Stocks Falling into Final Hour on Rising Eurozone Debt Angst, High Energy Prices, Global Growth Fears, Technical Selling

Broad Market Tone:

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

Equity Investor Angst:

• VIX 17.49 +1.33%
  
• ISE Sentiment Index 97.0 -15.65%
  
• Total Put/Call .92 -8.91%
  
• NYSE Arms .90 +8.55%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 94.20 +1.30%
  
• European Financial Sector CDS Index 161.62 +.45%
  
• Western Europe Sovereign Debt CDS Index 346.0 +1.47%
  
• Emerging Market CDS Index 238.07 -1.91%
  
• 2-Year Swap Spread 25.0 -1.25 bps
  
• TED Spread 41.50 +.5 bp
  
• 3-Month EUR/USD Cross-Currency Basis Swap -72.50 -.25 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .06% -1 bp
  
• Yield Curve 171.0 -2 bps
  
• China Import Iron Ore Spot $143.20/Metric Tonne unch.
  
• Citi US Economic Surprise Index 45.10 unch.
  
• 10-Year TIPS Spread 2.24 -4 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +13 open in Japan
• DAX Futures: Indicating -5 open in Germany

Portfolio:

• Slightly Higher: On gains in my Retail sector longs and index hedges
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, 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 on rising Eurozone debt angst, high energy prices, global growth fears, technical selling and profit-taking. On the positive side, Utility, Computer Service and Retail shares are slightly higher on the day. Oil is falling -2.3%. Major Asian indices rose around +.75% overnight, led by a +1.4% gain in Shanghai despite reports that China will stem any new property easing by local governments and some talk of Asian central bank tightening before year-end. Major European indices were mixed today, with the Bloomberg European Financial Services/Bank Index rising +.60%. The Brazil sovereign cds is falling -2.6% to 133.40 bps, the Saudi sovereign cds is down -3.9% to 132.66 bps and the Japan sovereign cds is down -2.78% to 116.94 bps. On the negative side, Education, Road & Rail, HMO, Hospital, Oil Service, Coal, Alt Energy, Construction, I-Banking, Networking, Semi, Energy and Oil Tanker shares are under pressure, falling more than -1.0%. Small-caps are relatively weak again. Copper is falling -.50%. The 10Y T-Note Yield at 1.98%, remains a concern considering the recent stock rally, falling Eurozone debt angst and improvement in US economic data. Despite the recent positive US economic data, the Philly Fed/ADS Real-Time Business Conditions Index has declined -5.08% over the last 5 days and continues to trend lower from its peak in mid-December. Lumber is -4.0% 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 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 -21.0% since Sept. 7th of last year. Shanghai Copper Inventories are up +707.0% 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. The euro currency has traded poorly over the last 3 days. Shares of Yelp(YELP) are soaring +65% today, giving the company a $1.5B market cap. I would not be a buyer anywhere near current levels and this stock’s performance today is another red flag regarding investor sentiment, in my opinion. The Transports, while underperforming today, have outperformed for the week, rising +.97%. However the MS Tech Index underperformed for the week, falling -.63%, despite a +4.6% gain in Apple(AAPL) shares. Stocks are short-term overbought and still near intermediate-term resistance. I would become more aggressive on the long-side after further sideways action and then a convincing break above DJIA 13K and Naz 3K. 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, technical selling and profit-taking.

Today's Headlines

Bloomberg:

• ECB Says Overnight Deposits Surge to Record. The European Central Bank said overnight deposits soared to a record after its second allocation of three-year loans. Financial institutions parked 776.9 billion euros ($1.03 trillion) with the Frankfurt-based ECB. That’s the most since the euro was founded in 1999 and up from 475.2 billion euros a day earlier. Banks get 0.25 percent on the deposits. The ECB this week lent banks 529.5 billion euros for three years in the biggest single refinancing operation in its history, taking total long-term lending above 1 trillion euros. Banks received the funds yesterday and pay the average of the ECB’s benchmark rate -- currently 1 percent -- over the period of the loans. The ECB said 800 financial institutions, more than a third of the 2,267 registered to borrow from it, took part in the operation.
  
