Today's Headlines

Bloomberg: 

• Euro Exports Fell in Fourth Quarter as Slump Deepened: Economy. Euro-area exports fell in the fourth quarter for the first time in more than three years and investment declined as the sovereign debt crisis pushed the region deeper into a recession. Shipments from the euro area dropped 0.9 percent in the last three months of 2012, helping to drive gross domestic product down 0.6 percent, the European Union’s statistics office in Luxembourg said today. Exports last declined in the second quarter of 2009. Imports also fell 0.9 percent in the fourth quarter. “Real economic activity is yet to show major improvement in many countries and it looks highly likely that growth will remain a major struggle for the euro zone for some time to come,” Howard Archer, chief European economist at IHS Global Insight in London, wrote in a note today.
• Bersani Says Recession Emergency as He Bids for Premiership. Democratic Party leader Pier Luigi Bersani called on Beppe Grillo’s anti-establishment Five Star Movement and Prime Minister Mario Monti’s coalition to back his efforts to form a government based on a program of easing austerity in recession-wracked Italy. The nation’s priority is getting “out of the austerity cage,” Bersani, whose bloc won the most votes in inconclusive election last month, told about 100 members of the party’s top body in Rome today. Italy’s next government should be an “active protagonist of a rectification of the European policies for stability,” he said.
• Monti Won’t Back Italian Government That Threatens EU Reforms. Italian Prime Minister Mario Monti said he won’t back a new government that would threaten his country’s commitments to the Europe Union and that Italy should hold a new vote rather than install an administration that could reverse fiscal discipline. In his most detailed comments since Feb. 24-25 elections produced a hung parliament and saw his coalition win less than 10 percent of the vote, Monti said none of Italy’s political parties is capable of addressing the country’s problems. “If the alternative is a government oriented to interrupting Italy’s European path or the way of reforms, I believe it would be better to hold new elections,” Monti said at a press conference in Rome today.
• Kuroda to Hit ‘Wall of Reality’ at BOJ, Ex-Board Member Says. Haruhiko Kuroda will have limited options for aggressive easing if he’s confirmed as central bank governor as more Japanese government bond purchases heighten the risk of a market bubble, a former BOJ policy board member said. “Kuroda will hit the wall of reality,” Atsushi Mizuno, vice chairman at Credit Suisse AG in Tokyo and a member of the BOJ board from 2004 to 2009, said in an interview today. “Increased bond buying would cause over-dependence on the BOJ and that’s not healthy for the market. I see the risk of a JGB bubble.”
• AIG Betting on Homeowners as Benmosche Chases Yield: Mortgages. American International Group Inc., the insurer that was rescued by the U.S. government in 2008 after soured bets on mortgage securities, is building a unit to buy individual home loans amid a rebound in the housing market. AIG plans to buy loans backed by its United Guaranty Corp. unit, the largest seller of traditional private mortgage insurance last year, according to Donna DeMaio, 54, the unit’s chief executive officer. The debt will be held as long-term investments by AIG insurance companies.
  AIG has boosted investment in U.S. property markets less than five years after real-estate wagers forced the government to rescue the insurer, once the world’s largest. The Fed had to step in after AIG sold derivatives to banks protecting them against losses on housing debt, with the U.S. bailout reaching $182.3 billion.
• Too-Big-to-Fail Banks Limit Prosecutor Options, Holder Testifies. The size of the largest financial institutions has made it difficult for the U.S. Justice Department to bring criminal charges, Attorney General Eric Holder said. Criminal charges against a bank -- something that could threaten its existence -- may also endanger the national or global economies in the case of the largest ones, because of their size and interconnectedness. That has “made it difficult for us to prosecute” some of those institutions, Holder said today at a Senate Judiciary Committee hearing.

