Bear Radar

Style Underperformer:

• Small-Cap Value -1.01%

Sector Underperformers:

• 1) Coal -3.30% 2) Steel -2.30% 3) Banks -1.85%

Stocks Falling on Unusual Volume:

• FCX, RIO, C, AIXG, BP, PERY, CPN, KEP, NAV, RUSH/A, GT, IYM, FSYS, SREV, AVAV, ACI, UTHR, BGC, CPN, PPO, CLD, LL, ALEX, FSLR, SGEN, USTR, GNRC, ALNY, MAS, DLPH, ZBRA, IHG and ZIP
  

Stocks With Unusual Put Option Activity:

• 1) GT 2) NOG 3) GNK 4) ZNGA 5) FOSL
  

Stocks With Most Negative News Mentions:

• 1) ACI 2) BAC 3) WMT 4) RYL 5) TSL
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth -.10%

Sector Outperformers:

• 1) HMOs +.35% 2) Computer Hardware -.01% 3) Tobacco -.20%

Stocks Rising on Unusual Volume:

• KORS, TTM, HSP, TAL, VAL, FIS, LPSN, MDAS, OSG, RAX, FIS, CRL, FOSL and CLR
  

Stocks With Unusual Call Option Activity:

• 1) KORS 2) RAX 3) KERX 4) DSX 5) OAS
  

Stocks With Most Positive News Mentions:

• 1) RAX 2) JEC 3) ASIA 4) FWLT 5) GGP
  

Charts:

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

Tuesday Watch

Evening Headlines
Bloomberg:

• Italy, Spain Cut by Moody's; U.K. May Be Next. Moody’s Investors Service cut the debt ratings of six European countries including Italy, Spain and Portugal and said it may strip France and the U.K. of their top Aaa ratings, citing Europe’s debt crisis. Spain was downgraded to A3 from A1 yesterday, Italy to A3 from A2 and Portugal to Ba3 from Ba2, all with negative outlooks. Slovakia, Slovenia and Malta also had their ratings lowered. “Policy makers have made steps forward but we do not think they have done enough to reassure the market that we are on a stable path,” said Alistair Wilson, chief credit officer for Europe at Moody’s in London. “What will guide long-term ratings is the clarity and the performance of policy makers and the macro picture.” “The uncertainty over the euro area’s prospects for institutional reform of its fiscal and economic framework,” and the resources that will be made available to deal with the crisis, are among the main drivers of Moody’s action, the ratings company said. Recent rating cuts have done little to deter investors, who poured money into the government bonds of nations such as France and Austria even after the countries lost their AAA ratings at Standard & Poor’s last month. U.S. Treasuries returned three times as much as AAA corporate bonds since the world’s biggest economy was cut by one rank in August. Moody’s yesterday also lowered its outlook on Austria’s Aaa rating to negative. Malta’s rating was downgraded to A3 from A2, and Slovakia and Slovenia were both downgraded to A2 from A1. All three were given negative outlooks. Moody’s said Europe’s “increasingly weak macroeconomic prospects” threaten the “implementation of domestic austerity programs and the structural reforms that are needed to promote competitiveness.” It said market confidence “is likely to remain fragile, with a high potential for further shocks to funding conditions for stressed sovereigns and banks.”
• Immigrants Lose in Imploding Spanish Housing Market: Mortgages. Lamin Numke, a 34-year-old man from the Republic of Mali, is one of the millions of immigrants who settled in Spain during the real-estate boom, attracted by plentiful jobs and cheap mortgages, only to default on his loan. Today, borrowers like Numke are the most likely to fall behind on mortgage payments and lose their property, according to a Moody’s Investors Service study of 890,000 mortgages from 2006 through 2008. The average default rate for foreign residents is “strikingly high compared with mortgage loans to Spanish residents,” Moody’s wrote in the report last month. Faced with mounting losses, Spanish banks have reduced new lending, which the National Statistics Institute in Madrid said fell 35.8 percent from a year earlier in November, the 19th straight decline. The bad loans to immigrants are also complicating a push for Spanish banks to recognize greater losses on real estate they accumulated during the crash and driving buyers from the 182 billion euro ($240 billion) Spanish residential mortgage-backed securities market. “Deals with a significant portion of foreign residents, whether immigrants or vacationers, are double no deals for me,” said Alexander Fagenzer of Union Investment GmbH in Frankfurt, which oversees 120 billion euros. “Incentives for those borrowers to keep paying are significantly lower than for Spanish residents,” and that’s “key in a country facing high levels of unemployment and declining housing prices.”
• Zinc Glut Rising to Two-Decade High. The largest glut of zinc in almost two decades is threatening to curtail a rally in prices as record production expands inventories to the highest since at least 1984. Supply will outpace demand by 539,000 metric tons, the most since 1993, according to Standard Bank Plc. Stockpiles of the metal used in brass and steel will reach 2.2 million tons, Barclays Capital estimates. Prices will drop 13 percent to $1,832 a ton this year, the median of 15 analyst and trader estimates compiled by Bloomberg shows.
• State Department Budget Bolsters Middle East Aid, Trims Europe. President Barack Obama’s budget seeks $8.2 billion in “extraordinary and temporary” funding for State Department responsibilities in Iraq, Afghanistan and Pakistan. The request comes on top of the $43.4 billion proposed for the “core” budget for the State Department and the U.S. Agency for International Development, which manages foreign aid. The budget includes funding for Egypt, despite the current dispute over U.S. staff of nonprofit groups being threatened with felony and misdemeanor charges for not registering or for engaging in political activity. The budget calls for $1.3 billion in assistance to the military, $1.8 million in military education and another $250 million in economic assistance. U.S. lawmakers have threatened to cut off funding until Egypt lifts the charges and lets the Americans return home.
• BOJ Adds to Monetary Easing After Contraction. The Bank of Japan added to monetary easing after exports tumbled and the economy contracted by more than forecast in the fourth quarter. Governor Masaaki Shirakawa’s board unexpectedly expanded an asset-purchase program to 65 trillion yen ($835 billion) from 55 trillion yen. The central bank maintained the overnight lending rate at between zero and 0.1 percent.

