Stocks Surging into Final Hour on Less Eurozone Debt Angst, More Tech Sector Optimism, Short-Covering, Investor Performance Angst

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.83 -6.45%
  
• ISE Sentiment Index 114.0 +12.87%
  
• Total Put/Call .91 -5.21%
  
• NYSE Arms .67 -16.25%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 96.10 -.08%
  
• European Financial Sector CDS Index 174.32 -4.07%
  
• Western Europe Sovereign Debt CDS Index 349.82 -.80%
  
• Emerging Market CDS Index 237.02 -3.40%
  
• 2-Year Swap Spread 25.50 -.25 bp
  
• TED Spread 39.75 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -64.0 +.5 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .08% unch.
  
• Yield Curve 171.0 +4 bps
  
• China Import Iron Ore Spot $142.60/Metric Tonne -.28%
  
• Citi US Economic Surprise Index 45.60 -1.3 points
  
• 10-Year TIPS Spread 2.26 +4 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +75 open in Japan
• DAX Futures: Indicating +27 open in Germany

Portfolio:

• Higher: On gains in my Tech, Retail, Medical and Biotech sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 100% Net Long

Today's Headlines

Bloomberg:

• Greece Restructuring Deadline Looms as Bond Investors Signal Swap Accord. The Greek government’s deadline for the biggest sovereign restructuring in history approached with a majority of investors signaling their readiness to participate in the debt swap. The euro and stocks gained before the offer’s close at 10 p.m. in Athens today as Greek Prime Minister Lucas Papademos told his Cabinet ministers that Greece had made “an appropriate framework with significant incentives” for bondholders. “For this reason I look forward to the maximum possible participation of the private sector,” Papademos said, according to an e-mailed transcript of his comments. Finance Minister Evangelos Venizelos told Parliament that “a historic process will be completed tonight,” and the results announced tomorrow.
• Draghi Lays Groundwork for ECB Stimulus Exit as Inflation Takes Spotlight. European Central Bank President Mario Draghi signaled he’s done enough to battle the sovereign debt crisis, laying the groundwork for an eventual exit from record-low interest rates and emergency lending measures. Declaring that the environment “has improved enormously” and there are “many signs of returning confidence in the euro,” Draghi turned the spotlight instead on “upside risks” to inflation, which is now forecast to remain above the ECB’s 2 percent limit this year. That suggests policy makers don’t plan to cut rates further or add to their 1 trillion euros ($1.32 trillion) of long-term loans to banks, economists said.
• Greek Swap Seen Provoking Aftershocks on Borrowing: Euro Credit. Greece’s day of reckoning with bondholders dawns with economists from Barclays Capital to Deutsche Bank AG concerned that the world’s largest debt restructuring will provoke aftershocks. Eight months of negotiations reach a head with today’s deadline for private creditors to accept a bond swap aimed at writing off 106 billion euros ($140 billion) of Greek debt. The government vows to bind holdouts to the deal should participation fall short of its target. Possible repercussions include a surge in borrowing costs for other indebted nations as investors refuse to lend to countries that may follow suit in imposing losses on bondholders. The accord may also trigger derivatives designed to insure against default, and may not be enough to prevent Greece from reneging on its debts in the coming years. “We have to be on alert for all kinds of potential risks surrounding this,” said Julian Callow, head of international and European economics at Barclays Capital in London. “We are in such unknown territory here by the sovereign debt standards of advanced economies that we have to pay attention.”
  