• 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 gained two basis points to 339 at 8:30 a.m. in London. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increased four basis points to 562.5, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 0.75 basis point to 127.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased two basis points to 201 and the subordinated index climbed 3.5 to 343.5.
• Troika to Have Permanent Presence in Greece, Wieser Tells Format. The “troika” of the European Commission, International Monetary Fund and European Central Bank will have a permanent presence in Greece, Eurogroup Working Group head Thomas Wieser told Austria’s Format magazine. “A permanent presence of the troika on site to monitor the reforms will definitely be the case for several years,” Wieser was cited as saying. Wieser also told the Vienna-based magazine that he is “optimistic” that the Greek economy will grow again in 2013, “be it at a slow pace.” From the middle of the century, growth will “speed up,” he said according to the report.
  
• EIB Privileges in Greek Debt Plan Spur Complaints From Private Investors. Investors are complaining that the European Investment Bank doesn’t deserve the same exemption from losses on its Greek bond holdings as the euro region’s central bank because it didn’t buy the notes to support monetary policy.
• China to Grow Less Than World Bank Estimates, Dow Jones Reports. China’s economic growth will probably be slower than the World Bank estimates, Dow Jones reported, citing Bert Hofman, the Washington-based lender’s chief economist for East Asia and Pacific. The slowdown in China is happening more rapidly than the World Bank expected and expansion may be less than the 8.4 percent the development lender has projected, according to the report published on the website of the Wall Street Journal, citing Hofman in Singapore today.
• Copper Falls as China's Inventories Rise to Highest Since 2003. Copper futures fell on signs of ample supplies as inventories rose to the highest in at least nine years in China, the world’s biggest consumer of industrial metals. Stockpiles monitored by the Shanghai Futures Exchange climbed 2.5 percent to 221,487 metric tons, the highest since at least January 2003, weekly data showed. The dollar’s rally against a basket of major currencies eroded the appeal of raw materials as alternative investment. “Any sign that China is slowing is certainly going to weigh on commodities across the board,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “The stronger dollar is also a factor.” “Builds in Chinese stocks reflect what is still a weak spot market currently, with consumers keeping buying to an absolute minimum due to uncertainty over future demand levels,” Gayle Berry, an analyst at Barclays Capital, said in a report.
• Crude Drops for First Time in Three Days. Oil fell the most since December as President Barack Obama said a pre-emptive strike on Iran might generate “sympathy” for the Persian Gulf country, easing concern that an attack would take place. Prices fell as much as 2.8 percent after Obama said in an interview with The Atlantic magazine that a strike without warning might allow Iran to portray itself as a victim. Oil for April delivery fell $2.76, or 2.5 percent, to $106.08 a barrel at 1:28 p.m. on the New York Mercantile Exchange. Earlier, prices touched $105.80 a barrel in the largest intraday decline since Dec. 14. Prices are down 3.4 percent this week, the biggest drop since Dec. 16. Brent oil for April settlement slipped $2.41, or 1.9 percent, to $123.79 a barrel on the London-based ICE Futures Europe exchange. It surged to $128.40 yesterday, the highest intraday price since July 2008.
• Buffett's Insurance Growth Engine May Stall. Warren Buffett, the former hedge fund manager who built Berkshire Hathaway Inc. into a $195 billion company by gaining leverage through insurance premiums, said this traditional source of new funds is drying up.
• Yelp(YELP) Surges as Much as 73% in Trade Debut. Yelp Inc. (YELP), the site that lets users review businesses ranging from diners to dentists, surged as much as 73 percent in its first day of trading after selling shares for more than planned in an initial public offering. The stock climbed 64 percent to $24.60 at 11:06 a.m. in New York, after soaring to $26, giving Yelp a market valuation of $1.56 billion. That price is about 19 times Yelp’s annual revenue.