Wall Street Journal:

• Canada Examine How Benchmark Rates Get Set. Canada's top antitrust watchdog said it is investigating allegations of collusion in the setting of key benchmark interest rates, joining law-enforcement authorities across the globe in a probe of how the rates are set.
• Chinese Hackers Suspected In Long-Term Nortel Breach. For nearly a decade, hackers enjoyed widespread access to the corporate computer network of Nortel Networks Ltd., a once-giant telecommunications firm now fallen on hard times. Using seven passwords stolen from top Nortel executives, including the chief executive, the hackers—who appeared to be working in China—penetrated Nortel's computers at least as far back as 2000 and over the years downloaded technical papers, research-and-development reports, business plans, employee emails and other documents, according to Brian Shields, a former 19-year Nortel veteran who led an internal investigation.
• Europe Struggles Over Greek Details. European Union negotiators have yet to settle key elements of a complex bailout and debt-restructuring package for Greece—including how euro-zone governments will contribute to a desired cut in the country's debt burden—ahead of a pivotal meeting this week. The Greek Parliament's backing for a deeply unpopular package of spending, wage and pension cuts, which sent European stocks and the euro higher on Monday, has shifted the focus of negotiations back to Brussels, ahead of a meeting of finance ministers due to start here Wednesday afternoon.
• The Amazing Obama Budget. Federal budgets are by definition political documents, but even by that standard yesterday's White House proposal for fiscal year 2013 is a brilliant bit of misdirection. With the abracadabra of a tax increase on the wealthy and defense spending cuts that will never materialize, the White House asserts that in President Obama's second term revenues will soar, outlays will fall, and $1.3 trillion annual deficits will be cut in half like the lady in the box on stage. All voters need to do is suspend disbelief for another nine months. And ignore the first four years.

