Bear Radar

Style Underperformer:

• Small-Cap Value -1.0%

Sector Underperformers:

• 1) Education -8.50% 2) Construction -2.80% 3) Oil Tankers -2.0%

Stocks Falling on Unusual Volume:

• APOL, HXM, RDC, SWN, LPI, FNSR, VNO, IPGP, TECD, TRAK, TZOO, SYKE, STRA, AMED, VVUS, CLNE, HSII, YRCW, GLNG, CPLA, TRS, APEI, LOPE, DNDN, GIFI, OKS, WCN, CVC, FDP, GXP, OMG, CCO, RBA, UNG, VSI, EPB, URS, FRC, CTB, HFC, WNR, BPI and AMED
  

Stocks With Unusual Put Option Activity:

• 1) APOL 2) XLK 3) EWW 4) JAH 5) PCLN
  

Stocks With Most Negative News Mentions:

• 1) ENOC 2) SWN 3) UTX 4) APOL 5) CVX
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.55%

Sector Outperformers:

• 1) Semis +1.68% 2) Airlines +1.29% 3) Internet +1.20%

Stocks Rising on Unusual Volume:

• SINA, IMOS, CREE, YOKU, GNTX, ZAGG, BCPC, PCLN, GTLS, SLXP, PRGO, TTEK, JIVE, SODA, RAIL, CTRP, NTES, SPLS, ASML, DPZ, BRY, AZO, CHMT, LAD, SAH, MRX and USG
  

Stocks With Unusual Call Option Activity:

• 1) CVC 2) SPLS 3) AZO 4) MU 5) APOL
  

Stocks With Most Positive News Mentions:

• 1) SLXP 2) PCLN 3) PG 4) APOL 5) HOV
  

Charts:

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

Tuesday Watch

Evening Headlines
Bloomberg:

• Greece Cut to Selective Default by S&P. Greece’s credit ratings were cut to “Selective Default” by Standard & Poor’s after it negotiated the biggest sovereign debt restructuring in history. S&P dropped Greece’s rating from CC, two levels above default, after the government added clauses to its debt designed to mop up investors unwilling to take part in the exchange, the New York-based company said in a statement today. The downgrade follows a reduction last week by Fitch Ratings to C, while Moody’s Investors Service has said it will cut the nation to its lowest rating. Greece published the formal offer document last week for its agreement to exchange bonds for new securities, with investors taking a haircut of 53.5 percent. The restructuring uses so-called collective action clauses to discourage holdouts, the use of which would trigger credit- default swap insurance contracts on the nation’s debt, according to the rules of the International Swaps & Derivatives Association.
• ECB Special Lender Status Threatens Bond Backlash: Euro Credit. The ECB's willingness to ride roughshod over bondholder rights risks pushing up borrowing costs for indebted governments by making investors less willing to lend. The ECB swapped about $67 billion of Greek bonds for new notes, identical to the old ones in every way save for their identification numbers, according to Moritz Kraemer, head of sovereign ratings at S&P. The switch exempts the central bank from the largest sovereign restructuring in history as Greece rewrites the terms of its securities to ensure lenders forgive 53.5% of the debt. "Bondholders are effectively being subordinated," said Saul Doctor, a credit strategist at JPMorgan Chase & Co. in London. "Foreign investors are going to be less willing to buy sovereign bonds when the ECB can exert itself."
• Rajoy Faces Tougher Budget Task This Year After Spain's 2011 Deficit Miss. Spain missed its 2011 deficit target by a wider-than-estimated margin, adding to the task facing the government to meet budget targets as the economy shrinks. The deficit narrowed to 8.5 percent of gross domestic product from 9.3 percent in 2010, overshooting the government’s previous estimate of around 8 percent, and a European Union target of 6 percent, Budget Minister Cristobal Montoro said in Madrid late yesterday. “We are going to promote budget stability as soon as possible with a credible path,” Montoro said. “We are in a recession and that must be recognized, which means implementing a budget policy that’ll lift us of this recession.”
• Credit Swaps Panel Asked If Greek Parliament Triggered Payouts. A committee of banks and investors that governs credit-default swaps was asked to rule whether Greece’s parliament triggered payouts on contracts that protect against losses on the country’s debt. The International Swaps and Derivatives Association’s determinations committee was asked whether a so-called restructuring credit event was caused by publication today of legislation that the Greek parliament passed as part of its agreement to exchange bonds for new securities, the trade group said on its website. The restructuring, in which bondholders take a 53.5 percent reduction in the value of their investments, uses collective action clauses to discourage holdouts. The use of such clauses would trigger swap contracts, according to ISDA rules. The committee is being asked whether the contracts have already been triggered because the deal gives the European Central bank and national central banks “a change in the ranking in priority of payment” by allowing them to exchange out of their eligible debt prior to the collective-action clauses taking effect, according to the ISDA website. The committee will decide whether to accept the question by Feb. 29, ISDA said in a statement today.
• Europe Puts Highest Since July Before ECB Loan Package: Options. Options traders, concerned a three-month rally in European equities is ending, pushed bearish contracts to the highest level since July on an ETF that gets most of its value from the region's equities. Options to protect against a 10% drop in the iShares MSCI EAFE Index Fund cost 71% more than contracts betting on a 10% gain, according to data compiled by Bloomberg. Put volume jumped to a record on Feb. 24. The ETF has gained 16% since global equities bottomed last year on Oct. 4.
  