Wall Street Journal:

• Spain Raises Budget Deficit Target. Spanish Prime Minister Mariano Rajoy said Friday his government has raised the budget deficit target for this year to 5.8% of gross domestic product, in what he called a "sovereign" decision that may rile up European Union partners. The new estimate contrasts with the 4.4%-of-GDP target set by Spain's previous left-of-center government, in office until December.
• Copper's Problems Pile Up Quietly.
  
• New Report: Seniors Can't Make Ends Meet. A new report released Thursday for all 50 states, called the Elder Economic Security Standard Index, found that people who are over 65 are struggling to cover basic expenses in all 50 states.
  

CNBC.com:

• Geithner Shows Own 'Amnesia' Over Bank Crisis: Bove. Treasury Secretary Timothy Geithner should have done more to stop the financial crisis before it started, rather than try now to impose unnecessary reforms on the banking system, analyst Dick Bove said.

Business Insider:

• Here's The New Restriction Some Hedge Funds Are Putting On Their Employee's Social Media Activity.
• The Horrific Eurozone Youth Unemployment Chart That Makes Everyone Cringe. (graph)
  

Zero Hedge:

• Foodstamp Use Hits Another Record in December. (graph)
• Who Is Most Exposed To The Oil Price Shock? (graph)
• Bank of America(BAC) Joins Goldman(GS) In Cutting Its Q1 GDP Forecast.
  

Reuters:

• Euro Drops for 3rd Day as Spain Defies EU Fiscal Pact. The euro dropped against the dollar for a third straight day on Friday and was on track for its worst week since mid-December after debt-burdened Spain challenged the European Union's new fiscal pact.

Telegraph:

• Euroland Will Pay For This Monetary Madness. The flood of cheap money from the European Central Bank is storing up grave trouble for the future.
• Debt Crisis: Live. Spain defies Brussels on day leaders sign fiscal pact.

RTHK:

• Fund inflows could cause an asset bubble in Hong Kong after a capital injection into the eurozone banking system, HKMA Chief Executive Norman Chan said.

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.50%

Sector Underperformers:

• 1) Coal -3.74% 2) HMOs -2.0% 3) Gold & Silver -2.0%

Stocks Falling on Unusual Volume:

• SKS, TTEC, CIG, WTI, CCJ, FCX, PSMT, USHS, CCMP, GCOM, BANR, TRS, PEGA, MIND, CINF, IPHS, LSTR, MINI, EXLS, CRDN, FNSR, CEVA, EBIX, GIFI, DXPE, SPPI, WOOF, DPM, GNI, CGV, FPO, CNC, FPO, BX, KRA, DGI, BIG, OMG, AH, TPC and QUAD
  

Stocks With Unusual Put Option Activity:

• 1) NYX 2) XME 3) XLU 4) MPEL 5) AIG
  

Stocks With Most Negative News Mentions:

• 1) ITT 2) LSTR 3) TRV 4) CMA 5) BHI
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth -.10%

Sector Outperformers:

• 1) Airlines +1.68% 2) Computer Hardware +.68% 3) Defense +.45%

Stocks Rising on Unusual Volume:

• CALL, YOKU, WYNN, DAL, ALJ, VLO, SFLY, ASNA, ZNGA, CALL, SINA, FMCN, MITK, SLE, GCO, KMX, FIO, BID, RAX, XLS and ANN
  

Stocks With Unusual Call Option Activity:

• 1) NYX 2) AMRN 3) UUP 4) SIRI 5) TLAB
  

Stocks With Most Positive News Mentions:

• 1) SPLS 2) NOC 3) DAL 4) GD 5) AAPL
  

Charts:

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

Friday Watch

Evening Headlines
Bloomberg:

• Banks Miss Out on Best Bond Market Gains as Fear Trumps Greed: Euro Credit. Europe’s banks, cutting their holdings of euro-area government bonds, are missing the region’s biggest returns. Italian and Irish bonds are leading gains among sovereign debt this year, followed by Belgian and Spanish securities, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Royal Bank of Scotland, Britain’s biggest government-owned lender, Germany’s Commerzbank (CBK) AG and France’s Credit Agricole SA (ACA) have reduced their investments in so-called euro-zone peripheral debt.
  