MarketWatch:

• BHP(BHP), Rio(RIO) invest more than $4 bln in copper output. BHP Billiton Ltd. BHP -0.17% and Rio Tinto PLC RIO +0.41% , two of the world's biggest mining companies, Tuesday laid out plans to invest more than US$4 billion beefing up their copper output. Most of the money will be invested in the Escondida mining operation southeast of the city of Antofagasta in Chile, and BHP also plans to resume operations at its idled Pinto Valley mine in Arizona by the end of the year.

Zero Hedge:

• 4 Charts Summarizing Obama's 2013 Budget.
• 2 Charts On The European Growth Dilemma.
• Today's Black Gold Swan - Presenting The Reason Why The CME's(CME) Crude Market Was Halted For Over One Hour.
  
• Market Volume Hits Fresh Non-Holiday Decade Lows. (graphs)
• Moody's Downgrades Italy, Spain, Portugal and Others; Puts UK, France On Outlook Negative - Full Statement.
  

IBD:

• Thuze From Bridgepoint Education(BPI) Cuts Textbook Costs.

Forbes:

• President Obama's Green Jobs Mirage. In recent weeks, President Obama has cranked up his commitment to federal subsidies for “green” energy in the face of accumulating defaults by the politically connected companies. “I will not walk away from the promise of clean energy,” as he declared at his State of the Union. “I will not cede the wind or solar or battery industry to China or Germany.” The President can make as many grand pronouncements as he likes, but the actual results of his green energy efforts have been paltry in terms of jobs and industry growth—and fiscal irresponsibility.

CNN:

• Dumping China for American Job Shops. U.S. small businesses that initially rushed to Chinese factories to get their products made are now dumping them for American manufacturers. And the shift is gaining traction, said industry experts who match U.S. small companies with domestic firms. Mitch Free, the founder and CEO of Atlanta-based MFG.com, said his company has seen a 15% uptick in inquiries since 2009 from U.S. firms looking for American factories to replace their Chinese suppliers. MFG.com is one of the largest online directories used by businesses to find domestic manufacturers. One reason behind the trend is that "Chinese manufacturing has become expensive," Free explained.

LA Times:

• Pentagon Working With FAA To Open U.S. Airspace To Combat Drones. The military says the nearly 7,500 robotic aircraft it has accrued for use overseas need to come home at some point. But the FAA doesn't allow drones in U.S. airspace without a special certificate.

Rasmussen Reports:

• Voters Are Gung-Ho for Use of Drones But Not Over the United States.

Reuters:

• Asia Banker Pay Down As Much As 40% As Slowdown Hits. Global investment banks have cut pay in Asia by between 30 and 40 percent for last year , with many bankers receiving no bonus at all and pay for star performers flat at best as a global sector slowdown bites, industry recruiters and sources within banks said.
• Greece Must Meet All Terms To Stay In Euro. Failure by Greece to meet all the conditions laid down by Europe and the International Monetary Fund for new bailout funds would lead to its exit from the euro zone, Luxembourg's finance minister said on Monday. Markets have adjusted and sufficient firewalls have been erected in Europe to limit the financial damage should Greece decide to default and leave the monetary union, Luc Frieden said. "I still think that we should do our best to keep the euro zone with all its members. But again, the key lies with Greece today," Frieden told the Atlantic Council after meeting with the U.S. Treasury. "And therefore if the Greek people or the Greek political elite do not apply all of these conditions -- and I do know that is very difficult for the Greek people and I do not underestimate the problems that it creates for Greece -- if they don't do this, I think they exclude themselves from the euro zone and the impact on other countries now will be less important than a year ago."

Financial Times:

• France To Push On With Trading Tax. France is determined to press ahead with a financial transaction tax inspired by the UK’s stamp duty and supported by at least eight other eurozone countries, the country’s finance minister has said.
• Bull Run On Subprime Debt Divides Investors. Investors have regained their taste for “toxic” mortgage debt. Securities related to subprime and other risky home loans that were at the heart of the 2008-09 financial crisis have embarked on an unexpected bull run. This stellar performance has divided analysts. Some argue that an improving US economy and the steep fall in the price of these securities last year leaves plenty of room for further gains.
• Derivatives Reform: We Are None The Wiser.
  

