Bear Radar

Style Underperformer:

• Large-Cap Value -.30%

Sector Underperformers:

• 1) Alt Energy -1.90% 2) Homebuilders -1.80% 3) Retail -1.76%

Stocks Falling on Unusual Volume:

• YOKU, CSGP, XOM, CLMT, BMA, CEVA, GNTX, ANGO, ALGN, RCII, OTEX, ICUI, PCH, TECH, CSGP, FARO, CENX, ANDE, THOR, NDAQ, NFLX, SCHN, PETD, BIDU, MNRO, CNH, MTH, AVY, LEG, AXE, AAN, OFG, WDR and PPO
  

Stocks With Unusual Put Option Activity:

• 1) LXK 2) RSH 3) RIO 4) ITW 5) KRE
  

Stocks With Most Negative News Mentions:

• 1) RSH 2) PCL 3) CVX 4) ADM 5) WDR
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.32%

Sector Outperformers:

• 1) HMOs +1.47% 2) Utilities +.06% 3) Defense +.05%

Stocks Rising on Unusual Volume:

• PRXL, VRTX, CNC, RTEC, MAT, PCAR, HOLX, WPRT, PAY, EW and MCK
  

Stocks With Unusual Call Option Activity:

• 1) RSH 2) MAT 3) ZAGG 4) LNC 5) ENDP
  

Stocks With Most Positive News Mentions:

• 1) LMT 2) PRXL 3) MAT 4) FWLT 5) BA
  

Charts:

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

Tuesday Watch

Evening Headlines
Bloomberg:

• EU Nears Greek Confrontation as Portugal Poses Looming Risk. European governments moved toward a confrontation over a second rescue package for Greece, just as a dimming fiscal outlook in Portugal opened a new front in the debt crisis. Euro leaders left a Brussels summit late yesterday with no accord over how to plug Greece’s widening budget hole and German Chancellor Angela Merkel voicing frustration with the Athens government’s failure to carry out an economic makeover. “Greece’s debt sustainability is especially bad,” Merkel told reporters. “You have to find a way through more action by the Greek government, more contributions by private creditors, for example, in order to close this gap.” Bargaining with Greece over a debt writedown and its economic management overshadowed efforts to point the way out of the financial crisis. EU chiefs agreed to speed the setup of a full-time 500 billion-euro ($654 billion) rescue fund and signed off on a German-inspired deficit-control treaty. The summit was the 16th in the two years since the Greek debt emergency provoked a Europe-wide drama, leading to unprecedented aid packages for Greece, Ireland and Portugal and shattering European faith that the common currency was indestructible. After the gathering of European leaders, EU President Herman Van Rompuy convened a smaller group, including Greek Prime Minister Lucas Papademos and European Central Bank Executive Board member Joerg Asmussen, to weigh the next steps on Greece.
  
