Bear Radar

Style Underperformer:

• Large-Cap Value +.25%

Sector Underperformers:

• 1) Steel -1.16% 2) HMOs -.98% 3) Internet -.60%
  

Stocks Falling on Unusual Volume:

• NQ, CLF, SBUX, VALE, JCP, PHI, SD, SLCA, ETFC, KW, NTI, VRA, ABCO, ZMH ,QIHU, HBI, HITT, WLT, WAC, NUE, OFIX, GPRE, ADES, CSII, DDD, SXL, WPRT, KMT, LUFK, FFIV, CNC, ETFC and TWGP

Stocks With Unusual Put Option Activity:

• 1) AET 2) JNPR 3) MGM 4) TSO 5) ULTA
  

Stocks With Most Negative News Mentions:

• 1) CCL 2) LUFK 3) TIF 4) CNC 5) HRB
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.05%

Sector Outperformers:

• 1) Gaming +1.38% 2) Homebuilders +1.33% 3) Hospitals +1.03%
  

Stocks Rising on Unusual Volume:

• SFY, BPFH, REXX, VIPS, MW, FTK, CVLT, EBIX, MGM, TEF, DYN, CONN, LNG and SAVE

Stocks With Unusual Call Option Activity:

• 1) SYNA 2) ETFC 3) ETP 4) SLM 5) LNG
  

Stocks With Most Positive News Mentions:

• 1) HTZ 2) VALE 3) BA 4) HOS 5) MMC

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Thursday Watch

Evening Headlines 
Bloomberg: 

• Cameron Ignores ‘Rubbish’ Stories, Focusing on Economy. Prime Minister David Cameron, speaking after three weeks of reports of lawmakers questioning his leadership, said he ignores such “rubbish” and is focusing on securing the U.K.’s international economic competitiveness. Cameron saw the U.K.’s top credit rating downgraded last month and his party, already behind in the polls for a year, was pushed into third place in a special election, stoking criticism of his leadership. Following Cabinet revolts over spending plans and alcohol pricing, he hit back last night, saying his Tory party and voters need to concentrate on the longer-term goal of restoring economic growth.

• Merkel's Reform Crown Slips at Home as She Turns Europe German. The political heirs to a decade-old strategy that turned Germany into the economic powerhouse of Europe risk squandering the gains. Ten years to the day since Gerhard Schroeder unveiled a welfare and labor-market overhaul that economists credit with reinvigorating the Germany economy, his Social Democratic Party is backtracking while his successor as chancellor, Angela Merkel, may not be doing enough to keep the reform flame alive. 

• China Stocks in Hong Kong Fall, Drop 10% From Recent Peak. Chinese stocks fell in Hong Kong, dragging the benchmark index down 10 percent from its peak, amid concern the government will take steps to avert asset bubbles. Haitong Securities Co. paced declines by brokerages in Hong Kong, while China Life Insurance Co. dropped to a six-month low. Country Garden Holdings Co. (2007) slumped 4.6 percent, leading losses by developers. Beijing will strengthen reviews of homebuyers’ qualifications to purchase property in the city amid real estate curbs, the China Securities Journal reported, citing an unidentified person. “Not-too-ample liquidity and the weak economic recovery are a very bad combination for stocks,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. The Hang Seng China Enterprises Index (HSCEI) retreated 0.8 percent at 10:50 a.m. in Hong Kong. The gauge is poised to enter a correction after losing 10 percent from its Feb. 1 high. 

• Little Chance of Better China-Japan Ties Now, Global Times Says. There is almost “no possibility” that China and Japan will restore ties to the level they were before an island dispute so long as Prime Minister Shinzo Abe remains in power, the Global Times newspaper said. China should aim to force the Abe government to negotiate over islands in the East China Sea claimed by both sides, the paper said in an editorial. Doing so would be a strategic victory though it could create the risk of war, the state-run newspaper said. The deputy head of China’s mapping agency said surveyors will land on the island at an “appropriate time,” China National Radio reported March 12. “China needs to give up its dreaming and should be tough in response to Abe’s toughness,” the Chinese-language editorial said.