• EU Speeds Payments to Permanent Aid Fund. European leaders agreed to provide capital faster for the planned permanent bailout fund in a concession to international pressure to strengthen the bloc’s defenses against the debt crisis. Euro governments might pay the first two annual installments into the 500 billion-euro ($666 billion) fund this year and complete the capitalization in 2015, a year ahead of schedule. A decision will come later today.
• Spain Foreclosures Stymied by Nun Make Debt Investors Skittish: Mortgages. With Spain’s economy set to contract in 2012 for the third year out of five and unemployment at 23 percent, banks are increasingly easing terms for customers who are missing payments on mortgages underwritten during the country’s decade-long housing boom. Pressure to renegotiate debt and delays in repossessions are raising doubts that default rates on Spain’s 613 billion euros ($817 billion) of mortgages have stabilized. “It probably is going to be worse than people expect, even though the banks say it’s not a problem,” said Daragh Quinn, an analyst at Nomura International Plc in Madrid, on the outlook for mortgage arrears. “The more they kick the can down the road, the less visibility we have on what is really happening with asset quality.”
  
• Euro Defaults Loom as National Ponzi Schemes 'Run Out of Suckers': Books. Western governments are now poised to repeat that ignoble history, be it through outright default or inflating their debt away, says Philip Coggan in “Paper Promises,” a crisply written look at how the debt crisis may overturn the global economic order. “The massive debts accumulated over the last 40 years can’t be paid in full, and they won’t be paid,” Coggan says. “The debt crises of Greece, Ireland and Portugal are just the start.” With its aging populations and overstretched budgets, the West’s “Ponzi scheme is running out of suckers,” he says.
• China to Stop Local Governments' Property Easing, Securities News Reports. China will stem any new property easing by local governments as the central authority is determined to maintain curbs on housing, Shanghai Securities News reported today. The central government will “absolutely” not allow local authorities to “sing a different tune” on property control policies, the newspaper affiliated with state-run Xinhua news agency said, citing an unidentified director at the country’s housing ministry. Tensions between the two levels of authority will be on show next week as officials gather in Beijing for the annual National People’s Congress starting March 5. China’s local governments have attempted to ease property tightening policies with little success, while Premier Wen Jiabao has maintained that he won’t waver on real estate controls and efforts to bring prices down to a reasonable level. “The central government will not relax its property tightening this year,” Jeffrey Gao, a Shanghai-based analyst at Macquarie Capital Securities, said in a phone interview today. China’s February home prices posted the biggest decline in 19 months as the government pledged to maintain curbs on property, SouFun Holdings Ltd. (SFUN), the nation’s biggest real-estate website owner, said yesterday.
• BRIC Investors Losing as State Companies Forgo Earnings Amid Slower Growth. Investors in the biggest state- controlled companies are being punished with the lowest valuations in six years by emerging-market leaders putting public services ahead of shareholder profits as economies slow.
• Goldman Sachs(GS) Criticized by Judge on Kinder Morgan Conflicts. Goldman Sachs Group Inc. (GS) was rebuked by Delaware Chancery Court Judge Leo Strine for “incomplete and inadequate” handling of a conflict of interest, less than 14 months after the firm finished examining its business practices. Strine, in a ruling yesterday, cited “the disturbing nature of some of the behavior” leading to the terms of pipeline operator Kinder Morgan Inc. (KMI)’s $21.1 billion purchase of El Paso Corp., Goldman Sachs’s biggest takeover assignment last year. The bank, which stands to get a $20 million fee from El Paso, has a $4 billion stake in Kinder Morgan and two employees on its board, both of whom recused themselves from negotiations.