Wall Street Journal:

• Honeywell's(HON) Hiring Is Bleak. Conglomerate's CEO Says Job Growth Won't Pick Up Until GDP Growth Tops 3%. Honeywell International Inc. Chief Executive David Cote says job growth won't improve much until U.S. economic growth tops 3%, in a bleak outlook for employment as the economy continues to bump along.
• House Approves Stopgap Budget Deal. The U.S. House on Wednesday voted to extend spending cuts that went into effect on March 1 and keep the government operating for the remainder of the fiscal year, which ends on Sept. 30. The legislation is necessary to keep the federal government open after current funding runs out on March 27. It would keep in place automatic spending cuts known as the sequester for all federal agencies, while giving the Defense and Veterans Affairs departments more flexibility in setting spending priorities.
• Syrian Rebels Seize U.N. Forces in Golan Height. Around 20 United Nations peacekeepers in the Golan Heights were abducted by a Syrian rebel group, which said it would keep them as hostages unless the Syrian government withdraws its forces from the region within 24 hours, a U.N. spokesman said Wednesday. "The U.N. Disengagement Observer Force, or Undof, has reported that, earlier today, approximately 30 armed fighters stopped and detained a group of around 20 peacekeepers" in the demilitarized zone patrolled by the U.N., said U.N. spokesman Farhan Haq in New York. 
• CIC President Warns Japan on Yen Devaluation. The president of China's giant sovereign-wealth fund warned Japan against using its neighbors as a "garbage bin" by deliberately devaluing the yen, joining a growing number of Chinese officials sounding alarms about a potential currency war. "I would hope that it doesn't do that as a responsible government," Gao Xiqing, president of China Investment Corp., said in an interview with The Wall Street Journal on Wednesday. He was responding to questions about worries among some finance ministers and central bankers that the new Japanese government would devalue its currency to boost exports at other countries' expense.
• Chávez Death Opens Uncertain Period. Crowds of weeping supporters surrounded the flag-draped coffin of President Hugo Chávez Wednesday as it was escorted through the streets of the capital, with many in this deeply divided nation mourning the loss of a man they considered their champion and others hoping for change after 14 years of populist policies.

Fox News:

• Obama Falls Farther Behind in Spending Fight. “So it is our opinion that however you manage that reduction, you need to make sure you are not contradicting what we said the impact would be.” -- An email from USDA official Charles Brown rejecting a subordinate’s suggestion of a way to lessen the consequences of budget cuts for citizens. Americans have a government that now claims the power to execute its own citizens on its own soil without trial but that cannot find a way to afford public tours of government buildings.

CNBC: 

• Retail Investor Sentiment Near All-Time High: TD Ameritrade. "Retail investors and professionals are both bullish on stocks," said Tom Bradley, president of retail distribution at TD Ameritrade on "Squawk on the Street." "Bullish sentiment is definitely high," he added, citing a TD Ameritrade index on sentiment of both retail and professional investors.

Zero Hedge: 

• ADP Beats As Small Businesses Respond To Payroll Tax Cash Crunch By Hiring More. (graph)
• One Hundred And Eighteen Million Dollars An Hour.
• Yet Another Funny Chart: January Factory Orders Confirm Manufacturing Slump Continues. 
• European Crisis Over? Not So Fast. (graphs)
• A Look at U.S. Taxes and Hauser's Law.

Business Insider: 

• FED SURVEY: Businesses Say They're Hiring Less And Laying Off Workers Because Of Obamacare. 
• REPORT: Carl Icahn Is Snapping Up A BIG Position In Dell, And Will Oppose The Buyout Deal. 
• GOOGLE(GOOG): US Government Spying Has Risen 122 Percent. 
• CHART OF THE DAY: A Stock Market Trend Has Developed That Coincided With The Last 3 Recessions. 
• BofA(BAC): NYSE Margin Debt Is Generating A Sell Signal We Haven't Seen In Three Years. (graph)

Propublica:

• After Sandy, Government Lends to Rebuild in Flood Zones. The Small Business Administration has approved the restaurant for a disaster loan of almost $1 million. There’s just one problem: Newly drawn FEMA flood maps show the cafe is at high risk of flooding again, raising the question of whether it makes sense to rebuild there or move elsewhere.