• Citigroup European Debt Chief Says Greek Euro-Exit Risk Remains. Greece risks being forced to exit the euro even with private investors agreeing to the biggest sovereign-debt restructuring in history, said Citigroup Inc. (C)’s head of European government-bond trading. “The private-sector involvement will be no panacea for Greece and unlikely to lead to debt sustainability,” Zoeb Sachee said in an e-mailed response to questions. New Greek bonds received in exchange for existing securities will probably trade between 22 percent and 27 percent of face value depending on their maturities, Sachee said. That would reflect the risk of “further PSI or default,” or a “euro-zone exit,” he said.
• Mersch at ECB Would Back German Criticism, Sueddeutsche Says. Yves Mersch is the top candidate to succeed Jose Manuel Gonzalez-Paramo on the management board of the ECB, as he is backed by Germany, France, and smaller European nations including Finland, Austria, and the Netherlands. Naming Mersch to the post would mean backing for criticism voiced by Bundesbank chief Jens Weidmann that the ECB too carelessly handed hundreds of billions of euros to ailing nations while accepting dubious guarantees in return, the newspaper said.
• Sovereign, Corporate Bond Risk Falls Before Greek Debt Exchange. The cost of insuring against default on European sovereign and corporate debt fell as Greece moved closer to completing its debt swap. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments dropped 5 basis points to 349 at 1 p.m. in London. The Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings fell 7 basis points to 581, according to JPMorgan Chase & Co. A decline signals improved perceptions of credit quality. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings was down two at 133 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers declined one basis point to 214 and the subordinated gauge was two lower at 356.5.
• Household Net Worth Rises For First Time in 3 Quarters. Household wealth in the U.S. climbed from October through December for the first time in three quarters as an increase in stock prices outstripped a decline in home values. Net worth for households and non-profit groups increased by $1.19 trillion in the fourth quarter from the previous three months to $58.5 trillion, the Federal Reserve said today in its flow of funds report from Washington. Housing wealth decreased by the most in more than a year. The value of household real estate fell by $367.4 billion, the first decrease in three quarters. Owners’ equity as a share of total household real-estate holdings dropped to 38.4 percent last quarter from 38.9 percent. Mortgage borrowing decreased at a 1.5 percent pace, the 11th consecutive drop. Other forms of consumer credit, including auto and student loans, climbed at a 6.9 percent pace, the biggest gain in at least seven years. Total non-financial debt climbed at a 4.9 percent annual pace last quarter, led by a 13 percent increase by the federal government and a 4.6 percent gain among businesses. State and local government borrowing dropped at a 1 percent pace.
• Crude Oil Rises a Second Day on Signs Sanctions Are Cutting Iran Exports. Oil rose for a second day in New York on signs that sanctions on Iran are succeeding in cutting the nation’s crude exports. Futures climbed as much as 0.9 percent, adding to yesterday’s 1.4 percent increase. U.S. lawmakers proposed new measures against Iran’s nuclear program, while Barclays Capital said shipments from the Persian Gulf nation have dropped by 300,000 to 400,000 barrels a day. Oil for April delivery gained as much as $1 to $107.16 a barrel in electronic trading on the New York Mercantile Exchange and was at $106.76 at 12:56 p.m. London time. Prices are 8 percent higher this year. Brent oil for April settlement was at $125.16, up $1.04 on the London-based ICE Futures Europe exchange.
• Oil Rallies More From Dollar Outlook Than Iran: Chart of the Day. Higher oil prices may have more to do with the dollar's outlook than with tensions related to Iran's nuclear program, according to Jack Ablin, chief investment officer at Harris Private Bank. Yesterday's price of $106.16 a barrel for deliveries next month of West Texas Intermediate, the benchmark U.S. crude, was .063 times the price of April gold futures. The ratio was less than the monthly average of .071 since 1985, according to Bloomberg. The relatively low number shows oil is rising "on the prospect of a debased dollar" as the Federal Reserve seeks to bolster real-estate and stock prices, Ablin wrote. Higher costs for crude "are a by-product of one of the Fed's intended consequences: asset inflation."
  
• Gold Futures Advance as Greek Rescue Spurs Demand for Dollar Alternative. Gold rose for a second day on signs that investors are buying the precious metal as an alternative to a slumping dollar. The U.S. currency fell for a second day against the euro as Greece moved closer to completing its debt swap. European Central Bank President Mario Draghi said inflation will probably breach the bank’s 2 percent limit this year even as the economy stalls.
• Airline Passenger Growth Limited by Economy Until 2015, FAA Says. A sluggish economy and higher fuel prices will hold down airline growth until 2015, according to a U.S. Federal Aviation Administration forecast.
• Obama Lobbies Senate Dems to Head Off Keystone Pipeline Amendment. President Barack Obama, seeking to head off an election-year showdown over energy policy, has been calling wavering Senate Democrats to lobby against a Republican measure that would force approval of the Keystone XL oil pipeline from Canada. With a vote coming as soon as today, the president has made personal appeals to Democrats from Midwestern states, where many of the jobs would be created by building TransCanada Corp. (TRP)’s pipeline from Canada’s oil sands to refineries on the U.S. Gulf Coast, according to a Senate Democratic aide, who spoke on condition of anonymity to discuss the private conversations. White House press secretary Jay Carney confirmed Obama’s calls while declining to identify who was targeted by the effort.
• Ayatollah Khamenei Says Obama's Iran Comments Are 'Good Words'. Iran's Supreme Leader Ayatollah Ali Khamenei said President Barack Obama's comments that there is room for diplomacy in the international community's standoff with Iran are "good words."
• Obama Faces Swing State Anger Over Gas Prices. Voters in some U.S. swing states are feeling the pinch of rising gasoline prices more than those in states that tend to vote Democrat, posing a challenge to President Barack Obama’s re-election, according to a report. Gasoline in Florida, Michigan, Nevada and Pennsylvania costs more than the national average of $3.76 a gallon, Trevor Houser, a partner at the New York-based policy analysis firm Rhodium Group, said yesterday in a report. Consumers in Iowa, New Mexico and Ohio spend more on gasoline as a percentage of their personal income than the national average.
• Jobless Claims in U.S. Rose 8,000 Last Week. The number of Americans filing claims for jobless benefits rose to 362,000 last week, a level consistent with an improving labor market. Applications for unemployment insurance payments increased by 8,000 in the week ended March 3, Labor Department figures showed today. Economists forecast 352,000 claims, according to the median estimate in a Bloomberg News survey. The average over the past four weeks held close to a four-year low.