• FHA to Increase Cost of Up-Front Mortgage Insurance Premiums. The Federal Housing Administration will increase the cost of up-front mortgage insurance premiums by 75 basis points as part of efforts to rebuild the agency’s insurance fund. The increase will apply only to new 30-year, single-family FHA loans and won’t affect the cost of streamlined refinancings, FHA Acting Commissioner Carol Galante said today in a call with reporters. The refinancing program allows FHA borrowers in good standing to qualify for a new, lower-rate FHA loan with minimal paperwork.
• Syria Shells Northern Towns After Referendum. Syrian forces bombarded towns in the north of the country as the government of President Bashar al- Assad said voters had backed a referendum designed to introduce political pluralism after almost a year of violence. Assad, facing international pressure to end his crackdown on dissent, is seeking to affirm his mandate as Syria’s leader with a new constitution. The European Union decided to tighten sanctions yesterday as EU politicians dismissed the validity of the previous day’s vote. The state-run Syrian Arab News Agency said 89.4 percent of voters backed the charter, which promises democratic elections while limiting presidents to two seven-year terms. “The referendum in Syria is nothing more than a farce,” German Foreign Minister Guido Westerwelle said in a statement. “Phony votes cannot contribute to a solution to the crisis.”
• Goldberg: Anti-Israel One State Plan Gets Harvard Outlet. For many years, Palestinian politics turned on a single idea: Palestine was stolen by the Jews, and so the Jews must be expelled -- “thrown into the sea,” the expression went. This week, Harvard University’s Kennedy School of Government will host a conference called “Israel/Palestine and the One State Solution,” whose goal is to “educate ourselves and others about the possible contours of a one-state solution and the challenges that stand in the way of its realization.” The conference will feature speakers such as Ali Abunimah, a veteran anti-Israel agitator, and Harvard’s own Stephen M. Walt, co- author with John Mearsheimer of the scapegoating Ur-text of anti-Israel argumentation, “The Israel Lobby.” In the best case, this new dystopia by the sea would be paralyzed by endless argument: “Two nationalities who have desperately sought a political frame for cultural and social independence would wrestle over control of language, art, street names, and schools.” In the worst case, Gorenberg writes, political tensions “would ignite as violence.” There are people, perhaps including some of the Harvard students organizing the conference, who advocate “one-statism” out of naivete. But the leaders of the movement are not naive. They understand their project shares a goal with Hamas: the elimination of Israel as a homeland and haven for Jews.
• Oil Tankers Seen Falling 42% as Japan Weakens Most Since Tsunami: Freight. The largest drop in Japanese oil consumption since last year’s earthquake and tsunami may cause tanker rates to plunge 42 percent next quarter, threatening the biggest rally in shares of shipping companies since 2005. Demand in Japan, the second-largest destination for supertankers after China, will drop 19 percent in the second quarter from now, according to the International Energy Agency in Paris. Daily rates for the 1,000-foot-long ships will average $17,000, compared with $29,280 now, the median of nine analyst estimates compiled by Bloomberg show.