• Coal-Carrier Rates Seen at Decade-Low as Glut Expands: Freight. The greatest number of coal cargoes in history still won’t be enough to eliminate a glut of Panamax vessels, driving charter rates to the lowest in a decade. Shipments will rise 3.6 percent to 956 million metric tons this year, according to London-based Clarkson Plc, the world’s biggest shipbroker. Rates for Panamaxes, each about 750-feet long, will average $12,744 a day in 2012, the lowest since 2002, the median of 10 analyst estimates compiled by Bloomberg shows. While that implies losses for ship owners, investors may profit by buying forward freight agreements, traded by brokers and used to bet on future costs, which anticipate $10,107. Panamax charter costs already tumbled 53 percent since Jan. 1, the worst start to a year since at least 1999, as the fleet expanded for a 35th consecutive month. “Demand looks good, but it’s just going to be massively outweighed by new vessels,” said Will Fray, a senior analyst at Maritime Strategies International Ltd., a London-based research company. “There’s unlikely to be enough mining output to soak up the enormous new capacity.”
• Wind Purchases, Deals to Fall in 2012 as Sinovel Profits Halved. Purchases of wind turbines and other equipment will decline 18 percent this year and won’t return to 2011 levels for five years, reducing profits at companies including Sinovel Wind Group Co. (601558), according to Bloomberg New Energy Finance. Capital investment in wind-power assets worldwide will be $60.8 billion in 2012, down from $74.6 billion last year, as oversupply and waning government support in the U.S. and Europe cut demand. Total installations will decrease 13 percent to 47 gigawatts and will remain little changed until 2019, said Justin Wu, head of wind analysis at New Energy Finance. Sinovel, China’s top turbine maker, said yesterday it expects 2011 profit to decrease by more than half from 2.86 billion yuan ($451.6 million) in 2010. Vestas Wind Systems A/S (VWS) this month cut 10 percent of its staff after twice reducing sales forecasts since October.
• S&P's Ogawa Says Japan Can't Conquer Debt Woes With Doubled Tax. Doubling Japan’s sales tax by 2015 won’t be enough to contain the nation’s growing debt load and the government needs to outline how it will pay for swelling social-welfare expenses, a Standard & Poor’s analyst said. “There’s no way that would be enough,” Takahira Ogawa, director of sovereign ratings at S&P in Singapore, said in a phone interview yesterday, referring to the plan to raise the levy by 5 percentage points. “No matter how high the sales tax is raised, there’s no point unless the government does something with the social-welfare system.” Japan’s government said last week that it will probably miss its goal of balancing the budget by fiscal 2020 even with the sales tax increase, yet to be approved by opposition lawmakers. Social-security expenses have more than doubled over the past two decades and will account for 52 percent of general spending in the year starting April, Finance Ministry data show.
• BlackRock's(BLK) Doll Says QE3 Unlikely in Contrast to Pimco's Gross. BlackRock Inc., the world’s biggest asset manager, says the Federal Reserve will refrain from conducting a third round of debt purchases as the economy grows. The outlook contrasts with that of Bill Gross, who runs the largest bond fund at Pacific Investment Management Co. and says the Fed may buy several more times. The central bank has purchased $2.3 trillion of debt in two rounds of quantitative easing known as QE1 and QE2 as it seeks to support the world’s biggest economy. Chairman Ben S. Bernanke said Jan. 25 that he’s considering another program of purchases. “QE3 will be seen only if the U.S. economy flags,” Bob Doll, chief equity strategist at BlackRock, which oversees $3.51 trillion, said today on Bloomberg Television’s “First Up” with Susan Li. “Ben Bernanke will use it if we have a rainy day and only then,” said Doll, who is based in Princeton, New Jersey.

Wall Street Journal:

• Florida Vote Sets Stage for Final Push.
  
• NYC Shifts On Teacher Evaluations. After months of talks with the teachers union, the Bloomberg administration is asking Gov. Andrew Cuomo to help put an end to the labor dispute by scrapping the state's teacher evaluation law.
• U.S. Gets Tougher on Debt Collecting. The Federal Trade Commission intensified its crackdown on the booming debt-collection industry, announcing a $2.5 million settlement with a company for allegedly coercing borrowers into paying debts they no longer legally owed. The settlement with Asset Acceptance Capital Corp., one of the nation's largest buyers of soured consumer debts, is the second-biggest penalty ever levied by the FTC against a debt collector. Officials said they are investigating other companies for alleged violations of federal law and expect to announce more enforcement actions soon.
• Cutoff Looms on Loan Accord. State attorneys general have until Friday to join a potential national settlement of alleged foreclosure abuses, according to a document reviewed by The Wall Street Journal.
• Group of Americans Takes Shelter at Cairo Embassy. A group of Americans who have been prohibited by Egypt's ruling military from leaving the country have taken refuge at the U.S. Embassy in Cairo in the midst of an Egyptian crackdown on pro-democracy and human-rights organizations and their staff.
• NYC New Construction Slid 31% in 2011. New York City's construction industry was dealt another tough year as the value of construction projects that began in 2011 sank 31% compared with 2010, new data released on Monday said. Reduced government spending on infrastructure and very few new, large commercial buildings contributed to the building industry's poor 2011. The value of construction starts fell by $6.2 billion in 2011 to $13.8 billion, according to the analysis by the New York Building Congress, an association representing real-estate developers and construction companies.

Business Insider:

• Papademos: Greece Could Need More Public Funding. Greece's prime minister says he cannot exclude the possibility that his country will need more help — on top of a new €130 billion ($170.43 billion) bailout and a deal with private investors to slash its debt.
  