Wall Street Journal:

• Goldman(GS) Begins Hedge Fund Wind-Down. Goldman Sachs began this month unwinding its investments in hedge funds to comply with the Volcker Rule’s ban on banks holding more than 3% of the assets of any single fund. The process will take more than two years. It will redeem up to 10% of its stakes in certain hedge funds each quarter over ten consecutive quarters, starting in March 2012 and ending in June 2014.

CNBC.com:

• Jobs Report: Warm Winter May Boost February Number.
• S&P: China Developers Close to 'Downgrade Thresholds'.
• Apple's(AAPL) New iPad Is 'Pretty Much a Home Run': Analyst.
  

Business Insider:

• US Soldier in Afghanistan Says It's Outrageous That Obama Apologized For Koran Burnings. Several U.S. soldiers have been killed. And on Monday, a suicide bomber blew himself up at the entrance of Bagram Airfield in retaliation for the incineration of Islam's holy book. "The insurgents used the Koran to write jihadists messages to pass to others. In doing so, they violated their own cultural practice and defiled the Koran." The holy books were confiscated from a U.S. prison, Parwan Detention Center at Bagram Airfield, after they were discovered to contain extremist messages and were mistakenly taken out with the office trash. Sgt. Shively continued, "The insurgents turned the Koran into contraband. Therefore it’s ridiculous that we would even consider apologizing.”
• Here's Apple's(AAPL) First Ad For The New iPad. (video)
  

Zero Hedge:

• Presenting Europe's Schizophrenia Post LTRO. (graphs)
• Greek "Fresh Start" Bonds Face Immediate 80% Loss, 98% Probability Of Redefault.

Forbes:

• Americans Love McDonald's(MCD) But Overseas Growth Is Slowing. McDonald's overseas sales growth slowed last month. Americans though couldn’t get enough of the Golden Arches. The growth slip was most noticeable in Asia, the Middle East and Africa, where comparable store sales growth fell by 1.6%. Weak consumer demand in Japan and the Chinese lunar New Year hampered efforts there, the company said today. European sales growth suffered too, falling by 0.9%. The emerging markets decline are likely the most troubling factor for investors. Emerging markets are largely seen as a potential gold mine for all retailers—especially so for low-cost food chains that can easily appeal to rapidly expanding populations.

TreasuryDirect:

• US Taxpayers Spent $454Billion+ Just on Debt Interest in 2011.

TheStreet.com:

• Big Banks Bleed Best and Brightest to Hedge Funds. While the Volcker Rule hasn't yet been implemented, buy-side analysts, traders and investment managers are already leaving the big banks to strike out on their own.

Reuters:

• Egypt Parliament to Reject Govt in Vote - Muslim Brotherhood. The Egyptian parliament is likely to declare it has lost confidence in the government of Prime Minister Kamal al-Ganzouri via a formal vote, Muslim Brotherhood leaders said on Thursday, a move that will add to pressure on the ruling military council to appoint a cabinet led by the group. Emboldened by its success in parliamentary elections, the once-banned Brotherhood has become more critical of the Ganzouri cabinet which is set to govern until the end of June according to a timetable drawn up by the ruling generals.