Wall Street Journal:

• Europe's Narrow Credit-Crunch Escape. It may be asking too much to expect the LTROs to spur an increase in lending overall. Most analysts expect banks to continue to deleverage, despite the offer of unlimited cheap funding. That is partly because banks will worry about extending new loans beyond three years since this would leave them with a potentially tricky refinancing risk when the ECB loans mature. Banks may also be reluctant to tie up collateral for ECB facilities since an over-encumbered balance sheet could restrict future access to senior unsecured bond markets. And while there is no stigma to borrowing from the LTRO, some banks may worry that too much reliance on subsidized funding may invite a political backlash. For example, HSBC, which borrowed in the first LTRO to fund euro-denominated assets, will keep profits from the trade out of its bonus pool. That suggests the LTRO may not deliver much of a kick to the real economy. For that, governments must repair balance sheets, push through structural reforms and strengthen institutions. All the ECB liquidity has done is to buy the real economy some time.
• Lilly(ELY) Faces Payment Delays From Health Systems In Italy, Spain. Drug maker Eli Lilly & Co. (LLY) said it has experienced delays in payments for its products from national health systems in Spain and Italy--the latest example of pressure on the pharmaceuticals industry stemming from the European financial crisis. Indianapolis-based Lilly, which makes the antidepressant Cymbalta, has seen the payment delays in certain countries including, but not limited to, regions within Spain and Italy.
• Did These Stocks Have 'Mini Flash Crashes' Last Week? The folks at Themis Trading, who have been among the most outspoken critics of high frequency trading, point to some irregular trading activity in the shares of Thermo Fisher Scientific and Pall Corporation last week.
• U.S. Considers New Message on Iran. Complaints from Israel about the U.S.'s public engagement with Iran have pushed the White House to consider more forcefully outlining potential military actions, and the "red lines" Iran must not cross, as soon as this weekend, according to people familiar with the discussions. President Barack Obama could use a speech on Sunday before a powerful pro-Israel lobby to more clearly define U.S. policy on military action against Iran in advance of his meeting on Monday with Israeli Prime Minister Benjamin Netanyahu, these people said.

Fox News:

• Gallup: 72% of All Americans and 56% of Democrats Say Obamacare Mandate Unconstitutional.

MarketWatch:

• Chinese Real-Estate Facing Pressure: Credit Suisse. Price cuts by mainland Chinese real-estate developers suggest profits will be under increasing pressure this year, according to Tuesday research published by Credit Suisse, which said the consensus view has been too optimistic on the earnings outlook for the property sector. In the note, the broker maintained its underweight view on Chinese real-estate developers, citing price reductions.

Business Insider:

• A Class Action Lawsuit Alleges Wells Fargo(WFC) Partnered With Insurers To Rip Off Homeowners.
• PIMCO: Natural Gas Is Already A Game Changer.
  

Zero Hedge:

• The Post-2009 Northern & Western European Housing Bubble. (graphs)
• Booze Inflation Highest In 20 Years. (graph)
  

IBD:

• Nu Skin Enterprises(NUS) Introduces New Anti-Aging Products.
  