• China Money-Market Rate Rises as Zhou Signals Inflation Concern. China’s money-market rate rose to a one-week high after central bank Governor Zhou Xiaochuan said yesterday the nation should be on “high alert” over inflation. “The PBOC is still withdrawing liquidity” said Weisheng He, a Shanghai-based strategist at Citigroup Inc. “The authorities are somewhat concerned about rapid monetary growth.” The seven-day repo rate, which measures interbank funding availability, climbed six basis points, or 0.06 percentage point, to 3.08 percent as of 10:45 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center.

• Hong Kong Banks Boost Rates as Government Cools House Market. HSBC Holdings Plc (HSBA) and Standard Chartered Plc (2888) raised Hong Kong mortgage rates for the first time since 2011, after the banking regulator tightened risk rules on concern a property bubble may undermine financial stability. The lenders will raise home loan charges priced at the best lending rate by 25 basis points, starting today, they said in separate e-mailed statements yesterday.

• Bank of Korea Holds Rates as Government Eyes Stimulus Steps.

• Industrial Metals Retreat Amid Tightening Concerns in China. Lead declined from the highest level in more than a week as copper and zinc dropped after China’s central bank governor’s comments on inflation signaled a heightened focus on controlling prices. Lead for delivery in three months lost as much as 0.7 percent to $2,235 a metric ton on the London Metal Exchange and was at $2,239 at 10:49 a.m. in Shanghai. Copper fell 0.2 percent to $7,772 a ton and zinc dropped 0.3 percent to $1,977 a ton. “Concerns over China’s macro economy persist,” Li Peng, an analyst at Guotai Junan Futures Co., said by phone from Shanghai. “Real estate is a so-called ‘pillar’ industry to the Chinese economy and has a great impact on metals demand.”

• Rebar Tumbles to Lowest in Three Months After Iron Ore Slumps. Steel reinforcement-bar futures in Shanghai declined for a seventh day to the lowest level in three months after the raw material used in steel making fell. Rebar for delivery in October on the Shanghai Futures Exchange retreated as much as 2.4 percent to 3,741 yuan ($602) a metric ton, the lowest since Dec. 14, before trading at 3,770 yuan at 10:02 a.m. local time. The price has dropped 12 percent since touching this year’s high of 4,297 yuan on Feb. 8. Iron ore dropped the most yesterday since January to the lowest level this year amid concern curbs on construction in China will reduce demand for the commodity used to make steel. Imported ore with 62 percent iron content at the Chinese port of Tianjin dropped 3.1 percent to $139 a dry ton, the most since Jan. 16, according to The Steel Index Ltd. “Lower raw-material prices have weighed on steel products,” Zheng Ge, an analyst at Wanda Futures Co., said in a report today. “The market is awash with inventory so we may see steel prices fall further.” 

• Rubber Drops to Lowest in Three Months on Malaysian Exports, Yen. Rubber declined for a third day to the lowest level in three months after exports surged from Malaysia, the third-largest producer, and the Japanese currency strengthened, reducing the appeal of yen-based contracts. The contract for delivery in August on the Tokyo Commodity Exchange fell as much as 2.9 percent to 272.4 yen a kilogram ($2,843 a metric ton), the lowest since Dec. 14, before trading at 275 yen at 10:21 a.m. Futures have lost 8.7 percent in the past three days. “Production is greater than demand, raising inventories,” said Gu Jiong, an analyst at commodity broker Yutaka Shoji Co. (8747) “This puts pressure on the rubber market.” Inventories in China, the largest user, jumped to 107,481 tons, the highest level in three years, based on a survey of nine warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said March 8. Stockpiles in Japanese warehouses rose 3.8 percent to 11,363 tons on Feb. 28, the Rubber Trade Association of Japan said March 11. 

• Brazil Real Drops on Speculation Credit Rating May Be Lowered. Brazil’s real declined, giving up earlier gains, on speculation among traders that the nation’s credit rating may be lowered. Credit-default swaps for Brazil rose while the benchmark stock index fell for a second day and interest-rate swaps jumped to an eight-month high. The real slid 0.4 percent to 1.9721 per dollar. It earlier advanced as much as 0.3 percent.