Telegraph:

• Greece Faces Death By A Thousand Cuts Unless It Leaves The Euro. Lucas Papademos was suitably apocalyptic. If the terms of the second Greek bailout were not approved, the Greek prime minister warned over the weekend, there would be a "disorderly bankruptcy that would create conditions of economic chaos and social explosion.
• Britain Could Be Stripped Of AAA Credit Rating Within A Year. Britain could be stripped of its AAA credit rating within a year after Moody’s last night put it on “negative” watch amid fears of contagion from the European debt crisis.

South China Morning Post:

• Europe Must Wake Up To China's Role In Debt Crisis. Forget misguided talk about China bailing out euro zone's debt-stricken economies, as East's economic emergence was one of drama's main triggers. In short, European governments and their voters failed to recognize what Indian essayist Pankaj Mishra describes as "the extent to which welfare state liberalism depended on ... the continuing somnolence of the 'East'." Today Europe needs urgently to wake up to the fact that China and other East Asian economies are no longer asleep. In a world in which Europe's economic competitors provide minimal social safety nets for their populations, many European countries can no longer afford their own lavish state welfare provisions, especially if they are funded by debt. This is a deeply unpopular message. But if Europe's southern periphery is ever to escape the debt trap it has fallen into, it cannot look to China for assistance. Instead, it must recognize that China's economic emergence is one of the main reasons the region is in its current hole, and act quickly to restore its lost competitiveness.
  

Shanghai Securities News:

• China won't increase loans or debt issues to overcome economic difficulties, citing former Chinese central bank deputy governor Wu Xiaoling. The government will be "cautious" about lending and issuing debt this year.
• China's outstanding loans to local government financing vehicles were 9.1t yuean as of Sept. 30, citing data. Of that total, almost 3t yuan is being managed as ordinary corporate loans. About 65% of the outstanding loan was backed by collateral.
  

Evening Recommendations
Capstone:

• Rated (GOOG) Buy, target $750.
• Rated (DMD) Buy, target $11.
• Rated (TRIP) Buy, target $22.
  

Night Trading

• Asian equity indices are -.75% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 164.0 -1.0 basis point.
  
• Asia Pacific Sovereign CDS Index 134.0 -4.5 basis points.
• FTSE-100 futures -.11%.
  
• S&P 500 futures -.29%.
  
• NASDAQ 100 futures -.16%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CPLA)/.91
• (MMC)/.45
• (FOSL)/1.77
• (GT)/.21
• (HST)/.30
• (OMC)/.95
• (AVP)/.51
• (BWA)/1.17
• (VMI)/1.67
• (MET)/1.24
• (ZNGA)/.03

Economic Releases
7:30 am EST

• The NFIB Small Business Optimism Index for January is estimated to rise to 95.0 versus 93.8 in December.
  

8:30 am EST

• The Import Price Index for January is estimated to rise +.3% versus a -.1% decline in December.
• Advance Retail Sales for January are estimated to rise +.8% versus a +.1% gain in December.
• Retail Sales Less Autos for January are estimated to rise +.5% versus a -.2% decline in December.
• Retail Sales Ex Auto & Gas for January are estimated to rise +.5% versus unch. in December.
  

10:00 am EST

• Business Inventories for December are estimated to rise +.5% versus a +.3% gain in November.
  

Upcoming Splits

• (MNST) 2-for-1
  

Other Potential Market Movers

• The Fed's Lockhart speaking, Fed's Plosser speaking, Greece Bill Auction, Italy Bond Auction, Spain Bond Auction, weekly retail sales reports, Pac Crest Emerging Tech Summit, Stifel Nicolaus Transports Conference, Deutsche Bank Small/Mid-Cap Conference, Goldman Tech/Internet Conference and the (SMG) Analyst Day could also impact trading today.
  