Reuters:

• China blames manipulation for iron ore price surge. China's top economic planning agency lashed out at the world's top three iron ore miners on Wednesday, accusing them and some traders of manipulating the market to drive an 80 percent rally in ore prices in just six months. "The three major miners and some traders have delayed shipments and held back cargoes to control supplies in order to send a fake market signal that there was a supply shortage," according to a report published on the National Development & Reform Commission (NDRC) website.
• DBRS downgrades Italy's debt rating over political uncertainty. Credit-rating agency DBRS downgraded Italy's debt to A (low) from A with a negative outlook on Wednesday, the first downgrade of the heavily indebted country since elections last month produced a political stalemate. 
• American Eagle Outfitters(AEO) outlook soft. American Eagle Outfitters Inc on Wednesday gave a profit forecast that fell short of Wall Street expectations and said same-store sales would fall in the current quarter, a setback for a company that has been winning market share from rivals. Shares were down 10.2 percent to $20.26 in late morning trading.
• Euro slides vs dollar as ECB seen signaling future easing.

 eFXNews:

• Italy 'Too Big To Ignore'; Needs EUR To Fall To 1.19 To Make A Good Recovery - Morgan Stanley. The message provided by the Italian electorate is also a cry for economic growth, especially by the younger generation. The ECB may have to listen.

Telegraph:

• French and Italian debt chiefs warn on EU Tobin Tax. Officials in charge of managing French and Italian public debt have warned that Europe’s ‘Tobin Tax’ on financial trades risks damaging the sovereign bond market and may prove self-defeating.

Handelsblatt:

• BDI's Grillo Sees Potential Return to Crisis. Ulrich Grillo, president of Germany's BDI industry association, cites developments in Italy and France. The Italian elections and deindustrialization of France show the danger, Grillo said in an interview.

CNTV:

• China's property control measures may get "stricter," citing Housing and Urban-Rural Development Minister Jiang Weixin. China won't cancel its latest property curbs "for awhile," Jiang said.

Shanghai Securities News:

• People's Bank of China adviser Qian Yingyi said today that he can't rule out an interest rate increase this year. China faces "very big" pressures in achieving M2 growth target of 13% and CPI growth target of 3.5%, Qian said.

Bear Radar

Style Underperformer:

• Large-Cap Growth -.22%

Sector Underperformers:

• 1) Oil Tankers -1.42% 2) Retail -.87% 3) Road & Rail -.78%
  

Stocks Falling on Unusual Volume:

• SOHU, QIHU, TV, BTI, RBS, BKU, ARII, TEO, LGCY, PHI, HAFC, CSX, AVAV, ARI, TFM, O, FWRD, NCS, AEO, WD, JAKK, PER, SPLS, YOKU, CYOU, JCP, MFB, SQM, FGP, BKU, GTLS, MR, CWH, SDT, MITT, FGP, LOGM and HPY

Stocks With Unusual Put Option Activity:

• 1) ITB 2) MTG 3) AEO 4) IYR 5) XRT
  

Stocks With Most Negative News Mentions:

• 1) COG 2) SQM 3) ARO 4) VNO 5) NVDA
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.06%

Sector Outperformers:

• 1) Gold & Silver +2.90% 2) Gaming +1.28% 3) HMOs +.90%
  

Stocks Rising on Unusual Volume:

• PBR, VIP, CTCM, ENOC, FCX, MHO, HCI, PAY, GRA, AEGR, BIG, BSFT, TIBX, WPRT, TRIP, FSLR, CLDX and LCC

Stocks With Unusual Call Option Activity:

• 1) ALXA 2) SYK 3) SPLS 4) NDAQ 5) XLNX
  

Stocks With Most Positive News Mentions:

• 1) DF 2) BBY 3) OSIS 4) MW 5) XOM

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Wednesday Watch

Evening Headlines 
Bloomberg: 