Zero Hedge:

• European Bailout Infographic: Presenting The Truckloads Of Cash Needed To Rescue The Insolvent.
• Good Gendarme: Recently Downgraded France Opposes German Demands For Greek "Tutelage".

NY Times:

• Trade Protest Is Planned on Eve of a Chinese Leader's Visit. As the White House prepares for a Washington visit by the man who is expected to run China for the coming decade, trade tensions between the United States and Beijing are on the rise.
• Portugal Suffers as Loss of Confidence in Bonds Sends Yields Higher. Investors fled out of bonds of weaker European countries on Monday, sending yields on Portuguese government bonds to a record high over concerns that the euro zone debt troubles were spreading beyond Greece. The fears of contagion spreading to other periphery countries in the zone that share the euro have grown more intense in recent months, with much of the latest focus on Portugal.

Reuters:

• Greece Needs to Dump Euro "shackles": Commerzbank. Greece must surrender the "shackles" of the euro in order to survive if it does not want to constantly ask for a handout from euro zone governments, the supervisory board chairman of Commerzbank said late on Monday. "What do they need, another 15 billion euros? If you think that is the last 15 billion that they will have miscalculated, then best wishes," Klaus-Peter Mueller told an industry event in Frankfurt."They will come back for more and there will be no end, unless you really see them enact structural reforms, but this won't take just two-three years -- we're talking 20, 30 or 40 years for Greece. "Mueller said it doesn't do any good to Greece were euro zone governments to continue forcing them to wear the "shackles" of a currency that only permits internal adjustments via spending cuts and declining wages."The Greeks need on balance a currency that they can then devalue," Mueller said, adding it would take a long time before the government could build up from scratch functioning structures that restore competitiveness.Athens and its EU partners have long ruled out a euro exit, which could drag the bloc even deeper into crisis. However, earlier in January a Greek government spokesman said the country would have to leave the euro zone if it fails to clinch a deal on a second, 130 billion euro bailout with its international lenders. The chairman of Germany's second largest listed lender disagreed that an exit would prompt "global chaos" and cause investors to dump sovereign debt from other periphery countries like Italy and Spain. "I don't think that markets would react negatively towards the other countries that would then remain in the euro zone after such a decision," he said.
• RadioShack(RSH) Sees Profit Drop on Sprint Weakness. RadioShack Corp (RSH.N) issued a disappointing fourth-quarter earnings forecast on "significant declines" in its Sprint wireless business and the shares of the struggling electronics retailer tumbled more than 18 percent on Monday.

Financial Times:

• The Dilemma of German Leadership.
• Banks Set to Double Crisis Loans from ECB. European banks are preparing to tap the European Central Bank’s emergency funding scheme for up to twice as much as the ECB supplied in its debut €489bn auction last month, providing further evidence of the sector’s liquidity squeeze.

Telegraph:

• Portuguese Storm Gathers as EU Leaders Fight Over Greece. Surging borrowing costs in Portugal have raised the spectre of a second full-fledged contagion crisis in the eurozone, eclipsing the latest efforts by European Union leaders in Brussels to agree on Europe's bail-out machinery and a strategy for Greece. Yields on Portuguese 10-year bonds hit a fresh record of 17.38pc on Monday even though the country is already shielded by a €78bn (£65.2bn) package from the EU, European Central Bank (ECB) and International Monetary Fund "troika" and does not have to tap the markets this year. Reports also emerged on Monday night that European banks were gearing up to ask the ECB's emergency funding scheme for up to twice as much in funds as the central bank supplied in its debut €489bn auction last month. The news reveals the extent of the liquidity squeeze on banks – with some chief executives looking to tap the ECB for up to triple the amount they originally borrowed, when the three-year money auction takes place on February 29.

Yonhap News Agency:

• North Korea - China Trade Jumps 62% in 2011: Data. Two-way trade between North Korea and China jumped 62 percent in 2011 from the previous year, with the North doubling its exports of minerals to its major ally, data showed Tuesday.

People's Daily:

• China's textile industry outlook may be "relatively grim" in the first half, citing Wang Tiankai, president of the China National Textile and Apparel Council. Export companies may face increasing lack of demand, competitive pressure and trade friction, Wang said.