AP:

• Homeless Household Levels Up by 14%. The number of households classed as homeless increased by 14% last year, Government figures have revealed. Some 48,510 applications for homelessness assistance were approved by councils, up from 42,390 in 2010. Among them were 69,460 children or unborn babies, the statistics from the Department for Communities and Local Government showed. Leslie Morphy, chief executive of homeless charity Crisis, said: "Our worst fears are coming to pass.

Cinco Dias:

• Most Spanish regions consider it will be impossible to meet the budget deficit targets set for this year by the central government of Prime Minister Mariano Rajoy, citing private conversations with officials.

The Australian:

• US Offers Israel Bombs To "delay" Iran Attack. THE US offered Israel advanced weaponry in return for it committing not to attack Iran's nuclear facilities this year, according to an Israeli report last night. Citing unnamed Western diplomats and intelligence sources, the report in the Maariv daily said that during Prime Minister Benjamin Netanyahu's visit to Washington this week, the US administration offered to supply Israel with advanced bunker-busting bombs and long-range refuelling planes. In return, Israel would agree to put off a possible attack on Iran until next year, after the US elections in November. The issue of Iran was top of the agenda at talks between Mr Netanyahu and US President Barack Obama in Washington this week.

Tencent:

• China should raise tolerance for small- and medium-sized companies' non-performing loans to about 5%, citing Yang Ziqiang, governor of China's central bank's Jinan branch.

Securities Times:

• Home prices in China's seven or eight major cities must decline, citing Housing Minister Jiang Weixin. If home prices rise further at current rates and the property market bubble bursts, the impact on the economy will be "very large," Jiang said.

Bear Radar

Style Underperformer:

• Large-Cap Value +.39%

Sector Underperformers:

• 1) Restaurants -1.10% 2) REITs -.81% 3) Coal -.40%

Stocks Falling on Unusual Volume:

• AIG, GRPN, WSM, MW, NLY, NAV, GMCR, MCD, FSYS, WSM, SMTC, HITK, DNDN, AGNC, ASPS, JOSB, KIRK and CALL
  

Stocks With Unusual Put Option Activity:

• 1) ELN 2) ZION 3) BAX 4) ABC 5) SIRI
  

Stocks With Most Negative News Mentions:

• 1) BK 2) VNO 3) CVX 4) AMZN 5) LMT
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +.88%

Sector Outperformers:

• 1) Homebuilders +1.78% 2) Agriculture +1.49% 3) Gaming +1.29%

Stocks Rising on Unusual Volume:

• TKC, DB, MDVN, CLNE, MITK, ARMH, CTXS, FTK, COH, CIEN, ARUN and FIO
  

Stocks With Unusual Call Option Activity:

• 1) CCL 2) CMCSK 3) MWW 4) WSM 5) MSI
  

Stocks With Most Positive News Mentions:

• 1) AEO 2) MCD 3) CIEN 4) HOTT 5) SQNM
  

Charts:

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

Thursday Watch

Evening Headlines
Bloomberg:

• Investors With 60% of Greek Bonds Agree to Swap. Investors with about 60 percent of the Greek bonds eligible for the nation’s debt swap have so far indicated they’ll participate, putting the country on the verge of the biggest sovereign restructuring in history. Greece’s largest banks, most of the country’s pension funds, and more than 30 European banks and insurers including BNP Paribas (BNP) SA, Commerzbank AG (CBK) and Assicurazioni Generali SpA (G) have agreed to the offer. That brings the total to about 124 billion euros ($163 billion), based on data compiled by Bloomberg from company reports and government statements. The goal of the exchange is to reduce the 206 billion euros of privately held Greek debt by 53.5 percent and turn the tide against the debt crisis that has roiled Europe for more than two years. While Greece would prefer a voluntary deal, the government has said it will use collective action clauses to force holders of Greek-law bonds into the swap if the so-called private sector involvement falls short and it gets sufficient approval from investors to change the bonds’ terms. “Adding up the commitments to participate in the Greek PSI, it is now clear that the CAC hurdles will very likely be cleared,” Commerzbank’s head of fixed-income strategy, Christoph Rieger, said in a note yesterday. Under the rules of the exchange, investors holding at least 50 percent of the eligible bonds must vote on the swap, and 66 percent of those must agree to amend the bonds to enable the government to impose the collective action clauses, Rieger said. The offer ends at 10 p.m. Athens time today.
  