• Fed to Release Statment, Projections on March 20 at 2 PM. The Federal Reserve starting next week will cut to 30 minutes the gap between the release of the Federal Open Market Committee policy statements and the start of Chairman Ben S. Bernanke’s press conferences. The central bank will release the FOMC statement and the Summary of Economic Projections at 2 p.m. Washington time, followed by Bernanke’s briefing to reporters at about 2:30 p.m., the Fed said today in a statement. Prior FOMC statements were released at about 12:30 p.m. on press conference days, with Bernanke starting his briefing at 2:15 p.m. The change will “better facilitate the release of information in conjunction with the chairman’s quarterly news conferences,” the Fed said in a statement today in Washington. 

• Dallas Fed Cap Seen Shrinking U.S. Banking Units by Half. A proposal by the Federal Reserve Bank of Dallas to limit government support for banks could force JPMorgan Chase & Co. (JPM) and Bank of America Corp. to shrink their U.S. consumer and commercial-lending units by more than half. The plan would cap assets at deposit-insured divisions of the largest U.S. financial firms at about $250 billion and wall off investment banking from traditional lending, Dallas Fed Executive Vice President Harvey Rosenblum said in an interview. The limit is needed to allow the Federal Deposit Insurance Corp. to shut a failed bank without using taxpayer funds, he said.

• Morgan Stanley(MS) Cautions on Junk Quality Souring: Credit Markets. An improving economy is emboldening junk-rated borrowers in the U.S. to boost debt ratios from the highest level since 2009. Leverage is poised to rise this year from 3.8 times in the fourth quarter and 3.38 times at the end of 2011, according to Morgan Stanley.

• Apple’s(AAPL) Schiller Takes Aim at Samsung on Eve of Galaxy Unveiling. Apple Inc. (AAPL) Senior Vice President Phil Schiller, seeking to steal thunder from his company’s main competitor in the smartphone market, touted the iPhone a day before Samsung Electronics Co. (005930) unveils its Galaxy S4.

Wall Street Journal: 

• U.S. Catholics Express High Hopes for New Pope. Pope Francis has a unique opportunity to modernize the church, reach its areas of growth more effectively and take a tougher stance on the sexual-abuse scandals that have tarnished its reputation, U.S. Catholics said Wednesday. From Los Angeles to Miami to Boston, archbishops and parishioners alike praised the election of the former Cardinal Jorge Mario Bergoglio of Buenos Aires, the first pope from the Americas. His ascent is "a great thing for the United States and for Latin America," said Thomas Wenski, the archbishop of Miami, at a news conference. "All of us that live in the Americas, we have a greater freedom a lot of times than people in Europe or more traditional societies."

• Henninger: Escape From Spending Hell. The sequester proved that spending cuts aren't a political third rail. So it looks like we've all been sentenced to spending at least two more years in budget hell with Barack Obama. Under the rules of budget hell set the past four years by the prince of Pennsylvania Avenue, you're not allowed to do anything real about federal spending. You can only fight over federal spending. Forever.

Fox News:

• Obama meets with House Republicans, downplays 'immediate' debt crisis. President Obama met Wednesday with House Republicans in an apparent bid to find consensus on fiscal policy, even as he seemed to antagonize the other side by claiming there's no "immediate crisis in terms of debt." His statement would be sharply at odds with a core Republican principle that the debt must be addressed soon -- and which underpinned the cost-cutting GOP budget released Tuesday. The president also acknowledged, in an interview aired earlier in the day, that differences with the GOP might be "too wide" to bridge. 

MarketWatch.com: 

• Men’s Wearhouse(MW) up, Vera Bradley(VRA) down after hours.

• China probes Coca-Cola(KO) for alleged spying: report.

CNBC:

• Fed Gets Ready to Judge Big Bank Plans to Redistribute Cash. The Federal Reserve plans to unveil Thursday afternoon the results of its review of bank plans for their piles of cash — from mergers to dividends and stock buybacks. This will be the second half of what is now an annual round of stress tests for the nation's 18 largest banks. Last Thursday, the Fed announced the results of its stress tests: Seventeen banks passed, which means the Fed believes that they would be able to survive a nasty recession or what the Fed calls a "seriously adverse scenario."

