t be able to leave his residence except for legal, medical and religious travel.
• Bank of Japan Refrains From Adding Stimulus. The Bank of Japan’s policy board unanimously voted to maintain monetary policy even after a report yesterday showed the country slipped into a recession following a record earthquake. Governor Masaaki Shirakawa and his eight colleagues decided to maintain a 30-trillion yen ($370 billion) credit program and a 10-trillion yen asset-purchase fund that represent the bank’s main policy tools. Deputy Governor Kiyohiko Nishimura dropped his call made last month to expand asset buys to provide more stimulus. The key overnight rate was kept at zero to 0.1 percent.
• Patriot Act to Be Extended to 2015 in Congressional Accord. Congressional leaders reached agreement on extending the USA Patriot Act until June 1, 2015, providing law enforcement continued powers to track suspected terrorists that include the use of roving wiretaps. The Senate will move the legislation on May 23 under a timetable Senate Majority Harry Reid established late today, and a spokesman for House Speaker John Boehner said he plans to have a House vote on it before the law expires May 27. “The speaker supports this common-sense proposal because this law has been crucial to detecting and disrupting terrorist plots and protecting the American people,” said Boehner spokesman Michael Steel.
• Liberty Media Offers $1 Billion for Barnes & Noble. Barnes & Noble Inc. (BKS), the U.S. bookstore chain that began exploring a possible sale last year, said it received an offer from John Malone’s Liberty Media to buy the company for about $1 billion in cash. Liberty Media offered $17 a share, a 20 percent premium to the closing price today, the company said in a statement. A special committee of the Barnes & Noble board will evaluate the proposal, which is subject to reaching a definitive purchase agreement, shareholder and regulatory approvals.
• Iron Ore 'Bubble' Looms, Will Lower Price. The iron ore market has risen to “bubble” levels that will burst as new mines create oversupply of the steelmaking raw material, according to Baosteel Group Corp., China’s second-biggest mill. “There is a bubble in this market, many are gambling,” making acquisitions and investment expensive, Chairman Xu Lejiang said in an interview in Shanghai, without saying when prices would drop. “Everyone who has money is rushing in to invest in iron ore.” Vale SA (VALE3), Rio Tinto Group and BHP Billiton Ltd. (BHP), the three biggest suppliers, plan to spend $45 billion on mines. Macquarie Group Ltd. predicts prices will average about half current levels after 2014 as demand growth in China, the world’s biggest buyer, slows. “The reason the big three keep spending is that they probably think growth in India, Brazil, Russia and South Africa will be sustained, and also because they believe the return on their input would beat those blind investments” by smaller rivals, Xu said. The biggest losers from the new mines may be the speculative companies that haven’t yet started production and their investors, Xu said.
• Emerging Equity Funds Post First Outflows in Eight Weeks. Emerging-market equity funds reported the first net withdrawals in eight weeks as the strengthening dollar and weakening commodity prices sapped demand for riskier assets, Citigroup Inc. said. Funds investing in developing nations reported outflows of $1.6 billion for the week ended May 18, Citigroup analysts led by Markus Rosgen wrote in a report today, citing data compiled by EPFR Global. “U.S. dollar strength and commodity weakness amidst concerns with Greek debt restructuring has probably led to investor risk aversion and thus selling in emerging-market equities as a risk asset,” the analysts wrote.
• Food Inflation in India to Climb on Labor, Energy Costs, Commission Says. Food-price inflation in India, Asia’s third-largest economy, may accelerate in the second half as farmers are paying 20 percent more to grow crops, according to the commission that helps set minimum farm-product prices. “The cost of production is going up very fast,” Ashok Gulati, chairman of the Commission for Agricultural Costs and Prices, said in a telephone interview yesterday. “The labor cost has gone up dramatically in the past one year and energy costs are also going up.” Inflation in India has been above 8 percent for 16 months, with the wholesale-price index increasing 8.66 percent in April. Farm-product wholesale prices rose 7.47 percent in the week to May 7 from a year earlier, the trade ministry said yesterday.