Evening Recommendations
Jefferies:

• Rated (WSM) Buy, target $42.

Night Trading

• Asian equity indices are -.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 187.0 +3,5 basis points.
  
• Asia Pacific Sovereign CDS Index 149.0 +3.25 basis points.
• FTSE-100 futures +.49%.
  
• S&P 500 futures +.09%.
  
• NASDAQ 100 futures +.18%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (LLL)/2.41
• (VLO)/-.18
• (X)/-.86
• (BIIB)/1.49
• (XOM)/1.98
• (MHP)/.57
• (DHR)/.78
• (MAT)/1.00
• (LLY)/.81
• (PFE)/47
• (PNR)/.54
• (LXK)/1.16
• (ADM)/.76
• (OSK)/.36
• (UPS)/1.26
• (PCAR)/.79
• (ITW)/.88
• (AVY)/.46
• (CHRW)/.68
• (UIS)/1.47
• (AFL)/1.51
• (BXP)/1.19
• (JLL)/2.24
• (BCR)/1.68
• (BRCM)/.65
• (AMZN)/.17
• (AMG)/1.73

Economic Releases
8:30 am EST

• The 4Q Employment Cost Index is estimated to rise +.4% versus a +.3% gain in 3Q.
  

9:00 am EST

• S&P/CS 20 City MoM% SA for November is estimated to fall -.5% versus a -.62% decline in October.

9:45 am EST

• Chicago Purchasing Manager for January is estimated to rise to 63.0 versus 62.2 in December.

10:00 am EST

• Consumer Confidence for January is estimated to rise to 68.0 versus 64.5 in December.
  

Upcoming Splits

• (CMN) 3-for-2
• (TJX) 2-for-1

Other Potential Market Movers

• The NAPM-Milwaukee for January, weekly retail sales reports and the (DLR) analyst day could also impact trading today.
  

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

Stocks Lower into Final Hour on Rising Eurozone Debt Angst, Less Financial Sector Optimism, Global Growth Fears, Profit-Taking

Broad Market Tone:

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

Equity Investor Angst:

• VIX 19.40 +4.70%
  
• ISE Sentiment Index 103.0 -25.90%
  
• Total Put/Call .94 +6.82%
  
• NYSE Arms 1.23 -28.41%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 103.40 +2.24%
  
• European Financial Sector CDS Index 190.50 +7.50%
  
• Western Europe Sovereign Debt CDS Index 345.0 +4.08%
  
• Emerging Market CDS Index 267.88 +.88%
  
• 2-Year Swap Spread 33.0 +1 bp
  
• TED Spread 50.0 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -73.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.
  
• Yield Curve 162.0 -7 bps
  
• China Import Iron Ore Spot $139.90/Metric Tonne +.07%
• Philly Fed ADS Real-Time Business Conditions Index .0250 -4.21%
• Citi US Economic Surprise Index 63.50 -1.9 points
  
• 10-Year TIPS Spread 2.09 -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating -41 open in Japan
• DAX Futures: Indicating +27 open in Germany

Portfolio:

• Slightly Lower: On losses in my Biotech, Medical and Retail sector longs
  
• Disclosed Trades: Added to my (IWM), (QQQ) hedges and then covered some of them
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish, as the S&P 500 trades lower, but near session highs, on more global growth fears, profit-taking, high energy prices, less financial sector optimism and rising Eurozone debt angst. On the positive side, Oil Tanker, Computer Service and Airline shares are especially strong, rising more than +.5%. The UBS-Bloomberg Ag Spot Index is falling -1.65%, gold is declining -.54%, Lumber is gaining +1.89% and Oil is down -.70%. Oil continues to trade poorly given the recent uptick in saber-rattling from Iran, escalating violence in the Mid-east, better US economic data and euro bounce. On the negative side, Bank, REIT, Coal, Alt Energy, Oil Service, Steel, Semi, Networking, Hospital, Construction, Homebuilding and Education shares are under pressure, falling more than -1.0%. (XLF) has underperformed throughout the day. Copper is falling -1.52%. The Germany sovereign cds is rising +7.1% to 91.50 bps, the France sovereign cds is gaining +6.45% to 176.33 bps, the Spain sovereign cds is rising +7.66% to 381.67 bps, the Italy sovereign cds is jumping +7.4% to 427.67 bps, the Belgium sovereign cds is rising +3.89% to 249.83 bps, the UK sovereign cds is gaining +2.94% to 80.33 bps and the Japan sovereign cds is rising +3.0% to 136.33 bps. The Portugal sovereign cds is up +5.2% to 1,510.0 bps(+39.6% in 11 days to new record high). The Portugal 10Y Yld is soaring +217 bps to 17.39%. The Italian/German 10Y Yield Spread is rising +5.2% to 424.89 bps. Lumber has declined -11.5% since its Dec. 29th high and is still near the lower end of its recent range(near a multi-year low) despite the better US economic data, more dovish Fed commentary, improving sentiment towards homebuilders, equity rally and decline in eurozone debt angst. Moreover, the Baltic Dry Index has plunged over -60.0% from its Oct. 14th high and is now down over -50.0% ytd. The 10Y T-Note Yield is falling -5 bps to 1.84% and remains a large concern considering the recent stock rally, falling Eurozone debt angst and improvement in US economic data. The Philly Fed’s ADS Real-Time Business Conditions Index has stalled over the last 3 weeks after showing meaningful improvement from mid-Nov. through year-end. The Western Europe Sovereign CDS Index is still near its Jan. 9th all-time high. The TED spread is near the highest since May 2009. The 2Y Euro Swap Spread is near the highest since Nov. 2008. The 3M Euribor-OIS spread is near the highest since February 2009. The Libor-OIS spread is still very near the widest since May 2009, which is also noteworthy considering the equity surge off the recent lows. Overall, the improvement in credit gauges appears to be stalling at still stressed levels, which is liklely related to rising concerns surrounding Portugal. China Iron Ore Spot has plunged -22.8% since Sept. 7th of last year. Shanghai Copper Inventories are up over 300.0% ytd to the highest level since March of last year. Major Asian indices were down around -1.5% overnight, led lower by a -2.15% decline in India shares. The Shanghai Composite re-opened from the holidays and fell -1.5%, led lower by a -2.75% decline in the Shanghai Property Index. Major European indices fell around -1.25%, led down by France’s -1.6% decline. As well, the Bloomberg European Bank/Financial Services Index fell -3.15%. The market’s focus is rapidly moving from Greece to Portugal, which appears headed for another bailout. Many are suggesting that the issues in Europe are priced into stock prices at current levels, however recent history suggests otherwise. Furthermore, given that several key investor sentiment gauges are registering too much complacency and stocks are technically extended, a more cautious approach is warranted. For an intermediate-term equity advance from current levels, I would still expect to see further European credit gauge improvement, subsiding hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade mixed-to-lower into the close from current levels on rising Eurozone debt angst, less financial sector optimism, more shorting, profit-taking, high energy prices and global growth fears.

Today's Headlines

Bloomberg:

• EU Stumbles as Merkel Signals Greece Debt Deal Delay. European leaders sparred with Greece over a second rescue program, clouding progress toward a permanent aid fund and tougher budget rules designed to stabilize the euro. Greece faced criticism that its economic makeover is faltering, and it fended off German-led calls for a European overseer to take command of its budget after its deficits surpassed targets for two years. “What the Greeks have to do is show they are ready to implement the package,” Dutch Prime Minister Mark Rutte told reporters as he arrived for a European Union summit in Brussels today. “We can help Greece through this difficult phase, but then Greece has to execute all agreements they made with us.” Bargaining with Greece over a debt writedown and its economic management threatened to overshadow a summit meant to point the way out of the financial crisis by speeding the setup of a full-time 500 billion-euro ($654 billion) rescue fund and signing off on a German-inspired deficit-control treaty. A start-of-year respite from market pressures continued today when Italy raised 7.5 billion euros, close to its maximum target, in preparation for its biggest redemption of 2012. At least five more countries plan bond sales this week. The euro slipped 0.9 percent to $1.3160 at 5:30 p.m. in Brussels, snapping a five-day rally.
• Stocks in Europe Fall Most in Six Weeks; BNP Paribas Tumbles on French Tax. European stocks dropped the most in six weeks as Portuguese bonds sank amid concern a meeting of the region’s leaders will fail to draw a line under the sovereign- debt crisis. BNP Paribas SA (BNP) tumbled 7.1 percent, leading French banks lower, as President Nicolas Sarkozy said he will unilaterally impose a financial-transaction tax. Royal Philips Electronics NV (PHIA) fell 2.2 percent after reporting a larger-than-estimated loss. Hochtief AG (HOT) slid 5.8 percent after saying it will post a wider annual loss than previously anticipated. The Stoxx Europe 600 Index retreated 1.1 percent to 252.52 at the close of trading, the largest slide since Dec. 14.
• Portugal Likely to Get Scant Relief From Greek Debt Agreement: Euro Credit. The Greek debt swap negotiations that may produce relief for Athens are fueling concerns in Lisbon where an agreement would make it more likely Portuguese investors would be next in line to accept a loss. European leaders have said a Greek accord where investors take a 50 percent writedown in the face value of their bonds is unique and won’t be applied to other nations struggling to tame rising debts. Holders of Portuguese securities are skeptical, with the yield on the nation’s 10-year bonds rising today to a euro-era record of 16.45 percent. “Portugal’s debt and lack of growth is very similar to Greece,” Yannick Naud, who manages $150 million at Glendevon King Asset Management, said in a Jan. 23 interview in London. “Its bonds are falling because it’s very obvious to everyone that if there’s a haircut for Greece, there might well be a haircut for Portugal too.”
• Corporate Bond Risk Rises in Europe, Credit-Default Swaps Show. The cost of insuring against default on European corporate debt rose, according to traders of credit- default swaps. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increased 13.5 basis points to 618.5 basis points, according to JPMorgan Chase & Co. at 7:30 a.m. in London. An increase signals worsening perceptions of credit quality. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings was up 3.25 at 144.75 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers added 4.5 basis points to 215 and the subordinated gauge was up six at 375.
  
• MF Global Said 'Never Been Stronger' a Week Before Failure. A week before MF Global Holdings Ltd. collapsed, its chief financial officer told Standard & Poor’s in an e-mail that the futures broker had “never been stronger.” S&P provided the House Financial Services Subcommittee on Oversight and Investigations with an excerpt of the e-mail from MF Global CFO Henri Steenkamp. S&P also informed the panel that Jon Corzine, then MF Global’s chief executive officer, met with its analysts on Oct. 20 to reassure them that his $6.3 billion bet on European sovereign debt was no threat to the firm, according to a Jan. 17 letter obtained by Bloomberg News.
• Canada's Subprime Crisis Seen With U.S.-Styled Loans: Mortgages. Canadian lenders are loosening standards on mortgages that are similar to U.S. subprime loans, posing an "emerging risk" to financial institutions, according to the country's banking regulator. Banks and other lenders are becoming "increasingly liberal" with mortgages and home-equity credit lines that don't require individuals to prove their income, according to documents obtained by Bloomberg News under freedom of information law from the Office of the Superintendent of Financial Institutions. The mortgages, typically granted to the self-employed and recent immigrants, "have some similarities to non-prime loans in the U.S. retail lending market," the documents show. "Non- income qualified" lending has been added to a list of issues to be considered by OSFI's "emerging-risk committee," the documents show. "It just speaks to the general easing in lending standards, which has contributed to a booming housing market," said David Madani, an economist in Toronto with Capital Economics, which estimates that Canadian housing prices may fall 25 percent over the next few years. "The problem is sort of baked in now, so I'm not sure there's a way to prevent a weakening of the housing market."
• Corn, Soybean Futures Decline as Rain May Boost Crops in Argentina, Brazil. Corn fell for the first time in eight sessions and soybeans dropped on speculation that rain in South America will boost crop potential, reducing demand for supplies from the U.S., the world’s biggest exporter.
• Consumer Spending in U.S. Stalls. Consumer spending stalled in December as Americans took advantage of a jump in incomes to restore depleted savings, indicating households remain focused on repairing finances. Purchases were little changed after rising 0.1 percent the prior month, Commerce Department figures showed today in Washington. The median estimate of 77 economists surveyed by Bloomberg News called for a 0.1 percent increase in sales. Incomes climbed by the most in almost a year, pushing the savings rate to a four-month high.