• Doctor Shortage Getting Worse. Experts often call it the "invisible problem," because the shortage of doctors in the U.S. is not as conspicuous or talked about as much as home foreclosures or job losses. But the growing scarcity—most specifically of primary care physicians—is clear for patients who sit for hours in waiting rooms, must drive long distances to a physician's office or simply can't find a doctor. Some observers say that the shortage is a major threat to the nation's health care system. The U.S. is estimated to be short about 16,000 primary care doctors. That leaves about 55 million people without a doctor or struggling to find one. The Association of American Medical Colleges predicts bigger shortages in all types of physicians: 63,000 by 2015 and 130,600 by 2025. Entering the system in 2014 will be the 30 million additional people with access to services through the Affordable Care Act (Obamacare). "There were shortages in doctors when Massachusetts did their version of the Affordable Care Act," said Ruselle Robinson, a health care business attorney and former general counsel to the Massachusetts Department of Public Health. "It's hard to say how this will play out with all the new people being added to health care next year," Robinson said.

Zero Hedge: 

• Santelli's Primer On The 'Miracle' Of Earnings Expectations. (video)

• CFTC Investigating London Gold, Silver Price Fixing For Manipulation.

• Latest Greek Aid Tranche To Be Delayed After Troika Talks Break Down.

• QBAMCO On The Fed's Exit.

• Japanese Welfare Recipients Hit All-Time High.

Business Insider: 

• 11 Hot Republicans To Watch At This Year's Biggest Conservative Summit.

• GOLDMAN(GS): The Private Equity World Is Shrinking.

IBD:   

• Fleetmatics(FLTX) Tames Unruly Service Fleets, Gains Share.

U.S. News:

• Democrats Fret Over Obama Poll Numbers. Democratic strategists are increasingly worried about the decline in President Obama's job approval ratings. "We aren't panicking but it's a source of concern," a senior Democrat told me.

Reuters:

• S&P cuts Puerto Rico GO rating to near-junk status. Standard & Poor's Ratings Services cut its general obligation credit rating for Puerto Rico on Wednesday to BBB minus, just one step from junk status, saying it was worried the Caribbean island's government budget gaps would prove hard to close. "The outlook is negative," the Wall Street credit-ratings group said in a news release. "We base the downgrade on the result of an estimated fiscal 2013 budget gap, which we view as significantly larger than originally budgeted, absent corrective action," said S&P credit analyst David Hitchcock.

• U.S. regulator sides with big banks on avoiding break-up votes. U.S. regulators have agreed with four of the country's biggest banks that they will not have to hold shareholder votes at upcoming annual meetings over whether the institutions are too big. 

• Budget cuts could hit U.S.-Mexico border security gains -union.

• Euro minister cautious on size of any Cyprus bailout. Cyprus should get an international bailout closer to 10 billion euros than the bigger figures that have been widely reported, the leader of the euro finance ministers' group said on Wednesday.

Financial Times:

• Tax blow to Italian stock trading. Trading in Italian stocks through the desks of major banks has dropped sharply amid a wider fall in volumes since Italy introduced a tax on financial transactions. Data from Thomson Reuters suggest that banks – which have been some of the most outspoken critics of a so-called Tobin tax – have emerged as the biggest losers since a levy on equity and derivative transactions came into force in Italy at the beginning of the month.

• Germany defies calls for stimulus. Germany has ignored calls from its eurozone partners for more economic stimulus by tabling plans to cut spending and balance its budget ahead of schedule on the eve of an EU summit dedicated to growth. Wolfgang Schäuble, German finance minister, said on Wednesday that his budget for 2014, involving spending cuts of more than €5bn to trim the total below €300bn, was “a strong signal for Europe”.

Telegraph: 

• Labour's toxic legacy has become a bad excuse for doing nothing. The purpose of a good graphic is to tell the story better than words: few do it better than the National Institute of Economic and Social Research's long-standing chart tracking the progress of the UK recession and recovery relative to previous downturns.