• ECB's Inflation Radar May Limit Scope to Lower Rates as Recession Looms. Inflation is back on the European Central Bank’s radar, complicating efforts to bolster growth as the sovereign debt crisis pushes the economy toward recession. The ECB will lift its 2012 inflation forecast above the 2 percent price-stability threshold today, limiting its ability to cut interest rates further even as it lowers the outlook for growth, economists said. Policy makers in Frankfurt will keep the benchmark rate at a record low of 1 percent, 55 of 58 economists in a Bloomberg News survey predict. The decision is due at 1:45 p.m. and ECB President Mario Draghi will unveil the bank’s new economic projections at a 2:30 p.m. press conference. “Draghi’s message won’t be a particularly pleasant one,” said Klaus Baader, chief euro-area economist at Societe Generale SA in London. “The ECB will breach its inflation limit for another year and the economic outlook hasn’t brightened significantly. That’s tying their hands on rates for now.”
• Emerging-Market Stocks in Deepest Losing Streak of Year on Greek Debt Swap. Emerging-market stocks fell, completing the worst three-day slump since November, as concern Greece’s debt swap won’t get enough investor support and prospects Chinese exports are dropping damped appetite for riskier assets. The MSCI Emerging Markets Index (MXEF) retreated for a third day, losing 0.3 percent at the close in New York to 1,037.71, the lowest since Feb. 1. The three-day loss is the steepest since Nov. 23.
• Oil Trades Near Two-Day High as Iran Tension Counters Rising U.S. Supplies. Oil traded near the highest price in two days as speculation that sanctions on Iran are cutting supplies countered signs of weakening fuel demand in the U.S., the world’s biggest crude consumer. Futures were little changed after gaining 1.4 percent yesterday. U.S. lawmakers proposed new sanctions against Iran’s nuclear program, while Barclays Capital said shipments from the Persian Gulf nation have dropped by 300,000 to 400,000 barrels a day. London-traded Brent’s premium to New York crude was near the widest in almost a month. Crude supplies at Cushing, Oklahoma, climbed to the highest level since July. “We’ve seen that differential between Brent and West Texas blow out again and that’s further evidence to suggest that there are supply concerns” because of Iran, said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “The demand picture is certainly looking weaker.” Oil for April delivery was at $106.12 a barrel, down 4 cents, in electronic trading on the New York Mercantile Exchange at 2 p.m. Sydney time. The contract yesterday increased $1.46 to $106.16 a barrel, the highest close since March 5. Prices are 7.4 percent higher this year. Brent oil for April settlement was at $124.05, down 7 cents, on the London-based ICE Futures Europe exchange.
• Fed Debt-Purchase Approach May Hurt Rather Than Help, RBC's Cloherty Says. A plan reported to be under discussion by the Federal Reserve to spur the economy while keeping a lid on inflation would drive up short-term interest rates, according to Royal Bank of Canada’s Michael Cloherty. Fed officials are considering a program in which the central bank would buy long-term mortgage or Treasury bonds and effectively tie up the money by borrowing it back for short periods at low rates, the Wall Street Journal reported without citing sources. The approach would keep excess money out of the system and head off inflation, damping criticism by opponents of earlier Fed efforts to support the economy, the newspaper said. Such a plan would be “one of the more perplexing policy steps in this crisis” because it would encourage banks to invest their reserve balances in the Treasury repurchase- agreement market, said Cloherty, head of U.S. interest rate strategist at RBC Capital Markets in New York, one of 21 firms that trade with the Fed. This would offset much of the benefit of the low interest rates the Fed has maintained. “Executing this policy would have a sizable distortions and open a number of questions that the Fed doesn’t want opened,” Cloherty said in an interview. The plan “would do dramatically more harm than good.”
• Drones Move Closer to Flying in Civilian Airspace. Drone aircraft moved closer to taking flight in U.S. civilian airspace as regulators issued a call for advice on establishing test sites. The Federal Aviation Administration said today it wants drone makers and the public to comment on where to locate proving grounds and their management, according to a filing in the U.S. Federal Register’s Public Inspection Desk. “Unmanned aircraft can help us meet a number of challenges, from spotting wildfires to assessing natural disasters,” Transportation Secretary Ray LaHood said in a statement. “These test sites will help us ensure that our high safety standards are maintained as the use of these aircraft becomes more widespread.”
• China Puts Jump to Three-Year High as Dominance Shrinks: Options. China's shrinking dominance over global economic growth is driving trading in the options market, which the cost to protect against losses in the nation's biggest companies is the highest compared with the U.S. since 2008. Options on the Hang Seng China Enterprises Index of 40 companies from PetroChina Co. to China Construction Bank Crop. cost the most since the collapse of Lehman Brothers Holdings Inc. when compared with contracts on U.S. stocks. The difference, or skew, shows investors are increasingly bearish on the index of Hong Kong-traded China shares.
• Asia Faces Headwinds With Greece Debt Deal. Australian employers unexpectedly cut jobs, South Korea’s central bank warned of “downside” risks to growth and Japan reported an increasing reliance on energy imports that threatens to damp its economic rebound. Today’s indicators highlighted headwinds for the Asia- Pacific region’s expansion as policy makers evaluate whether to add to stimulus implemented in recent months. With inflation pressures remaining, South Korean and New Zealand officials kept benchmark interest rates unchanged and Indonesia was forecast to do the same. “Global trade has slowed so Asian countries heavily reliant on exports are certainly suffering,” said Annette Beacher, the Singapore-based head of Asia-Pacific research at TD Securities Inc., a unit of Canada’s second-largest bank.
  