Wall Street Journal:

• Obama's Israel Surprise. President Barack Obama, seeking to get ahead of historic changes rolling through the Middle East, promised support for democratic uprisings in the Arab world and called for the first time to begin negotiations for a Palestinian state based on Israel's pre-1967 borders. Mr. Obama, in a wide-ranging speech on the Mideast, stressed to a global audience—the speech was broadcast in English, Arabic and Farsi. With grievances deep and ideological lines drawn decades ago, some in the Mideast, including Israel's prime minister, said Mr. Obama went too far; some pro-Israel U.S. lawmakers agreed. Others, from Palestinians to Arab diplomats, said he didn't go far enough.
• Spain Vote Threatens to Uncover Debt. Weekend elections that threaten to drive Spain's ruling Socialist party from power in several regions and cities also promise a potentially nasty surprise: the revelation of piles of undisclosed debt in local governments that could undercut the country's drive to avoid an international bailout. Five months ago, a government change in Spain's Catalonia region revealed a budget deficit more than twice as big as previously reported. Now, a growing chorus of economists, local politicians and business leaders say that new governments are likely to discover, as Catalonia did, piles of "hidden debt" owed to health clinics and other suppliers.
• Goldman(GS) Braces for Federal Subpoenas. Bank Expects a Demand for Mortgage Documents; Move Would Follow Senate Subcommittee's Report. Goldman Sachs Group Inc. executives expect to receive subpoenas soon from U.S. prosecutors seeking more information about the securities firm's mortgage-related business, according to people familiar with the situation. Officials at the New York company believe the Justice Department will demand certain documents and other information, possibly within days, these people said.
• LinkedIn IPO Soars, Feeding Web Boom.
  

CNBC:

• Offshore Oil Rig Demand High Except in US: Drilling CEO. Diamond Offshore Drilling is seeing lots of demand for its oil rigs from China, India and other industrialized nations — but not the United States, Chief Executive Larry Dickerson told CNBC Thursday.
• Strauss-Kahn to Get at Least $250,000/Year Pension For Rest of Life From IMF. According to the IMF, the global financial institution is contractually obligated to pay Strauss-Kahn a standard staff pension, plus an enhanced supplemental retirement allowance and a "separation allowance" that was negotiated in his original contract.

Business Insider:

• You Need to Be Watching What's Developing In Spain Right Now. (video) The center of the movement is very much Puerta del Sol, where protesters are now camping out overnight just like they did in Tahrir Square in Egypt. The protesters claim they will stay in the square until after regional elections this Sunday, according to Der Spiegel. The protest movement has been declared illegal by the government, over fears it may influence the result of the elections. The traditional media is allegedly under-covering the story.
• Bubble? These China Stocks Got DESTROYED Today.
  

IBD:

• VMware(VMW) Ascends To The Cloud.

Forbes:

• Obama Administration Grants $737 Million for a 24/7 Solar Power Plant. The Obama administration on Thursday offered Santa Monica solar startup SolarReserve a $737 million loan guarantee to build a 110-megawatt solar thermal power plant in Nevada that can generate electricity 24 hours a day. That’s the holy grail for intermittent sources of carbon-free energy such as solar and wind and the SolarReserve loan guarantee is a sign that the United States Department of Energy is willing to gamble on a technology untested on a commercial scale.
• A Trial Balloon That Could Deflate The Muni Market Even Further. The trial balloons unleashed by Congress have a lot of investors scratching their heads as to the ramifications for municipal bonds and Master Limited Partnerships. With the utmost simplicity, if the Wyden-Coats Bipartisan Tax Fairness and Simplification Act of 2011 gains momentum, the bill will eliminate the tax exempt interest on all new municipal bonds issued after 2011. However, it will instead provide a 25% tax credit on the interest payments of the bonds. So, what happens to the old munis issued before December 31, 2011 if this bill passes?