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

Stocks Rising into Final Hour on Euro Bounce, More Financial Sector Optimism, Short-Covering, Investor Performance Angst

Broad Market Tone:

• Advance/Decline Line: Sharply Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 19.12 -8.03%
  
• ISE Sentiment Index 63.0 +3.28%
  
• Total Put/Call .87 -19.44%
  
• NYSE Arms .93 -26.76%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 97.55 -.54%
  
• European Financial Sector CDS Index 181.47 +.50%
  
• Western Europe Sovereign Debt CDS Index 331.90 -.12%
  
• Emerging Market CDS Index 258.0 -2.69%
  
• 2-Year Swap Spread 29.5 +1.5 bps
  
• TED Spread 40.50 -2.0 bps
  
• 3-Month EUR/USD Cross-Currency Basis Swap -68.25 +4.5 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .10% +2 bps
  
• Yield Curve 171.0 +2 bps
  
• China Import Iron Ore Spot $142.20/Metric Tonne -.35%
• Citi US Economic Surprise Index 68.50 -4.8 points
  
• 10-Year TIPS Spread 2.24 +2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +24 open in Japan
• DAX Futures: Indicating +15 open in Germany

Portfolio:

• Higher: On gains in my Biotech, Tech, Medical and Retail sector longs
  
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 trades near session highs and tests July 2011 highs, despite Eurozone debt angst, rising global growth fears, profit-taking and technical selling. On the positive side, Paper, Biotech, HMO, Homebuilding and Airline shares are especially strong, rising more than 2.0%. Small-caps have outperformed throughout the day. (XLF) is also outperforming. Major Asian indices rose around +.5% overnight, led by a +1.5% gain in Indonesian shares. Major European indices also gained around +.5%, led by a +.9% gain in the UK. Lumber is gaining +1.85%. Oil continues to trade poorly, despite today's bounce, given the stock rally, euro rally, rising interest from speculators, falling euro debt angst, subsiding emerging market hard-landing fears, improving US data and rising Mid-east tensions over the last few weeks. On the negative side, Utility, Coal, Oil Tanker, Gaming, Alt Energy, Oil Service, Steel, Computer, Semi, Networking, Computer Service, Retail and Restaurant shares are lower-to-just slightly higher on the day. Tech shares are underperforming today. Copper is falling -.63%, Oil is rising +1.8% and the UBS-Bloomberg Ag Spot Index is rising +1.04%. The Germany sovereign cds is gaining +.59% to 85.67 bps, the Spain sovereign cds is gaining +1.22% to 367.57 bps, the France sovereign cds is gaining +1.9% to 180.67 bps, the Italy sovereign cds is rising +.76% to 396.33 bps and the Japan sovereign cds is gaining +.6% to 126.68 bps. Lumber is just slightly higher since its Dec. 29th high despite the better US economic data, more dovish Fed commentary, improving sentiment towards homebuilders, equity rally and decline in eurozone debt angst. Moreover, the weekly MBA Purchase Applications Index has been around the same level since May 2010. 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 flat at 1.99% today, which remains a 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 month after showing meaningful improvement from mid-Nov. through year-end. The Western Europe Sovereign CDS Index is still fairly close to its Jan. 9th all-time high. The TED spread, 2Y Euro Swap Spread, 3M Euribor-OIS spread and Libor-OIS spread have improved, but are still at stressed levels. China Iron Ore Spot has plunged -20.0% since Sept. 7th of last year. Shanghai Copper Inventories are up +572.0% ytd to the highest level since March of last year and are very close to their April 2010 record. As expected, Greece succumbed to Troika demands, however I still view it as highly unlikely they will meet those demands over the intermediate-term. I still see little evidence to suggest that Europe's debt crisis won't flare up again in an even more intense fashion down the road. Volume is poor again today. Stocks weakened a bit after this morning's open, however the usual morning dip buyers quickly emerged. Investor sentiment remains too complacent, however performance angst is likely already a factor in some circles, which is a positive. 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. One of my longs, (AAPL), is crossing the $500 market today. The stock is very extended technically and sentiment is frothy, but I still see further outperformance over the intermediate-term after a pause. I expect US stocks to trade mixed-to-lower into the close from current levels on Eurozone debt angst, rising global growth fears, less tech sector optimism, technical selling, profit-taking and more shorting.