NY Times:

• Yahoo(YHOO) Warns Facebook(FB) of a Potential Patent Fight. As Yahoo struggles to keep up with younger competitors, the Web portal company is weighing a new tactic: threatening legal action over its patent holdings. Yahoo is seeking to force Facebook into licensing 10 to 20 patents over technologies that include advertising, the personalization of Web sites, social networking and messaging, people briefed on the matter told DealBook.
• Pressure Grows on Fannie and Freddie to Reduce Principal on Some Loans. California’s attorney general, Kamala D. Harris, has ratcheted up the pressure on Fannie Mae and Freddie Mac to allow debt reduction on their home loans by asking the mortgage finance giants to halt foreclosures in the state.

CNN:

• Water Bills Expected To Triple In Some Parts Of U.S.
• Gas Prices Climb For 20th Day.
  

Chicago Tribune:

• FBI Sees More Hedge Fund Trading Probe Informants. The FBI says it has enough informants lined up to keep its investigations of suspected illegal insider trading at hedge funds going for at least five more years.
  

Real Clear Politics:

• The Wisdom of Drilling for Oil.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 26% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -16 (see trends). That’s the president’s lowest rating in over a month.

AP:

• Israel Won't Warn US Before Iran Strike. The pronouncement, delivered in a series of private, top-level conversations, sets a tense tone ahead of meetings in the coming days at the White House and Capitol Hill. The apparent decision to keep the U.S. in the dark also stems from Israel's frustration with the White House. After a visit by National Security Adviser Tom Donilon in particular, they became convinced the Americans would neither take military action, nor go along with unilateral action by Israel against Iran. The Israelis concluded they would have to conduct a strike unilaterally -- a point they are likely to hammer home in a series of meetings over the next two weeks in Washington, the official said.

Reuters:

• Priceline(PCLN) Quarterly Profit Jumps, Bookings Rise. Online travel agency Priceline.com on Monday reported a stronger-than-expected fourth-quarter profit as the value of its bookings gained more than 50 percent from a year ago, sending its shares up more than 6 percent.
• Sina(SINA) Revenue View Misses Street, Shares Down. Sina Corp, the operator of China's largest Internet portal, posted a quarterly profit in line with analysts' estimates, but forecast a disappointing first quarter, sending its shares down 5 percent in aftermarket trade.
• German Court to Rule on MP's Rights on Euro Bailouts. Germany's Constitutional Court will rule on Tuesday whether a small sub-committee in parliament is representative enough to take decisions over whether the country should grant help to heavily indebted euro zone countries such as Greece in future.

Financial Times:

• Israel Gets Ready For Iran Retaliation. As they ponder the option of a military strike against Iran, Israeli leaders have started to worry about targets closer to home.

Telegraph:

• China Risks 'Middle Income Trap' Without Free Market Revolution. China’s spectacular catch-up growth is nearing its limits, leaving the country prey to the "middle income trap" over coming years unless Beijing embraces the free market and relaxes its suffocating grip over the economy.

Tagesspiegel:

• Germany's opposition leader Frank-Walter Steinmeier said the lack of an absolute majority in a vote on Greek aid shows Chancellor Angel Merkel's authority is "severely damaged," citing an interview.

People's Daily:

• China will set up an electricity price policy "soon" that punishes companies for exceeding limits for industrial energy use, citing a Ministry of Industry and Information Technology official.

Xinhua:

• China's National Development and Reform Commission will continue to introduce measures to stabilize prices and ensure the supply of basic necessities, citing Zhou Wangjun, deputy director at the price department of the commission.

Apple Daily:

• Macau Feb. Gaming Revenue Growth May Slow to 15.8% Y/Y. The percentage growth may be the lowest in over 3 years, the report said. Macau Jan. casino revenue growth rose 35% y/y.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 164.0 +3.0 basis points.
  
• Asia Pacific Sovereign CDS Index 134.0 +2.25 basis points.
• FTSE-100 futures +.03%.
  
• S&P 500 futures +.10%.
  