• Oil Rises to $110 on Report of Pipeline Explosion. Oil climbed over $110 a barrel for the first time since May after an Iranian state-run news channel reported an explosion on a pipeline in Saudi Arabia. A Saudi official said no oil facilities were sabotaged. Futures reached $110.55 at 3:17 p.m. in New York after Iran’s Press TV reported on its English-language website that “an explosion has hit oil pipelines in the flashpoint Saudi Arabian city of Awwamiya,” then fell back below $109. Major General Mansour Al-Turki, a spokesman for the Saudi Interior Ministry, said no oil facility in the region has been sabotaged after reports of a fire near the Ras Tanura refinery.
• Asia's Strong Job Market May Limit Policy Easing. Asia’s job markets are holding up even as the European crisis hurts exports, auguring stability in domestic demand that reduces the case for the region’s central banks to add monetary stimulus. “We have tight labor markets across Asia,” said Frederic Neumann, Hong Kong-based co-head of Asian economic research at HSBC Holdings Plc. “Rather than sit back and let inflation rise again, policy makers will want to be proactive and tighten the screws before it becomes a problem. We could even see rate hikes coming through at the end of the year.”
• U.S. Exporters Sell 120,000 Tons of Wheat to Iran, Most Since August 2008. U.S. exporters sold the most wheat to Iran in more than three years, the government said, raising speculation that the Persian Gulf country may be boosting stockpiles after production from last year’s crop declined. The sale of 120,000 metric tons of hard, red winter wheat is for delivery in the marketing year that ends May 31, the U.S. Department of Agriculture said today in an e-mailed statement. The sale was the biggest since Iran purchased 689,310 tons in a deal announced on Aug. 15, 2008. The U.S. hasn’t exported any wheat to Iran since a 54,267-ton shipment was sent in November 2009, USDA data show. Iran’s production of wheat, the country’s biggest crop, fell to 13.75 million tons in 2011, 13 percent less than a year earlier, the USDA estimates. While Iran is facing international sanctions over its nuclear program, U.S. restrictions provide exemptions for “licensed exports of agricultural commodities,” according to the Office of Foreign Assets Control, a division of the Treasury Department.
• U.S. Commercial Paper Falls to Lowest Level Since January 2011, Fed Says. The market for corporate borrowing through U.S. commercial paper declined to the lowest level in more than a year as investors shunned short-term IOUs from financial institutions on investor concern that Europe’s fiscal strains will taint bank balance sheets globally. The seasonally adjusted amount of commercial paper outstanding fell $10.4 billion to $927.2 billion in the week ended yesterday, the third consecutive decrease, the Federal Reserve said today on its website. That’s the longest stretch of declines since the period ended Jan. 4 and the lowest level since the market touched $916.8 billion on Jan. 19, 2011, according to Fed data compiled by Bloomberg. Demand from U.S. money-market funds, among the biggest investors in short-term financial obligations, has been capped by concern that European debt stresses may push the price of these securities lower, even after unprecedented financial aid measures for the area’s banks.
• Iranians Vote in Parliamentary Election. Iranians vote today in the country’s first election since the disputed presidential contest of 2009 sparked mass protests, as sanctions targeting the country’s nuclear program squeeze the economy. Iranian authorities have urged voters to go to the polls in a display of defiance toward the countries that are applying the pressure. The election “will be a slap in the face of enemies of the nation,” Supreme Leader Ayatollah Ali Khamenei said on his website this week.