Wall Street Journal:

• Germany Warns Greece on Aid Funds. Germany's finance minister issued an unusually blunt warning that the euro zone might refuse to grant Greece a fresh bailout, pushing Athens into default unless it persuades Europe it can overhaul its state and economy. "Greece needs to decide," Wolfgang Schäuble said in an interview with The Wall Street Journal, when asked whether the euro zone would grant or withhold the second bailout package for the country since 2010, expected to be in excess of €130 billion ($172 billion).
• CFTC to Step Up Focus on High-Frequency Trading. The Commodity Futures Trading Commission is planning to take a closer look at high-frequency trading, with an eye on getting a clearer understanding of how electronic trading affects commodity markets and participants.
• Fed Survey Finds Banks Still Cautious to Lend. Banks in the U.S. kept credit fairly tight in the final months of 2011 even as demand for loans increased, putting a brake on the slow economic recovery. The Federal Reserve's quarterly survey showed that credit standards on commercial and industrial loans were little changed for the 56 domestic banks that were interviewed, after the banks stopped relaxing credit in the third quarter.
• Syrain Forces Battle Ahead of U.N. Talks. Syrian forces heavily shelled the restive city of Homs on Monday and troops pushed back dissident troops from some suburbs on the outskirts of Damascus in an offensive trying to regain control of the capital's eastern doorstep, activists said. President Bashar al-Assad's regime is intensifying its assault aimed at crushing army defectors and protesters, even as the West tries to overcome Russian opposition and win a new U.N. resolution demanding a halt to Syria's crackdown on the 10-month-old uprising. Activists reported at least 28 civilians killed on Monday.
  

CNBC.com:

• Why Even 20-Somethings Are Worried About Retirement.
• Pay Up-Front Portugal Slides Towards Bond Pariah Greece.
• Rates May Need to Rise Sooner: Philly Fed's Plosser. "If the economy evolves as I think it might, then it’s likely it might have to be sooner than that," he said of a mid-2014 increase. "I’ve said previously that I thought it possible rate hikes would have to come before mid-2013. I was unhappy with the calendar date in the statement. I’m still uphappy with the statement. I don’t think it’s the right way to convey policy." He said it is "clear" from the Fed's statement the mid-2014 date "is contingent on the evolution of the economy. It is not a commitment and shouldn’t be interpreted as a commitment. It’s a conditional statement." He acknowledged "we are punishing savers" by keeping rates at near zero. "The policy is to get people to quit saving and start spending," he said. The problem is, when they start liquidating assets "it's gonna be gone" for the next generation. He also acknowledged low interest rates are forcing some investors to take "unwise risks" in the search for yield from stocks, Plosser said.

Business Insider:

• China Has Begun Buying Up Germany's Family-Owned Industrial Backbone.
• The Most Bullish Number From Today's Big Dallas Fed Manufacturing Report. (graph)
• Bubble Watching: My Trip To The 'Hawaii Of China'. (pics)
  

Zero Hedge:

• European Elections And Tolstoy's Portugal.
• Everything You Need To Know About Europe In Three Charts.
• Youth Unemployment Across Europe. (chart)
• Japanese Population to Shrink by One Third, Size of Workforce to Plunge in Under 50 Years.
  

The Detroit News:

• Treasury Ups Auto Bailout Loss Estimate. The U.S. Treasury Department boosted its estimate of government losses in the $85 billion auto bailout by $170 million. In the government's latest report to Congress this month, the Treasury upped its estimate to $23.77 billion, up from $23.6 billion. Last fall, the government dramatically boosted its forecast of losses on the rescues of General Motors Co., Chrysler Group LLC and their finance units from $14 billion to $23.6 billion. Much of the increase in losses is due to the sharp decline of GM's stock price over the last six months. GM was trading at noon today at $24.24. It's down 35 percent over its 52-week-high of $37.23, but the Detroit automaker has rebounded from a low set last year of $19.05.