• NASDAQ 100 futures +.12%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (VPHM)/.55
• (TECD)/1.66
• (RDC)/.30
• (CVC)/.23
• (SAFM)/.18
• (AZO)/4.04
• (ODP)/.00
• (DWA)/.31
• (WRC)/.99
• (CPRT)/.59
• (FSLR)/1.56
• (DPZ)/.49

Economic Releases
8:30 am EST

• Durable Goods Orders for January are estimated to fall -1.0% versus a +3.0% increase in December.
• Durables Ex Transports for January are estimated unch. versus a +2.1% gain in December.
• Cap Goods Orders Non-Defense Ex Air for January are estimated to fall -1.4% versus a +2.9% gain in December.
• Cap Goods Shipments Non-Defense Ex Air for January are estimated to fall -2.0% versus a +2.9% gain in December.

9:00 am EST

• S&P/CS 20 City MoM% SA for December is estimated to fall -.35% versus a -.7% decline in November.

10:00 am EST

• Consumer Confidence for February is estimated to rise to 63.0 versus 61.1 in January.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Duke speaking, Fed's Pianalto speaking, results of the latest LTRO program, weekly retail sales reports, Italian/German Bond Auctions, Richmond Fed Manufacturing Index for February, Morgan Stanley Tech/Media/Telecom Conference, RBC Healthcare Conference, (JPM) Investor Day and the (JNPR) Analyst Meeting could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial 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 Reversing Higher into Final Hour on Falling Energy Prices, More Financial Sector Optimism, Better US Economic Data, Short-Covering

Broad Market Tone:

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

Equity Investor Angst:

• VIX 17.89 +3.24%
  
• ISE Sentiment Index 125.0 +92.31%
  
• Total Put/Call .86 -21.10%
  
• NYSE Arms .80 -28.35%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 95.65 -.14%
  
• European Financial Sector CDS Index 178.93 +2.02%
  
• Western Europe Sovereign Debt CDS Index 350.33 +1.20%
  
• Emerging Market CDS Index 252.16 -.11%
  
• 2-Year Swap Spread 30.50 -.5 bp
  
• TED Spread 38.75 -1.25 bps
  
• 3-Month EUR/USD Cross-Currency Basis Swap -68.0 +4.0 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .10% +1 bp
  
• Yield Curve 163.0 -4 bps
  
• China Import Iron Ore Spot $140.50/Metric Tonne +1.08%
• Citi US Economic Surprise Index 47.80 -10.2 points
  
• 10-Year TIPS Spread 2.26 -2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -34 open in Japan
• DAX Futures: Indicating +4 open in Germany

Portfolio:

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

BOTTOM LINE: Today's overall market action is mildly bullish, as the S&P 500 reverses morning losses and trades slightly higher despite rising Eurozone debt angst, high energy prices, global growth fears and recent equity gains. On the positive side, Oil Tanker, paper, Bank, Hospital, Retail and Airline shares are especially strong, rising more than +.75%. Oil is falling -1.5%, Gold is down -.2% and Copper is rising +.2%. (XLF) is outperforming and the Transports are trading better today with oil's decline. On the negative side, Coal, Steel, Disk Drive and Education shares are under meaningful pressure, falling more than -.75%. Technology shares are underperforming today. The UBS-Bloomberg Ag Spot Index is rising +.86% and Lumber is declining -.95%. The Germany sovereign cds index is rising +2.03% to 82.38 bps, the Japan sovereign cds is rising +1.7% to 124.0 bps, the Israel sovereign cds is gaining +1.5% to 191.83 bps and the Brazil sovereign cds is gaining +2.8% to 139.0 bps. Lumber is -2.5% 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, which is falling another -5 bps to 1.92%, remains a concern considering the recent stock rally, falling Eurozone debt angst and improvement in US economic data. Despite more positive US economic data today, the Philly Fed/ADS Real-Time Business Conditions Index has declined -6.0% over the last 5 days and continues to trend lower from its peak in mid-December. The Western Europe Sovereign CDS Index is still fairly close to its Jan. 9th all-time high. Overall, credit gauge improvement has stalled over the last few weeks and these gauges are still at stressed levels. China Iron Ore Spot has plunged -22.4% since Sept. 7th of last year. Shanghai Copper Inventories are up +687.0% ytd and are still very near their recent all-time high. I still think this is more of a red flag for falling demand rather than the intentional hoarding, which many suggest. Major Asian indices were mostly lower overnight, led down by India’s -2.7% decline. India shares had been one of this year’s best-performers, but have declined -4.6% over the last five days. Major European indices fell around -.5%, led down by a -1.1% decline in Italian stocks. The Bloomberg European Bank/Financial Services Index is down -1.42% today. As usual, US equity dip-buyers appeared in aggressive fashion after opening weakness. Stocks remain extremely resilient to all negative news. I would normally view this as a positive, but with bullish investor sentiment already elevated given the macro backdrop this positive technical action is breeding even more complacency. However, as long as the largest company in the world, market leader (AAPL), continues to trades as if shot from a cannon, it is hard to envision a meaningful market correction materializing. US stocks are still technically extended short-term and are right near intermediate-term resistance, which likely means more sideways action near-term. For an intermediate-term equity advance from current levels, I would still expect to see further European credit gauge improvement, a further subsiding of 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, high energy prices, global growth fears, profit-taking, technical selling, less tech sector optimism and more shorting.