Wall Street Journal:

• Iran Steps Up Rights Abuses, U.N. Says. Iran has dramatically increased executions over the past decade and abused the rights of students, women, journalists and religious minorities, according to a new United Nations report that spotlights Tehran's crackdown on domestic dissent as the country faces an international clampdown over its nuclear ambitions.
• Greek Debt Restructuring Expected to Put CDS Market to Test. It isn't yet known if Greece's debt restructuring will trigger payouts on insurance-like contracts called credit-default swaps covering the government's debt. But if it does, it will touch off the biggest-ever CDS auction for sovereign bonds and determine how much banks and others will have to pay to settle the swaps.
• U.S. Warns Apple(AAPL). The Justice Department has warned Apple Inc. and five of the biggest U.S. publishers that it plans to sue them for allegedly colluding to raise the price of electronic books, according to people familiar with the matter.
• Emerging-Market Engines Falter. Fresh signs of economic weakness in Brazil are adding to a growing worry for the global economy: that the emerging markets that have boosted growth in recent years are slowing. That is a big concern amid the drag of the European debt crisis and a sluggish U.S. recovery. Brazil, China, Russia, India and South Africa are among the dynamic economies that helped the world bounce back from the 2008 financial crisis. This time around, they seem less likely to provide the same boost as they deal with problems such as strong currencies, inflation, deficits and real-estate bubbles.
• Facebook(FB) Beefs Up Its IPO Roster. Facebook Inc.'s march toward its highly anticipated initial public offering is now coming with a lot more help. On Wednesday, the social network said in a new disclosure document that it added 25 underwriters to an original group of six for its IPO, as the company also boosted its financial muscles with a new credit line and bridge loan. In addition, it offered more information on where it derives its revenue.
• General Motors(GM) Recalls Vehicles in China. General Motors Co. will recall 18,204 imported vehicles in China because of problems with the cars' anti-lock braking systems, China's quality control agency said in a statement dated Wednesday.

MarketWatch:

• Tough Climate, Dilemmas for China's Small Business. The problems have indeed been mounting in recent months among the nation’s small businesses, the most vulnerable of China’s private sector players. Labor supplies are strained, driving up wages. Credit access is tight, as banks prefer big and state-owned companies. Production and raw materials costs are rising. Customers are in arrears. And brutal competition for clients at home as well as abroad is making for razor thin profits, if any.

Business Insider:

• China Isn't Playing Fair, And Neither Should We.
• Goldman(GS) Reveals The Frustrating Reason That Big Government Debts Slow The Economy.
  

Zero Hedge:

• China Moves To Further Marginalize Dollar: Offers CNY-Denominated BRIC Loans.
• Iran Nuclear Site 'Clean-Up' Raises Suspicions Further.

CNBC:

• Consumer Credit Surges 8.6%, Mostly on Student Debt. The American consumer is levering-up again, as consumers borrowed more for everything from student loans to cars. Consumer credit jumped 8.6 percent, or $17.7 billion, in January to $2.54 trillion, the Federal Reserve reported. It was the fifth straight month that borrowing increased and the largest gain since 2004.
• US Eyes Summers and Rice for World Bank: Sources. Former White House adviser Lawrence Summers, diplomat Susan Rice and PepsiCo CEO Indra Nooyi are on a "short list" of possible U.S. candidates to head the World Bank, a person with knowledge of the Obama administration's thinking said on Wednesday.