Wall Street Journal:

• Retailers Join Payment Chase. Two Words: Digital Wallet—Wal-Mart and Target Join Project Aiming to Make Plastic Obsolete.
• Executive Pay Votes Spur Shifts in Policies. Shareholder votes on executive pay are starting to change the shape of compensation at some big companies. A group of institutional investors recently joined forces to seek executive-pay and governance changes at 10 companies where nonbinding "say on pay" votes narrowly passed last year. The informal coalition, led by unions and public pension funds, already has persuaded Allstate Corp., Northern Trust Co. and five other companies to ban "gross-up" payments to executives. Those payments cover taxes executives owe on benefits provided by their employer.
• What's a Splunk? Part of the Next Wave of Start-Ups Going Public. Silicon Valley's initial public offering machine is shifting to a new sweet spot: enterprise technology companies. After a year of high-profile consumer Internet IPOs—from Groupon Inc., LinkedIn Corp. and Zynga Inc. last year to Yelp Inc. and Facebook Inc. now—a slew of Silicon Valley companies that sell technology mainly to businesses are also getting ready to hit the stock market. This new crop of IPO-ready companies are solving problems that businesses are willing to spend money on, such as improved security or better insight into customer behavior.
• Greek Debt Deal Won't Trigger Payouts, for Now. Owners of insurance-like contracts designed to protect against potential losses on Greek sovereign debt won't receive payouts, at least for now, even though the country took steps in its restructuring in recent days that could force private creditors to accept losses on the face value of their bonds, a committee of dealers and investors decided. Thursday's decision marks the first time the panel of experts has held a vote on whether compensation is owed to holders of the credit-default swap protection on Greece.

MarketWatch:

• Japan Household Spending Drops, Jobless Rate Rises. January real spending by households of two or more people dropped 2.3% from a year earlier, the Ministry of Internal Affairs said. The result was well below projections for a 0.8% fall in separate surveys from Dow Jones Newswires and Reuters. January's jobless rate rose to 4.6% from December's 4.5%, with the Dow Jones Newswires survey having called unemployment to remain flat.

Business Insider:

• FBI Director: Hacking Will Replace Terrorism As The Nation's Top Worry.
• In the Middle Of The Euro Crisis, These 12 EU Countries Sunk Even Further Into Debt. Despite the fact that European countries have bailed out Greece and Ireland, and countries like Hungary were facing harsh criticism for not reducing their GDP to debt ratios, new data from Eurostat (pdf) shows that of the 27 countries in Europe, 21 had a higher ratio in the third Quarter of 2011 than the year before. The ratio also increased in both the euro area and the EU27 , compared with the third quarter of 2010. What chance do they have now?
• How Yelp's Business Works.
  

Zero Hedge:

• Juncker Says There Is A "Plan B" If Greek Debt Swap Fails.
• Capturing Sarkozy's Close Encounter Of The Third Estate Kind. (videos)
  

NY Times:

• Greek Crisis May Test the Value of Swaps. The restructuring of Greece’s debt that is scheduled to start next week may well demonstrate how effective credit-default swaps are. These financial instruments, which played a major role in both the 2008 financial crisis and in the European debt crisis, are meant to pay out if a company or country defaults. But the twists and turns over Greece’s debt are revealing their potential limitations for investors who hope the swaps will protect them against losses if Greece defaults.

Forbes:

• Oil Continues to Rise Because the Dollar Continues to Fall. The primary reason that crude oil today – Brent is at $123 per barrel – is higher than its prior average around $20 in the 1990s, or the $3.00 of the 1960s, is that the dollar has lost value over that time.

The Baltimore Sun:

• Breitbart A Provocateur To The End by Jonah Goldberg.

The Hill:

• Gingrich Says Obama Should Fire Energy Secretary For Remark About Gas Prices. Republican candidate Newt Gingrich said President Obama should fire Energy Secretary Steven Chu following his remark this week that reducing gas prices is not the “overall goal” of his agency. Gingrich said President Obama’s continued support for Chu signals a commitment to “his radical ideology, which wants to artificially raise the cost of energy.” “Just this week, Obama’s own Energy secretary, Steven Chu, admitted what we all know is true — that the Obama Energy Department really isn’t trying to lower gasoline prices,” Gingrich said while campaigning Thursday in Georgia.