Today's Headlines

Bloomberg:

• Merkel: "Incalculable' Damage If Greek Plan Rejected. Chancellor Angela Merkel won a parliamentary vote on Greek aid after warning German lawmakers that pushing Greece out of the euro would risk “incalculable” damage, defying a public backlash against more bailout funds. In a vote that showed dissent in her coalition growing, 496 members of the lower house, or Bundestag, voted in favor of the 130 billion-euro ($174 billion) package in Berlin; 90 voted against and five abstained. While questions on Greece’s remaining in the euro “have their justification,” Merkel warned that a failure of the euro might endanger the Europe Union and the global economy. “I think those risks are incalculable, and therefore indefensible,” Merkel told lawmakers in the Bundestag today. As chancellor, “I should and have to take risks, but I cannot embark on adventures. My oath forbids that,” she said. Merkel’s government pushed through the measure to stave off a collapse of the Greek economy amid signs of growing resistance and as one of her Cabinet ministers said Greece should leave the single currency. Euro leaders will now shift their focus on whether to bolster the region’s bailout firewall as they prepare for a summit meeting in Brussels on March 1-2.
• Draghi's Unlimited Loans Are No Panacea for Banks: Euro Credit. European Central Bank President Mario Draghi's success in quelling a bond-market rout across the euro region's periphery masks a failure by the region's banks to bolster their capital. The ECB will offer a second round of unlimited three-year funds on Feb. 29. Firms will seek 470 billion euros ($629 billion), approaching the 489 billion euro take-up by 500 banks at the first long-term refinancing operation on Dec. 21, the median estimate of 28 analysts surveyed by Bloomberg show. "The worry is it may act to keep afloat institutions that aren't exactly viable," said Stewart Robertson, chief European economist at Aviva Investors in London, which manages more than $425 billion. "This buys time for banks, but does it really provide them with an incentive to sort out their books? The worry is it doesn't."
  