NY Times:

• Auto Overcapacity Gives Leaders Another Issue to Ponder. While Europe has been preoccupied with the euro crisis, another storm has been gathering that could also take a grievous toll on jobs and growth. Just as Europe has too much debt, it also has more automobile factories than the economy can support. The overcapacity is not exactly a secret, but judging from the talk at the Geneva auto show this week, a long-postponed reckoning is nigh.
• Cost of Gene Sequencing Falls, Raising Hopes for Medical Advances. In Silicon Valley, the line between computing and biology has begun to blur in a way that could have enormous consequences for human longevity.

Washington Post:

• Greek Debt Write-Down: The Era of Risk-Free Government Bonds Nears Its End.

CNN:

• AIG(AIG) Bailout: $42 Billion To Go. The Treasury Department is selling $6 billion worth of its AIG stock at a profit. But it's still not clear taxpayers will come out ahead on the insurer's bailout.
• Wells Fargo(WFC) to Charge $7 Fee On More Checking Accounts.
  

Reuters:

• Japan GDP Contraction Eases, Current Account in Red. Japan's economy shrank less than initially estimated in the fourth quarter as companies ramped up capital expenditure, but the current account swung to a record deficit in January as a shift away from nuclear power pushes up fossil fuel imports. The revision to GDP showed a 0.2 percent contraction, bang in line with the median market forecast as companies look to an increase in demand due to reconstruction of the country's tsunami-battered northeast coast.
• Proview Shenzhen Asks China Distributors to Halt iPad Sales. Proview Technology, which is battling Apple over the iPad trademark in China, has asked Chinese distributors to stop selling the popular tablet PC after the U.S. technology giant launched the latest version of its iPad. The move is the latest twist in a long-running lawsuit between the world's most valuable technology company and the Chinese firm, a unit of near-bankrupt Proview International Holdings Ltd, but was expected to have little impact on the case.
• US Senate Democrat Proposes Ban on Keystone Pipeline Fuel Exports. A Democratic U.S. senator proposed on Wednesday to ban exports of oil from the proposed Keystone XL crude pipeline from Canada and require U.S. iron and steel be used to build it, part of an effort to derail a Republican plan that would fast-track the project.
• Korn Ferry(KFY) 3Q Misses Estimates; Outlook Weak. Korn/Ferry International Inc posted lower-than-expected quarterly results, hurt by higher expenses, and the U.S. executive search company forecast fourth-quarter earnings below Wall Street expectations. Korn/Ferry, which competes with Heidrick & Struggles International Inc, expects fourth-quarter earnings of 24 cents to 30 cents a share, excluding items. Analysts, on average, were expecting earnings of 31 cents a share, according to Thomson Reuters I/B/E/S. Shares of the Los Angeles-based company were down nearly 3 percent in trading after the bell.

Telegraph:

• Triple Trouble in Europe, US and China Brings Out The Bears. Graham Secker from Morgan Stanley said it is rare for global stocks, oil prices and government bonds to rise in lockstep, and such exuberance becomes a "very reliable sell signal for stocks" once speculators join the party.

South China Morning Post:

• Port of Shanghai Sees A Slowdown. In a sign of slowing global trade, the throughput of Shanghai, the world's busiest port, turned out to be weaker than expected in the first two months of this year. Shanghai's container throughput rose 3.6 per cent to 4.8 million twenty foot equivalent units (teus) in January and February, while cargo throughput grew 7 per cent to 76.16 million tonnes, according to the website of Shanghai International Port Group, the port operator. Given that Shanghai's container throughput enjoyed 7 per cent to 9 per cent year-on-year growth in the second, third and fourth quarters last year, a growth of 3.6 per cent falls short of expectations, said Nomura analyst Jim Wong. Combining the data of January and February and eliminating the distorting effects of the Lunar New Year, Wong said: "This year people are more cautious. They are delaying things all over the world. Factories in China stayed closed for a longer period." Willy Lin Sun-mo, chairman of the Hong Kong Shippers' Council, said: "At this moment, the forecast is it's going to be a very difficult season in the first six months of this year." He added: "The overall sentiment is still weak. People still don't have much confidence in the market. "The global economy is not very dynamic, and the Chinese government just lowered its GDP forecast to 7.5 per cent this year.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are +.50% to +1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 164.50 -5.5 basis points.
  