Today's Headlines

Bloomberg:

• Europe Welcomes Greek Vote; Bailout Nears. Germany and the European Commission welcomed Greek approval of the austerity steps demanded for a financial lifeline, suggesting euro finance chiefs will pull Greece back from the brink when they meet in two days. The Greek parliament’s backing “is a crucial step forward toward the adoption of the second program,” EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Brussels today. “I’m confident that the other conditions, including for instance the identification of the concrete measures of 325 million euros ($430 million), will be completed by the next meeting” of finance ministers. Euro-area finance chiefs will convene in Brussels on Feb. 15 for their second extraordinary meeting on Greece in a week. Frustrated after two years of missed budget targets, ministers declined to ratify the 130 billion-euro package in a special session on Feb. 9, demanding that Greek officials put their verbal commitments into law. “It’s important for now to complete this program -- and the passage in the Greek parliament yesterday was very important,” German Chancellor Angela Merkel said in Berlin. “The finance ministers will meet again on Wednesday to undertake the work on this, but there can’t and the won’t be any changes to the program.”
• EU Vows to Keep Airline-Emission Levies as China-India Opposition Mounts. The European Union will press ahead with emissions levies for international airlines, putting the bloc on course for a trade spat with countries including China, India and the U.S. “The EU will not suspend the legislation,” Siim Kallas, the European Commission’s vice president for transport, said today in Singapore at an airline conference. “It’s a very high- profile environmental issue.”
• Toronto Condo Bubble Risk Topping New York. A sliver of land wedged between Toronto’s elevated expressway and an off-ramp that pumps traffic into downtown may become the epicenter for a Canadian housing bubble. In four years, this site that’s now used as a parking lot and police impound near the shores of Lake Ontario will be home to Ten York, a 75-story glass building that would be the country’s third-tallest condo tower. Toronto has more skyscrapers and high-rises under construction than any North American city -- almost three times as many as New York -- stoking debate on whether the condominium market in Canada’s largest city is headed for a U.S.-style correction as prices rise and household borrowing hits a record. Canadian lenders including Toronto-Dominion Bank last week raised mortgage rates to cool off the housing market. “Condo construction has always been rather prone to boom and bust cycles, and this one seems particularly strong,” said Sheryl King, an economist with Bank of America Merrill Lynch in Toronto. “Builders seem to overestimate how much demand is going to be out there, and that’s when you tend to see some abrupt pull-back.” Canada’s housing market is about 10 percent overvalued, with inflated prices primarily in Vancouver, Montreal and Toronto, King said in a telephone interview. “We would call it a bubble,” she said.
• Apple(AAPL) Says Fair Labor Association Began Foxconn Inspections. Apple Inc. (AAPL) said the Fair Labor Association started audits of supplier Foxconn Technology Group (FOXCGZ)’s factories in China, the first inspections of a larger effort to respond to criticism of conditions of workers making its gadgets. The iPhone maker, which became the first technology company to join Washington-based FLA in January, said labor-rights inspectors started today at a Shenzhen, China, plant known as Foxconn City, Apple said today in a statement.
• Obama Budget Proves Unique Source for $3 Trillion. President Barack Obama’s budget outlines his ideas for how the government may spend $3.8 trillion in fiscal 2013. There’s no similar document accounting for where taxpayers’ money actually goes. At least three federal sources tally spending, each following its own rules to produce a different total. For the 15 Cabinet-level agencies and Social Security, the White House Office of Management and Budget put expenses at $3.18 trillion in fiscal 2010, the last year for which data are complete. Ask the Census Bureau, and the amount rises by $13.1 billion to $3.19 trillion. USASpending.gov, a website Obama championed as a senator, accounts for $2.23 trillion of spending. (For an interactive graphic, click here.) The nation’s budget has more than doubled in the past decade, pushing the annual deficit to more than $1 trillion and the national debt to $15.2 trillion.
• Pentagon May Oust Troops Involuntarily Under Budget Cuts. The Defense Department may have to force soldiers, Marines or other members of the military out of the services for the first time since the aftermath of the Cold War to achieve the spending reductions in its budget proposal. The Pentagon plans to cut 67,100 soldiers from active and reserve Army units and the Army National Guard in the five years starting Oct. 1, as well as 15,200 from the active and reserve ranks of the Marine Corps.
• Oil Advances as Greek Approval of Austerity Bolsters Economic Optimism. Crude oil for March delivery increased $1.61, or 1.6 percent, to $100.28 a barrel at 1:10 p.m. on the New York Mercantile Exchange. Futures are up 17 percent from a year ago. Brent oil for March settlement rose 65 cents, or 0.6 percent, to $117.96 a barrel on the London-based ICE Futures Europe exchange.
• U.S. Farm Income May Fall on Bigger Crops, Increased Expenses. U.S. farm net income probably will fall 6.5 percent in 2012 from last year’s record as the biggest crop acreage in a generation and rising costs trim profits, the Department of Agriculture said. Income will total $91.7 billion, down from a revised $98.1 billion in 2011 and the second-highest ever, the USDA said today in a report. The value of crops will rise 3.1 percent to $204.9 billion, while revenue from livestock sales will increase 0.6 percent to $165.7 billion, the USDA said. Expenses such as diesel fuel and animal feed will increase 3.7 percent to $235.1 billion, eroding profits.