• Sovereign, Corporate Bond Risk Rises, Credit-Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments climbed two basis points to 346.5 at 8:15 a.m. in London. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increased 7.5 basis points to 582.5, according to BNP Paribas SA. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose two basis points to 132 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 1.5 basis points to 214.5 and the subordinated index rose five to 365.
• Europe Bond Risk 9 Times Higher Than U.S. After Greek Pact. The bailout that rescued Greece from a looming default has failed to restore confidence in credit markets, where traders are paying nine times more to insure European government bonds than they are for Treasuries. While European stocks are off to their best start since 1998, the relative cost of credit default swaps has risen to a record, more than double the July level, according to CMA. To obtain 130 billion euros ($175 billion) in aid to help pay interest on bonds due March 20, Greek Prime Minister Lucas Papademos agreed to reduce debt to 120.5 percent of gross domestic product by 2020 from about 160 percent last year. While chances of defaults and the breakup of the euro may have diminished, investors are no longer rewarding European governments for reducing spending to cut debt as their economies shrink.
• Pending U.S. Home Resales Show Housing Market Regaining Footing: Economy. More Americans than forecast signed contracts to buy previously owned homes in January, indicating the industry that sparked the last recession is improving. The index of pending home resales climbed 2 percent after a 1.9 percent decrease the prior month that was smaller than previously estimated, the National Association of Realtors said today in Washington. The median forecast of 44 economists surveyed by Bloomberg News called for a 1 percent advance.
• Private Equity Funds Expect Credit Access to Worsen, PwC Says. Private equity funds expect the situation in the markets and access to credit to worsen this year, according to a study by PricewaterhouseCoopers LLP. Some 51 percent of the 170 private equity companies included in the study said they believe it will be more difficult to get funding, while 47 percent expect markets to deteriorate, PwC said in an e-mailed statement today. Still, 46 percent forecast rising investment volumes while 37 percent see a higher number of exits in 2012, according to the study.

Wall Street Journal:

• China Plans 'Buy Local' Rule on Government Cars. It adds to the rising number of regulatory restrictions facing foreign auto makers, adding to what some foreign auto executives say is a worrying environment. Previous measures include an increasingly restrictive approval process for expansions and a shift away from efforts to draw foreign capital to the industry.
• Spain Misses Deficit Target. The Spanish government said Monday it missed its 2011 budget-deficit target by a wide margin, highlighting the difficulties in closing one of the euro zone's largest budget gaps as the country's economy entered a new downturn. The Spanish budget ministry said Spain's total public-sector budget deficit stood at 8.51% of gross domestic product last year, above the 8% estimate the new government of Prime Minister Mariano Rajoy gave in December. Spain had been aiming for a budget deficit equal to 6% of GDP in 2011. According to the budget ministry, Spain's regions were responsible for the biggest portion of the 2011 overrun. They had a budget gap equal to 2.94% of GDP, compared to a target of 1.3%. In highly decentralized Spain, the regions control over one third of spending, complicating the government's deficit-reduction push.

CNBC.com:

• Why Gasoline Prices Are So Different Around The US.

Business Insider:

• A Complete Guide to Greece's Selective Default Next Month.
• Fearing a National Collapse, The State of Wyoming is Putting Together a 'Doomsday Bill'.
• Iran Is About To Execute This Man For Converting To Christianity And Everyone Is Outraged.
• UK Chancellor: 'The British Government Has Run Out Of Money'.
• Chart of the Day: By This Measure, Stocks Are Still Incredibly Cheap.
  

Zero Hedge:

• The Perfection of Crony Capitalism: Use Regulation to Destroy Competitors.
• Here Is Why Someone Will Be Disappointed By The LTRO.
  

The Detroit News:

• Detroit Running Out of Cash. City has $76M on hand, could be broke by April, according to figures on website.

Telegraph:

• Bill Clinton and Bradley Manning Nominated for Nobel Peace Prize. A total of 231 nominees are up for the Nobel Peace Prize this year, the Nobel Institute said on Monday, with Bill Clinton, Helmut Kohl, the EU and US soldier and WikiLeaks suspect Bradley Manning known to be on the list.

Bear Radar

Style Underperformer:

• Mid-Cap Value +.01%

Sector Underperformers:

• 1) Coal -2.10% 2) Disk Drives -1.40% 3) Steel -1.10%

Stocks Falling on Unusual Volume:

• PEGA, IBN, HBC, HDB, BCPC, DNDN, NIHD, SKUL, DRQ, INVN and EBS
  

Stocks With Unusual Put Option Activity:

• 1) LNG 2) CBG 3) PHM 4) HYG 5) WDC
  

Stocks With Most Negative News Mentions:

• 1) ANR 2) BHI 3) MCP 4) CPRT 5) NFLX
  

Charts:

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