• Merkel Looks East for Austerity Allies in Talks With Hollande. German Chancellor Angela Merkel is turning east as she pushes plans for a more competitive Europe, seeking to bring on board the leaders of Poland and other eastern countries as allies elsewhere prove hard to find. Merkel and French President Francois Hollande, the key players in the euro-area debt crisis, travel to Warsaw today for talks on closer European Union integration with Polish Prime Minister Donald Tusk and his peers from the Czech Republic, Slovakia and Hungary. The six leaders are due to hold a joint news conference at about 4 p.m. Warsaw time. 
• Merkel’s Working Poor Pose Election-Year Dilemma as Divide Grows. Every Saturday, about a hundred people arrive in a silent procession at a small church in the north of Berlin, armed with empty shopping carts. Some smoke, others play with their children as they wait patiently to be called for the packets of noodles, vegetables and cans of soup that are handed out. They are Germany’s poor, come for out-of-date food that has been collected from supermarkets by the Laib und Seele charity. “It’s scary, nearly every week more people sign up who can’t make ends meet,” Antje Grund, a local coordinator for the charity, said in a Feb. 23 interview while preparing some of the 900 kilograms (2,000 pounds) of food that are doled out each week. “There are pensioners and unemployed, but even people who have a job and a regular income come to us to get food.”
• Chavez Legacy of Polarized Venezuela Endangers Smooth Transition. Venezuela faces political infighting and the risk of unrest after the death of Hugo Chavez, whose personal brand of socialism left the region’s biggest oil exporter polarized and among the world’s most violent countries. As government control of the economy spread, Chavez’s critics blamed the nationalization of more than 1,000 companies or their assets, currency controls and price caps for discouraging investment, creating food shortages and fueling inflation. The former paratrooper’s departure after 14 years in office opens up a void, even after the cancer-stricken leader in December urged supporters to elect Vice President Nicolas Maduro to succeed him if he couldn’t fulfill a term that began Jan. 10. 
• China Agrees to Additional UN Sanctions on North Korea. North Korea and its ruling elite are facing additional sanctions after the U.S. and China agreed on a United Nations Security Council resolution punishing the Communist nation for its February nuclear test explosion. U.S. Ambassador to the UN Susan Rice announced the agreement yesterday after a meeting of the council, which plans to adopt the measure with a vote later this week. Russia, which like China has veto-power, also supports the sanctions, Russian UN Ambassador Vitaly Churkin said in comments reported by the RIA news agency.
• Rubber Trades Near Two-Month Low on Demand Outlook Concerns. Rubber futures traded close to the lowest level in more than two months as investors remained cautious about demand growth prospects. The contract for delivery in August dropped as much as 0.4 percent to 286.4 yen a kilogram ($3,074 a metric ton) and was at 287 yen on the Tokyo Commodity Exchange at 12:17 p.m. local time. Futures closed at 283.9 yen on March 4, the lowest since Dec. 20.
• Traders Flee Asia Hedge Funds as Job Haven Turns Dead End. Paul Smith moved from London to Hong Kong to work in Asia’s hedge-fund industry almost 17 years ago, and he rode the boom to its peak. Last year, like other industry veterans, he quit. “I decided not to wait the cycle out but to do something more productive with my time,” said Smith, 53, who remains in the city heading the Asia-Pacific office of the nonprofit CFA Institute, the global association of chartered financial analysts. “The hedge-fund industry in Asia will continue to struggle to raise funds for the next few years as banks continue to have liquidity issues.”
• Sharp Said in Talks for 10 Billion Yen Samsung Investment. Sharp Corp. (6753), the unprofitable Japanese electronics maker, is in talks to obtain an investment of about 10 billion yen ($107 million) from Samsung Electronics Co. (005930), according to two people familiar with the situation.

Wall Street Journal: 