NY Times:

• Chinese Student Takes Aim, Literally, at Internet Regulator. The authorities are seeking a college student who sneaked into a lecture hall at one of China’s most prestigious universities on Thursday and tossed eggs and shoes at a computer scientist both lionized and reviled as the architect of China’s strict Internet controls.
• Europe and Emerging Nations Vie to Fill I.M.F. Job. European officials moved quickly to assert their claim over the leadership of the International Monetary Fund on Thursday, suggesting a serious challenge is being mounted by emerging economic powers like China and India that believe the time has come to break Europe’s historic grip on the post. Nations like Brazil want a more open process that does not see the top position at the I.M.F. granted to a European, as has been the convention since the fund was founded 65 years ago. They hope instead to put forth a credible candidate from the emerging world to reflect its growing economic clout.
• At I.M.F., Men on Prowl and Women on Guard. It is an international island in the midst of the American capital, a sharp-elbowed place ruled by alpha male economists. The days are long, and employees are regularly pressed together for weeks on end during overseas “missions.” It is a climate in which romances often flourish — and lines are sometimes crossed. Some women avoid wearing skirts for fear of attracting unwanted attention. Others trade whispered tips about overly forward bosses. A 2008 internal review found few restraints on the conduct of senior managers, concluding that “the absence of public ethics scandals seems to be more a consequence of luck than good planning and action.” This is life at the International Monetary Fund, the lender of last resort for governments that need money and, under the leadership of Dominique Strauss-Kahn, an emerging force in the regulation of the global economy.
• FrontPoint to Shut Most Funds After Insider Charges. FrontPoint Partners, once a multibillion-dollar hedge fund before it was battered by allegations of insider trading, will shut down most of its funds by the end of the month.

Google Blog:

• Making Financial Comparisons Easy With Google(G))G) Advisor. Financial decisions may be some of the most difficult decisions we face—whether it’s finding the right credit card or understanding the impact of paying an extra point on a mortgage. And these days, it seems like we have more financial options than ever. To help solve these problems, we began testing a mortgage comparison tool in 2009 and have added other financial products such as credit cards, CDs, checking, and savings accounts. Today, we’re rolling these tools into one place: Google Advisor, a site designed to help you quickly find relevant financial products from many providers and compare them side-by-side.

Real Clear Politics:

• Running From Obama's Health Care Law. Hear that? It's the escalating cry of American employers and workers trying to hold on to their health care benefits in the age of stifling Obama health insurance mandates: Gangway! Gangway! Save me! Waive me! Obamacare refugees first began beating down the exit doors in October 2010. As I've documented since last fall, waiver-mania started with McDonald's and Jack in the Box; spread to Dish Networks, hair salon chain Regis Corp and resort giant Universal Orlando; took hold among every major Big Labor organization from the AFL-CIO to the CWA to the SEIU; roped in the nationalized health care promoters at the Robert Wood Johnson Foundation (whose board of trustees includes health care czar Nancy Ann DeParle); and is now gripping entire states (Maine, New Hampshire and Nevada all recently got in on the act).

Reuters:

• Morgan Stanley(MS) Launches $410 Million MLO for Apollo Credit. Morgan Stanley has pre-placed a new US$410.1m collateralized loan obligation with investors, according to sources with knowledge of the deal. The offering is managed by Apollo Credit Management and is expected to price the week of June 6th.
• Tepco to Announce Record Annual Loss, Replace President - Media. Tokyo Electric Power Co is set to book a record annual net loss on Friday due to the accident at its Fukushima Daiichi nuclear plant and its top executive will resign to take responsibility for the handling of the crisis, Japanese media reported.
• North America April Chip-Gear Orders Rise 1.1% vs March.
• Gap(GPS) Slashes Outlook, Cites Tougher Cost Inflation. Clothing maker and retailer Gap Inc slashed its full-year profit outlook, saying higher price tags will not be enough to offset rising cotton costs, and its shares fell more than 15 percent.
• Symantec(SYMC) Buys Data Experts Clearwell for $390 Million. Symantec Corp will buy privately held database specialist Clearwell Systems for $390 million, as the world's No. 5 software maker shores up its storage and cloud computing capability.
• Salesforce.com(CRM) Raises Revenue Outlook, Shares Rise. Salesforce.com Inc raised its full-year revenue outlook as quarterly sales of its Web-based software surged, sending its stock up more than 7 percent.