Wall Street Journal:

• Fed Watchers See Risks in Rate Plan. Many economists believe the Federal Reserve risks making a big mistake if it sticks to its recent guidance about keeping interest rates super low for the next three years. The Fed said last month that it expected to keep short-term interest rates near zero until at least late 2014 to bolster the slow recovery. Among 49 economists who participated in the latest monthly Wall Street Journal survey, the vast majority—33 respondents—said moving to raise rates then would be too late. Just three said it would be too soon, 11 said it would be right on time and two didn't answer.
• 'Co-Co' Debt Finds Favor in Euro Zone. Spanish, Portuguese Governments See Debt as Tool to Aid Lenders, Without Direct Bailouts. A new breed of bank debt that turns into equity if a lender hits trouble is becoming the instrument of choice for some Southern European governments as they prop up their ailing banks. The instruments, known as "contingent convertibles," began to get attention following the financial crisis and have been issued by a few banks. "Co-cos," as they are called, are sold as interest-bearing debt that has to be paid back. But they convert to equity in the event that a bank's capital ratios fall below certain levels.
• DBJ Chief Says Japan Needs Consumption Tax Hike.
  

MarketWatch:

• Regeneron(REGN) Loss Widens But Sales Forecast Raised. Regeneron Pharmaceuticals Inc. REGN +12.87% said sales of its new eye-disease treatment were off to a fast start, causing the company to boost its 2012 sales forecast for the drug by roughly 80%.
• Volcker, Others Clash On Speculative Trading Rule.
• Death Tolls Passes 600 in Europe Cold Snap.
  

CNBC.com:

• Greece Still to Convince Skeptical Euro Zone. Europe gave Greece until Wednesday to convince skeptical international creditors that it would stick to the punishing terms of a multi-billion-euro rescue package, endorsed by parliament as rioters torched downtown Athens.
  
• A Secretive Hedge Fund Legend Prepares to Surface. It’s a humbling time for Louis Moore Bacon. The 55-year-old founder of the $15 billion Moore Capital Management — and one of the premier hedge fund investors of the past two decades — just weathered his second down year in the past four after a particularly ragged run in the markets.

Business Insider:

• The Most Overpriced Housing Markets In The Developed World.
• Check Out The New Tax Hikes In Obama's Budget. Even for people making less than Warren Buffet. The Obama Budget is going to mean tax-increases. Notice how he can't just call them tax and revenue increases, they are "American Values" about "fairness." You see, even budget documents are campaign documents:
• Chinese Authorities Are Removing iPads From Store Shelves.
• Israeli Embassies Attacked in Three Countries, Netanyahu Blames Iran.
  