• Venezuela Leader Chávez Dies at 58. Hugo Chávez, a former tank commander turned populist politician who used Venezuela's oil riches to challenge the U.S. with his fiery brand of socialism, died Tuesday from complications related to cancer. With Mr. Chávez just months into his fourth term, his death plunged Venezuela into political uncertainty. The foreign minister said Mr. Maduro, as expected, would take over for Mr. Chávez until an election is held within 30 days. But some in the ruling party disputed that, saying it should be the head of the assembly. The Supreme Court declined to immediately weigh in on the controversy.
• ADP CFO: Companies Accelerated Bonuses at Year-End to Lower Taxes. Companies heavily accelerated bonuses and payroll at the end of last year to avoid higher tax rates on personal income in 2013, a move which could take a bite out of overall wage growth figures this year, according to Automatic Data Processing Inc. Chief Financial Officer Jan Siegmund. When the Commerce Department in January said bonus payments that were shifted into 2012 from this year helped push personal income in the U.S. 2.6% higher in December, it confirmed what Mr. Siegmund had known was coming for months.
• New York City Leads Jump in Homeless. An average of more than 50,000 people slept each night in New York City's homeless shelters for the first time in January, a record that underscores an unsettling national trend: a rising number of families without permanent housing. Families have become a larger share of the nation's homeless population, growing 1.4% from 2011 to 2012, after their numbers fell as the economy emerged from recession. In Boston, authorities said there were 1,166 homeless families in December 2012, up 7.8% from the previous year. In Washington, D.C., homeless families grew 18% from 2011 to 2012, according to the U.S. Department of Housing and Urban Development. The numbers in New York, however, are starker, according to a report to be published Tuesday by the Coalition for the Homeless, a New York advocacy group, citing New York City government figures. More than 21,000 children—an unprecedented 1% of the city's youth—slept each night in a city shelter in January, an increase of 22% in the past year, the report said, while homeless families now spend more than a year in a shelter, on average, for the first time since 1987. In January, an average of 11,984 homeless families slept in shelters each night, a rise of 18% from a year earlier.
• White House Asked Gensler to Stay at CFTC. The Obama administration has asked Gary Gensler to serve a second term as the U.S.'s top futures-industry regulator, according to people familiar with the matter. The question now is whether Mr. Gensler will say yes. Mr. Gensler, who heard from the White House in January, hasn't decided whether he will stay as chairman of the Commodity Futures Trading Commission. Instead, he is interested in taking on a role as a senior economic official elsewhere in the administration, these people say.
• Fed Holds Ground on 'Stress Test' Releases. Banks Argued Against the New Plan to Issue Results in Two Components, a Week Apart, Citing Possible Stock Volatility. Large U.S. banks and the Federal Reserve are clashing over the two-part "stress test" release schedule adopted this year, in the latest flash point between large financial institutions and their overseers. A conference call last week between Fed officers and bank representatives ended with the central bank refusing to accommodate demands from some lenders for a one-day release of results, according to a person briefed on the call.
• Copper Market Prepares for a Flood. Price of the Industrial Metal Has Plunged Amid Forecasts of the Biggest Increase in Output in 13 Years. The copper market is bracing for a wave of new mine openings this year. Copper prices recently fell to three-month lows as investors and traders anticipate an onslaught of supplies, estimated to be the biggest increase in global copper mine output in 13 years. At the same time, the outlook for growth in copper demand remains dim: The No. 2 and No. 3 users of the industrial metal, Europe and the U.S., continue to face economic headwinds.
• #SequesterThis. Meat inspectors have to go, but fine wines are still on the USDA menu. In its bid to make the sequester as painful as possible, the White House announced Tuesday that it is canceling all visitor tours of the White House "during the popular Spring touring season." This fits President Obama's political strategy to punish the eighth graders visiting from Illinois instead of, say, the employees of the Agriculture Department who will attend a California conference sipping "exceptional local wines" and sampling "tasty dishes" prepared by "special guest chefs."

Fox News: 

• Obama administration hit for giving Egypt $250M as domestic spending cuts take hold. The Obama administration is facing criticism for giving $250 million in aid to Egypt while saying the recent sequester has forced drastic cutbacks elsewhere in the budget -- including forcing the release of "low-priority" illegal immigrants from jail. 

CNBC:

• Oil Industry Mulls Next Steps for Venezuela. Venezuelan President Hugo Chavez's death is not likely to result in near-term changes to the Venezuelan oil industry or global energy landscape, but it could ultimately result in political change that would reopen the country's energy industry to foreign investment.
• Paulson's Gold Fund Limps Forward. Gold is up 70 percent since hedge-fund manager John Paulson turned bullish in the spring of 2009. So why has Paulson & Co.'s dedicated gold fund suffered double digit declines?

Zero Hedge:

• Europe Is Drowning Under Too Much Government. (graphs)
• QE Is "Unsustainable And Unfair To Those Who Work For A Living".
• Today's Other All Time High: Smith And Wesson(SWHC) Gun Sales.
• Janet Napolitano Dazed And Confused About What Sequester Really Means.
• The NINJAs Are Back: Buy Life Insurance, Get A No Doc Mortgage Loan For Free.
• Dear American: It's An "Extraordinary Circumstance" And This Drone's Coming For You.