Rasmussen Reports:

• National GOP: Romney 40%, Santorum 24%, Gingrich 16%, Paul 12%.

Reuters:

• Fed Officials Flag Soft Economy But Mum On Easing. Federal Reserve Chairman Ben Bernanke and other top officials of the U.S. central bank on Thursday highlighted risks to the economic recovery despite recent signs of strength, but offered few hints that any additional monetary stimulus might be needed. Bernanke told lawmakers there was reason to be suspicious of the recent decline in unemployment given the weakness of economic growth. "There's still a bit of a contradiction between the improvement in the labor market and the speed of the overall recovery," Bernanke said in a second day of testimony to Congress. "You've still got consumption spending growing relatively weakly." Two of the Fed's regional presidents, Sandra Pianalto of Cleveland and Dennis Lockhart of Atlanta, also cited the economy's shaky stance, with Pianalto signaling that policy was appropriate for the current environment. "There'd have to be a significant change to my outlook to change my position on policy at this time," she said in rare press briefing.

Financial Times:

• Brazil Declares New "Currency War'. Brazil has declared a fresh “currency war” on the US and Europe, extending a tax on foreign borrowings and threatening further capital controls in an effort to protect the country’s struggling manufacturers. Guido Mantega, the finance minister who was the first to use the controversial term in 2010, said the government would not “sit by passively” as developed nations continue to pursue expansionary monetary policies at the expense of Brazil.

Telegraph:

• EU Finance Chiefs Give Greece $58Bn But Stock Fears Of Default After Delaying Bail-Out Decision.
  

Chosun Ilbo:

• North Korea has several hidden uranium enrichment plants other than the Yongbyon facility, citing a South Korean government official.

Shanghai Securities News:

• China may impose more rules ordering local governments to reinforce property curbs if new easing attempts are made, citing housing ministry researcher Wang Juelin.
  

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are +.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 157.0 -3.5 basis points.
  
• Asia Pacific Sovereign CDS Index 131.50 +2.5 basis points.
• FTSE-100 futures +.13%.
  
• S&P 500 futures -.03%.
  
• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GCO)/1.67
• (BIG)/1.74

Economic Releases

• None of note

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bullard speaking, Fed's Evan speaking, ISM New York for February and the (HW) Investor Day could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted by financial 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 Rising into Final Hour on Less Eurozone Debt Angst, Financial Sector Optimism, Short-Covering, Investor Performance Angst

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Rising
  
• Volume: Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.47 -5.21%
  
• ISE Sentiment Index 120.0 -2.44%
  
• Total Put/Call .94 -10.48%
  
• NYSE Arms .92 -27.09%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 92.99 -.69%
  
• European Financial Sector CDS Index 161.10 -3.69%
  
• Western Europe Sovereign Debt CDS Index 340.41 -2.14%
  
• Emerging Market CDS Index 242.46 -3.36%
  
• 2-Year Swap Spread 26.25 +.25 bp
  
• TED Spread 41.0 +.25 bp
  
• 3-Month EUR/USD Cross-Currency Basis Swap -72.25 -5.25 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .07% -1 bp
  
• Yield Curve 173.0 +4 bps
  
• China Import Iron Ore Spot $143.20/Metric Tonne +.14%
  
• Citi US Economic Surprise Index 45.10 -4.8 points
  
• 10-Year TIPS Spread 2.28 unch.
  

Overseas Futures:

• Nikkei Futures: Indicating +69 open in Japan
• DAX Futures: Indicating +2 open in Germany

Portfolio:

• Higher: On gains in my Retail, Biotech and Tech sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
  
• Market Exposure: 75% Net Long