• Asia Pacific Sovereign CDS Index 133.50 -1.75 basis points.
• FTSE-100 futures +.17%.
  
• S&P 500 futures +.13%.
  
• NASDAQ 100 futures +.10%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SFD)/.65
• (HITK)/.83
• (WSM)/1.13
• (NAV)/-.27
• (BKE)/1.15
• (JW/A)/.94
• (ZUMZ)/.59
• (COO)/1.04
• (ZQK)/-.10
• (ULTA)/.67
• (ARO)/.38

Economic Releases
8:30 am EST

• Initial Jobless Claims are estimated at 351K versus 351K the prior week.
• Continuing Claims are estimated to fall to 3400K versus 3402K prior.
  

Upcoming Splits

• (RES) 3-for-2
  

Other Potential Market Movers

• The Challenger Job Cuts report for February, Greek Bond Swap Deadline, BoE rate decision, ECB rate decision, weekly Bloomberg Consumer Comfort Index, RBC Consumer Outlook Index for March, weekly EIA natural gas inventory report, (HUN) investor day, (XOM) analyst meeting, China CPI/Fix Asset Investment/Industrial Production/PPI/Retail Sales, UBS Tech Conference, (ALTR) Mid-Quarter Update and the (TXN) Mid-Quarter Update could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted by technology and financial 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 Euro Bounce, US Economic Data, Short-Covering, More Financial/Tech Sector Optimism

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 19.34 -7.33%
  
• ISE Sentiment Index 100.0 +31.58%
  
• Total Put/Call 1.01 -2.88%
  
• NYSE Arms .91 -62.12%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 96.18 -1.40%
  
• European Financial Sector CDS Index 174.32 -1.70%
  
• Western Europe Sovereign Debt CDS Index 352.40 -.13%
  
• Emerging Market CDS Index 245.0 -2.63%
  
• 2-Year Swap Spread 25.75 -1.75 bps
  
• TED Spread 39.75 -.75 bp
  
• 3-Month EUR/USD Cross-Currency Basis Swap -64.50 +2.25 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .08% +1 bp
  
• Yield Curve 167.0 unch.
  
• China Import Iron Ore Spot $143.0/Metric Tonne unch.
  
• Citi US Economic Surprise Index 46.90 -.6 point
  
• 10-Year TIPS Spread 2.22 +4 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +74 open in Japan
• DAX Futures: Indicating -5 open in Germany

Portfolio:

• Higher: On gains in my Tech, Retail, Medical and Biotech sector longs
  
• Disclosed Trades: None
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 trades near session highs despite yesterday's swoon, rising energy prices, a reversal lower in (AAPL), an inline ADP jobs report and rising global growth fears. On the positive side, Homebuilding, Semi, Networking, Bank and Disk Drive shares are especially strong, rising more than +1.5%. Financial and Tech shares have traded well throughout the day. Copper is rising +.9% and the UBS-Bloomberg Ag Spot Index is down -1.1%. Major European indices are rising around +.50%, however Spanish shares are flat. Spain remains the worst-performing index Europe and is now down -4.7% ytd, which is a red flag for the region. The Bloomberg European Financial Services/Bank Index is rising +1.01%. The Italy sovereign cds is falling -2.5%, the Russia sovereign cds is down -2.4% to 188.60 bps and the UK sovereign cds is down -3.9% to 65.33 bps. On the negative side, Steel, Utility, Alt Energy, Airline, REIT and Paper shares are lower-to-flat on the day. Oil is rising +1.5%, Gold is gaining +.65% and Lumber is down -1.2%. The 10Y T-Note Yield at 1.97%, 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 10 days and continues to trend lower from its peak in mid-December. Lumber is -5.5% 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 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 +711.0% 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 fell around -.75% overnight, led lower by a -1.4% decline in Australian shares. This article in China Daily is openly hostile towards the real estate industry and seems to indicate that tightening measures on the industry are likely to stay in place for some time. Stocks are rebounding from morning lows on a bounce in the euro, an inline ADP jobs report and rumors that the Fed is considering a new “sterilized” QE program. I doubt that the Fed would embark on this given the current macro backdrop. In my opinion this would prove a big mistake as it would boost inflation expectations too much, thus harming the economy later in the year. Its unlikely recent stock weakness has already run its course and I will be looking for signs of another move lower by next week at the latest. 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 Eurozone debt angst, rising energy prices, rising global growth fears, more shorting and profit-taking.