Business Insider:

• Six Bizarre Taxes That Congress Could Pass This Year.
• DEMOCRATIC CONGRESSMAN: Hugo Chavez Was 'Committed To Empowering The Powerless'.
• THE BIG EASY: Here's Jeff Gundlach's Huge New Presentation On Government Intervention And The State Of World Markets.
• White House Report On Sequester Cuts Will Make You Sick.
• LAKSHMAN ACHUTHAN: Look At These Charts And Tell Me We're Not In Recession.

Reuters: 

• EMERGING MARKETS-Brazilian stocks fall on rates speculation.
• Unpaid bills, pensions loom large in new Illinois budget. Illinois Governor Pat Quinn will unveil a fiscal 2014 budget on Wednesday that will chip away at a huge pile of overdue bills and cut spending to accommodate growing public pension costs, top state officials said on Tuesday. 
• Google(GOOG) tests same-day delivery, raising marketplace speculation. Google Inc began testing a same-day delivery service with retailers in recent weeks, the latest move into Amazon.com Inc's e-commerce turf by the world's largest Internet search company. Google Shopping Express helps local retail stores sell products online and have the items delivered to shoppers the same day, according to a person familiar with the test.  
• Italy president mulls new technocrat government-sources. President Giorgio Napolitano is considering appointing a new technocrat government led by a non-politician as one way out of Italy's political stalemate, Italian officials said on Tuesday. Such a solution would come into play if centre-left leader Pier Luigi Bersani failed to form a government after receiving an initial mandate from Napolitano, as is expected, they said.

Telegraph:

• The gap between rich and poor will continue to grow until we give up on QE. 
• Cypriot crisis deepens as 'haircut' fears drive capital flight. Capital flight from Cyprus has accelerated since eurozone politicians began threatening losses for bank depositors, and may have reached 12pc of the country's GDP over the last month.  

Hong Kong Economic Times:

• Centaline Founder Says Hong Kong Property Curbs 'Last Straw'. Shih Wing Ching said the latest round of property measures is the "last straw to break the camel's back" and will lead to "big adjustments" in prices. Transaction volumes may fall by half, Shih said.

South China Morning Post: 

• Dry Cargo Bulk Shippers to Remain Under Pressure. China Merchants Group Chairman Fu Yuning says he doesn't expect the problem of excess capacity to be resolved this year.

Shanghai Securities News:

• The China Banking Regulatory Commission will issue new rules on housing loans following property curbs announced last Friday by the State Council, citing Chairman Shang Fulin.

China Securities Journal:

• China Should Use Property Tax to Curb Speculation. Property control suppresses prices, preventing it from rising too quickly which will impact macroeconomic and social stability, citing a commentary by Mei Xinyu, a researcher with the Ministry of Commerce.

Evening Recommendations 
Oppenheimer:

• Rated (UPS) Outperform, target $95.

• Rated (FDX) Outperform, target $124.

Night Trading

• Asian equity indices are +.25% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 106.0 -3.5 basis points.

• Asia Pacific Sovereign CDS Index 84.0 -1.0 basis point.

• FTSE-100 futures -.05%.

• S&P 500 futures +.05%.

• NASDAQ 100 futures unch.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AEO)/.56
• (BF/B)/.70
• (PETM)/1.21
• (DYN)/-.46
• (SPLS)/.45
• (TFM)/.44
• (BIG)/1.98
• (KFY)/.29
• (HOV)/-.10  

Economic Releases
8:15 am EST

• The ADP Employment Change for February is estimated to fall to 170K versus 192K in January.

10:00 am EST

• Factory Orders for January are estimated to fall -2.2% versus a +1.8% gain in December.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +788,000 barrels versus a +1,130,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,000,000 barrels versus a -1,857,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,000,000 barrels versus a +557,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.4% versus a +2.2% gain the prior week.

2:00 pm EST

• Fed's Beige Book 

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Fisher speaking, Fed's Plosser speaking, Eurozone gdp report, Canadian rate decision, weekly MBA mortgage applications report, Cowen Healthcare Conference, Wedbush Tech/Media/Telecom Conference, (HON) investor conference and the (XOM) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are 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 50% net long heading into the day.