Shanghai Securities News:

• China Banking Regulatory Commission drafts guideline on strengthening risk supervision for local government financing vehicle loans, citing a person familiar with the situation. The draft reiterates controls on total amount of LGFV loans.

China Securities Journal:

• Beijing will strengthen review of homebuyers qualifications to purchase property in the city as a local policy for real estate curbs, citing a person familiar with the situation. Beijing may also release some policies on exiting home transactions, the person said.

• China Securities Regulatory Commission will try to release supervision rules for listed companies this year, citing Ouyang Zehua, an official at the regulator.

Securities Times:

• Banks are under pressure to increase profits because of narrowing net interest margins resulting from interest rate liberalization and falling non-interest income, citing Bank of China Chairman Xiao Gang. Profit growth rate is slowing, Xiao said.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -1.25% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 102.50 -.5 basis point.

• Asia Pacific Sovereign CDS Index 81.0 +.5 basis point.

• FTSE-100 futures +.05%.

• S&P 500 futures +.01%.

• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BKE)/1.25

• (ARO)/.22

• (ULTA)/.98

• (DYN)/-.46

• (EBIX)/.47

• (GORO)/.22

Economic Releases
8:30 am EST

• The Producer Price Index for February is estimated to rise +.7% versus a +.2% gain in January.

• The PPI Ex Food & Energy for February is estimated to rise +.1% versus a +.2% gain in January.

• Initial Jobless Claims are estimated to rise to 350K versus 340K the prior week.

• Continuing Claims are estimated to fall to 3090K versus 3094K prior.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone unemployment report, SNB rate decision, EU Economic Summit, Japan vote on Kuroda nomination, $16B 30Y T-Bond auction, Round Two of CCAR Results, Bloomberg March US Economic Survey, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, (ONXX) analyst day and the Samsung Galaxy 4 introduction could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Slightly Higher into Final Hour on US Economic Data, Short-Covering, Transport/Defense Sector Strength

Broad Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• VIX 12.09 -1.47%

• ISE Sentiment Index 103.0 -8.04%

• Total Put/Call .77 -28.04%

• NYSE Arms 1.11 +17.02%

Credit Investor Angst:

• North American Investment Grade CDS Index 79.16 -.72%

• European Financial Sector CDS Index 145.43 +1.12%

• Western Europe Sovereign Debt CDS Index 97.60 +1.14%

• Emerging Market CDS Index 237.44 +.48%

• 2-Year Swap Spread 13.25 -.25 bp

• TED Spread 19.25 +.25 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -16.5 +.25 bp

Economic Gauges:

• 3-Month T-Bill Yield .09% unch.

• Yield Curve 176.0 -1 bp

• China Import Iron Ore Spot $139.0/Metric Tonne -3.07%

• Citi US Economic Surprise Index 27.4 +6.3 points

• 10-Year TIPS Spread 2.57 +1 bp

Overseas Futures:

• Nikkei Futures: Indicating +101 open in Japan

• DAX Futures: Indicating +14 open in Germany

Portfolio: 

• Slightly Higher: On gains in my retail sector longs and emerging markets shorts
• Disclosed Trades: Covered some of my (IWM), (QQQ) hedges, then added them back
• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:    