Zero Hedge:

• Athens - The Morning After: 48 Buildings On Fire, 150 Looted, Hundreds Arrested.
• Samaras Pledges To "Renegotiate" Bailout Pact After April Elections.
• LTRO Stigma Becomes Acute Days Ahead Of Second Operation. (graph)
• European Financials At Worst Levels In Two Weeks. (graphs)
  

New York Times:

• Chinese Official Brushes Aside Calls to Buy European Debt. The head of China’s $410 billion sovereign wealth fund has brushed aside a call by the German chancellor, Angela Merkel, to buy European government debt, saying Monday that such investments were “difficult” for long-term investors. “For European bonds like the government bonds of Italy and Spain, only central banks with certain responsibilities can invest,” he said. But it was more “difficult for long-term investors like us” to make such investments, he said at the annual meeting of China Economists 50 Forum, a club of government officials and economists. Xia Bin, an adviser to the Chinese central bank, echoed Mr. Lou’s harder line on buying European government debt. “We may be poor, but we aren’t stupid,” Mr. Xia said on the sideline of the forum. “We must follow commercial principles in making such investments. That means we want returns.” Mr. Lou, who predicted that Europe would “inevitably” fall into recession, said Mrs. Merkel had asked the sovereign fund to look at French and German government debt.

Forbes:

• Greek Optimism Severely Misplaced: Huge Risk of Political Failure.

MortgageOrb:

• Fitch: Office and Retail CMBS Delinquencies Hit New Highs. Delinquencies for office and retail loans have hit their highest-ever levels while overall U.S. commercial mortgage-backed securities (CMBS) delinquencies fell for the sixth straight month, according to the latest index results from Fitch Ratings. CMBS late-pays declined five basis points (bps) in January to 8.32% from 8.37% a month earlier. The improvement was driven by multifamily loans, which saw a 165-bp plunge in their rate month-over-month to 12.77%. The delinquency rates for office and retail rose to all-time highs of 7.30% and 7.21%, respectively. January marked the first time post-recession that the office delinquency rate surpassed that of retail.

Seeking Alpha:

• 7 Rallying Semi Stocks Hedge Funds Are Buying Up.

TheStreet.com:

• Bank of America(BAC), Citigroup(C) Face Debt Downgrade: Moody's. Moody's Investors Service is expected to announce downgrades to large global banks that play an outsized role in the capital markets, due to "Eurozone weakness and elevated economic and market uncertainties," according to a research report published Monday by CreditSights.

Reuters:

• Copper Falls as Euro Trims Gains, Demand Concerns Weigh.
• Obama Seeks Big Hike Is Dividend Taxes On Wealthy. President Barack Obama's 2013 budget plan calls for significantly hiking taxes on dividends for the wealthy, a change from prior proposals that will raise the ire of dividend-paying companies. Obama's proposal, released on Monday, would raise the taxes investors pay on dividends to the top income tax rate, now at 35 percent, but scheduled to rise to near 40 percent next year. In prior proposals, Obama sought to raise the current 15 percent dividend tax rate to 20 percent for the wealthiest Americans.
• Obama Unveils Big Spending Election-Year Budget. President Barack Obama called on Monday for aggressive spending to boost growth and for higher taxes on the rich, laying out an election-year vision for America in a budget that was criticized sharply by Republicans for failing to curb the deficit.

Telegraph:

• Debt Crisis and Greek Bailout: Live. German leader Angela Merkel states that there won’t be any changes to Greek rescue measures despite riots in the debt-stricken country, as Barack Obama unveils his Budget for 2013.

Der Spiegel:

• European Doubts Growing Over Greece Debt Strategy. 'The Troika's Policies Have Failed'.

Bear Radar

Style Underperformer:

• Mid-Cap Value +.49%

Sector Underperformers:

• 1) Coal -.80% 2) Gold & Silver -.60% 3) Gaming -.33%

Stocks Falling on Unusual Volume:

• ACI, ABC, CLF, VVUS, RAIL, NTGR, DMND, AVAV, ACOM, PANL, GRPN, CVV, FSLR, WYNN, GPRO, BWLD, LUFK, BPL, SRI and OSK
  

Stocks With Unusual Put Option Activity:

• 1) NTAP 2) CLNE 3) WM 4) NKE 5) FOSL
  

Stocks With Most Negative News Mentions:

• 1) ACI 2) FSLR 3) BAC 4) X 5) BRCM
  

Charts:

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