Stocks Surging into Final Hour on Less Eurozone Debt Angst, Diminishing Global Growth Fears, Short-Covering, Tech/Homebuilding Sector Strength

Broad Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• VIX 13.55 -3.35%
  

• ISE Sentiment Index 114.0 unch.

• Total Put/Call 1.13 -.88%

• NYSE Arms .65 -18.97%

Credit Investor Angst:

• North American Investment Grade CDS Index 83.06 -1.90%

• European Financial Sector CDS Index 151.82 -4.55%

• Western Europe Sovereign Debt CDS Index 100.79 -.69%

• Emerging Market CDS Index 239.60 -.98%

• 2-Year Swap Spread 14.0 unch.

• TED Spread 20.0 +.25 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -17.25 +2.75 bps

Economic Gauges:

• 3-Month T-Bill Yield .08% -1 bp

• Yield Curve 165.0 +1 bp

• China Import Iron Ore Spot $145.20/Metric Tonne -2.42%

• Citi US Economic Surprise Index 6.30 +1.1 points

• 10-Year TIPS Spread 2.56 +1 bp

Overseas Futures:

• Nikkei Futures: Indicating +145 open in Japan

• DAX Futures: Indicating -20 open in Germany

Portfolio: 

• Higher: On gains in my retail/biotech/tech/medical sector longs 
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• Grillo Says Party to Vote Only for 5 Star Italian Government. Italy’s Five Star Movement will only provide voting support for a new government that it leads, said the populist group’s founder, Beppe Grillo. Five Star “won’t back a technocratic government” in a vote of confidence, Grillo said today in a post on his website, commenting on possible support for an administration of non- elected figures. “The only solution we propose is a government of the 5 Star,” Vito Crimi, the head of the party’s senators, said in the same post.
• Euro-Area Services Output Contracts Less Than Estimated. Euro-area services output shrank less than initially estimated in February, adding to signs the currency bloc’s economy may be beginning to emerge from a recession. An index based on a survey of purchasing managers in the euro-area services industry fell to 47.9 from 48.6 in January, London-based Markit Economics said in a report today. That’s above an initial estimate of 47.3 published on Feb. 21. A reading below 50 indicates contraction. Euro-area retail sales rose the most in three years in January, separate data showed.
• Qualcomm(QCOM) Boosts Dividend by 40%, Sets $5 Billion Buyback. Qualcomm Inc. boosted its dividend by 40 percent and set up a $5 billion share buyback plan, rewarding investors after rising demand for smartphones that run on its technology spurred sales growth. The quarterly cash dividend will increase to 35 cents from 25 cents, Qualcomm, the largest seller of semiconductors for mobile phones, said in a statement today. The new share repurchase plan replaces an older $4 billion plan that had $2.5 billion remaining.

MarketWatch:

• Druckenmiller says ‘it’s going to end very badly’. Hedge-fund legend Stan Druckenmiller suggested Tuesday that the market’s current surge could continue for a while, but is likely to end — and end badly.

CNBC:

• Why China's Property Market Is Getting Scary. 
• Dow Breaks Record but Party Likely Won't Last.

Zero Hedge:

• China's "State Of The Union" Address Warns Of Tepid Growth, Sees Larger Deficit, Hawkish On Housing. 
• The Last Time The Dow Was Here...
• Non-Manufacturing ISM Has Highest Print Since February 2012, 8 Beats In A Row. 
• FBI And SEC Team Up To Take Down HFT. 
• China's Wahaha Billionaire Says Capital Markets "Suck".

Business Insider: 

• JPMORGAN: The 'Slowdown In Consumer Spending Has Arrived'. 
• Scary New Satellite Pictures Of China's Ghost Cities. 
• GOLDMAN(GS): Apple(AAPL) Is The Most Undervalued Stock We Cover.

iMore:

• iPhone 5S planned for August, next iPads may debut as soon as April. iMore has learned that Apple is planning the release of the iPhone 5S for this summer, currently for August. Next generation iPads, presumably the iPad 5 and potentially the iPad mini 2, may also debut as soon as this April.

Reuters:

• Italy February Services PMI 43.6, MNI Says. France February Services PMI 43.7, MNI Says. Euro-Area February Composite PMI 47.9, MNI Says.