China Securities Journal:

• Beijing may start a property tax as early as the second half of this year, citing a person familiar with the situation.
  

Evening Recommendations

• None of Note

Night Trading

• Asian equity indices are -.50% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 106.0 +.5 basis point.
  
• Asia Pacific Sovereign CDS Index 113.50 -1.0 basis point.
  
• S&P 500 futures unch.
  
• NASDAQ 100 futures -.05%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ANN)/.48
• (DCI)/.72
• (HIBB)/.67

Economic Releases

• None of note

Upcoming Splits

• (FAST) 2-for-1
• (KRO) 2-for-1
• (MOH) 3-for-2
  

Other Potential Market Movers

• The Goldman Sachs(GS) Insurance Symposium and the (BGCP) analyst conference could also impact trading today.
  

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

Stocks Slightly Higher into Final Hour on Falling Food/Energy Prices, Technical Buying, Short-Covering, Earnings Optimism

Broad Market Tone:

• Advance/Decline Line: About Even
  
• Sector Performance: Mixed
  
• Volume: Slightly Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 15.92 -1.91%
  
• ISE Sentiment Index 104.0 -16.13%
  
• Total Put/Call .97 unch.
  
• NYSE Arms 1.26 +30.23%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 88.74 -1.15%
  
• European Financial Sector CDS Index 98.0 +1.88%
  
• Western Europe Sovereign Debt CDS Index 180.50 +.65%
  
• Emerging Market CDS Index 203.93 -.04%
  
• 2-Year Swap Spread 19.0 unch.
  
• TED Spread 22.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .04% +1 bp
  
• Yield Curve 264.0 +2 bps
  
• China Import Iron Ore Spot $175.30/Metric Tonne -.34%
  
• Citi US Economic Surprise Index -49.0 -5.1 points
  
• 10-Year TIPS Spread 2.31% -4 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +5 open in Japan
• DAX Futures: Indicating +23 open in Germany

Portfolio:

• Higher: On gains in my Retail and Tech sector longs
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 maintains recent gains despite eurozone debt worries, emerging markets inflation fears, rising Mideast unrest and global growth concerns. On the positive side, Road & Rail, Airline, Tobacco, Restaurant, Telecom and Software shares are especially strong, rising more than +.50%. Cyclicals are outperforming, with the Transports surging +1.08% back near their multi-year high. Oil is falling -1.14%, the UBS-Bloomberg Ag Spot Index is down -1.1% and Lumber is gaining +2.63%. The US Muni CDS Index is falling -2.61% to 119.79 bps and the Saudi sovereign cds is falling -4.6% to 107.24 bps. The AAII % Bulls fell to 26.7 this week, while the % Bears rose to 41.3, which is a big positive. On the negative side, Coal, Steel and Semi shares are under pressure, falling more than -1.0%. The US price for a gallon of gas is falling -.02/gallon today to $3.91/gallon. It is up .77/gallon in 92 days. The Italy sovereign cds is gaining +2.11%, the UK sovereign cds is rising +2.07% to 57.67 bps, the Belgium sovereign cds is rising +2.67% to 140.64 bps, the Japan sovereign cds is rising +2.44% to 83.92 bps and the US sovereign cds is rising +3.1% to 47.18 bps. Brazil's Bovespa is falling another -.78% today and is down -9.96% ytd. Food and energy price declines today are noteworthy given the bounce in the euro. US stocks remain extraordinarily resilient to developing headwinds. The tone of the equity market remains positive, however volume is still lackluster. I continue to believe US stocks can build on recent gains in the near-term after a brief pause. I expect US stocks to trade mixed-to-higher into the close from current levels on technical buying, short-covering, bargain-hunting, buyout speculation, falling food/energy prices and earnings optimism.