The Daily Ticker:

• Freddie Mac Betting Against Homeowners Is Latest GSE Outrage. (video)

Reuters:

• Gulf Arabs Have Plans Against Hormuz Closure - Official. Coastguards and naval forces of the Gulf Cooperation Council (GCC) group of Arab countries have contingency plans for a possible attempt by Iran to shut the Strait of Hormuz, a Kuwaiti maritime official said on Monday.
• Oil Slips in Choppy Trade. Oil prices slipped on Monday in volatile trading a day after Iran postponed a parliamentary debate on a proposed halt to crude sales to the European Union. The dollar index .DXY strengthened and the euro fell from a six-week high against the U.S. currency as talks on a Greek debt agreement continued, keeping investors cautious about the outlook for the economy and oil demand. The possibility Iran may yet halt exports to the EU, along with data showing improved European economic sentiment and a successful bond auction in Italy, helped limit oil's losses."Oil is lower because Iran didn't cut off sales to Europe and the dollar index is stronger, and there still isn't a deal on Greece," said Phil Flynn, analyst at PFGBest Research in Chicago.Brent March crude fell 46 cents to $111 a barrel by 12:45 p.m. EST, having traded from $110.80 to $111.78. That intraday peak was in sight of front-month Brent's 200-day moving average of $111.89.U.S. March crude fell 36 cents to $99.20 a barrel, having swung from $98.50 to $100.05, seesawing either side of the front-month 50-day moving average at $99.27.
• Rajoy Says Spain Won't Make 2012 Growth Target. Prime Minister Mariano Rajoy said on Monday Spain was not going to meet its existing growth target for 2012, but wouldn't go into detail about what that may mean for its plans to cut its budget deficit sharply.

Financial Times:

• Portugal Yields Jump On Default Fears. Portugal’s bond yields reached new euro-era highs as many investors priced in a Lisbon default amid fears its debt holders could suffer heavy losses once a restructuring deal with Greece is agreed. At one point the yield on benchmark 10-year Portuguese debt rose as much as 204 basis points to 17.26 per cent. Portuguese credit default swaps, meanwhile, rose to record levels as the market priced in about a 70 per cent chance the country would default over the next five years.
• Eurozone Crisis: Live Blog.
  

Telegraph:

• European Venture Capital Deals at 10-Year Low.

Financial Times Deutschland:

• Kloeckner says steel demand in Europe may drop 5% or more, citing CEO Gisbert Ruehl. Insecurity in the markets is at the moment probably higher and more threatening than during 2008 with no end in sight for the debt crisis.

Bild:

• Greece should be closely monitored by the European Union if it won't manage itself, German Economy Minister Philipp Roesler said in an interview. Greece also shouldn't receive any more aid until it implements reforms, Roesler said, adding that Germany opposes adding money to the European Stability Mechanism.

Shanghai Daily:

• New Home Sales in Shanghai Fall to Lowest in 7 Years. NEW home sales in Shanghai during the week-long Lunar New Year holiday fell to the lowest in seven years on a sluggish buying sentiment. More than 1,700 square meters of new homes, or 16 units, excluding government-funded affordable housing, were sold across the city during the holiday which ended on Saturday, the lowest since 2006 when the city's housing data were first tracked, said a report released yesterday by Shanghai Deovolente Realty Co. The sales by area fell 33.3 percent from the Lunar New Year holiday in 2011, and the unit number shed 27.9 percent.

Bear Radar

Style Underperformer:

• Mid-Cap Value -.71%

Sector Underperformers:

• 1) Homebuilders -2.0% 2) Hospitals -1.90% 3) Steel -1.50%

Stocks Falling on Unusual Volume:

• CHU, LFC, ABB, ESIO, MPEL, NTRI, CPHD, VIVO, GSM, SPLS, ABFS, Z, PMTC, RVBD, ABCO, SNCR, ACAT, RDEA, FSLR, CREE, QCOR, YPF, BNS, ICB, GCI, SCCO, CFX and PMC
  

Stocks With Unusual Put Option Activity:

• 1) FCN 2) RENN 3) KRE 4) RDN 5) MTG
  

Stocks With Most Negative News Mentions:

• 1) SPLS 2) CF 3) CCL 4) BAC 5) BLK
  

Charts:

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