• Euro-Region Industrial Output Drops as Slump Persists: Economy. Euro-area industrial output fell more than economists forecast in January, adding to signs that the region’s recession extended into the first quarter. Factory production in the 17-nation euro zone dropped 0.4 percent from December, when it rose a revised 0.9 percent, the European Union’s statistics office in Luxembourg said today. The median forecast in a Bloomberg News survey of 32 economists was for a 0.1 percent decline. Production fell 1.3 percent in January from a year earlier.
• Italian Bonds Decline as Borrowing Costs Climb at Debt Auction. Italian bonds fell, with two-year yields rising the most in two weeks, as borrowing costs increased at an auction amid concern a political deadlock will derail plans to fix the nation’s finances. Shorter-maturity notes led declines as the country sold 3.32 billion euros ($4.3 billion) of securities due in December 2015 at an average yield of 2.48 percent versus 2.30 percent at the previous offering last month. “The market is a bit complacent about the risks that can happen in Italy,” said Mohit Kumar, head of Europe and U.K. rates strategy at Deutsche Bank AG in London. “If you have a government that is unable to pursue structural reforms, it will have an impact on economic growth in Italy.” 
• Europe to Contract as Much as 1.5%, El-Erian Says: Tom Keene.
• PBOC Chief Says China Should Be on ‘High Alert’ on Inflation. China should be on “high alert” over inflation after February’s figures exceeded forecasts, central bank Governor Zhou Xiaochuan said, signaling a heightened focus on controlling prices. Monetary policy is “no longer relaxed” and is “relatively neutral” as demonstrated by a 13 percent target for money-supply growth that’s tighter than expansion in the last two years, Zhou, head of the People’s Bank of China, said at a press conference today during the annual gathering of China’s National People’s Congress. Zhou’s comments add to signs that officials are tightening policies even as the recovery in the world’s second-biggest economy shows signs of weakness.
• China’s Stocks Slump to Two-Month Low on Property Curbs. Chinese stocks fell, dragging the benchmark index to a two-month low, as real estate and construction companies tumbled on concern policy makers will step up property curbs. Sina.com reported the southern city of Shenzhen banned developers from raising home prices, citing discussions with property companies. Poly Real Estate Group Co. and Gemdale Corp. declined more than 3 percent. Sany Heavy Industry Co. (600031), the nation’s biggest maker of construction machinery, lost 2.1 percent. CSR Corp. (601766) and China CNR Corp., the nation’s top train makers, slumped at least 3.7 percent on concern the dismantling of the rail ministry will curb state spending. “Property curbs and the central bank’s possible attitude towards tightening liquidity make investors nervous,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “There’s concern the economic recovery will falter.” The Shanghai Composite Index (SHCOMP) dropped 1 percent to 2,263.97 at the close, capping a five-day, 3.6 percent losing streak that’s the longest in four months. The gauge also erased its gain for the year.
• Copper Falls on Concern China Housing Curbs Will Sap Demand. Copper fell the most in a week amid concern that policy makers will expand efforts to cool the housing market in China, the world’s biggest consumer. Chinese stocks fell, dragging the benchmark index to a two- month low, as real estate and construction companies tumbled. Sina.com reported the southern city of Shenzhen banned developers from raising home prices. Accelerating inflation means the country should be on “high alert,” Zhou Xiaochuan, head of the People’s Bank of China, said today, signaling a heightened focus on controlling prices. On the Comex in New York, copper futures for delivery in May slid 0.7 percent to $3.5285 a pound at 12:01 p.m., heading for the biggest decline since March 1. 
• Iron Ore Falls Most Since January Amid China Property Concerns. Iron ore fell the most since January amid concern curbs on construction in China will reduce demand for the commodity used to make steel. Imported ore with 62 percent iron content at the Chinese port of Tianjin dropped 3.1 percent to $139 a dry metric ton today, the most since Jan. 16, according to The Steel Index Ltd. The global benchmark fell 13 percent from a 16-month high reached Feb. 20. Sentiment is deteriorating because of concerns about demand from real estate in China, Oscar Tarneberg, an analyst at The Steel Index, said by e-mail today. “China’s panicked basic-material destock continues, with construction and real-estate firms caught up in a severe economic slump, caused by tightening liquidity and the ongoing threat of negative property policies,” Melinda Moore, an analyst at Standard Bank Plc, said in an e-mailed report today.
• Import Prices in U.S. Climbed in February as Energy Costs Jumped. The cost of goods imported into the U.S. climbed in February by the most in six months, reflecting a jump in energy expenses that is now receding. The 1.1 percent increase in the import-price index followed a 0.6 percent gain in the prior month, Labor Department figures showed today in Washington. The median forecast of 43 economists in a Bloomberg survey called for a 0.6 percent advance. Prices dropped 0.3 percent over the past 12 months.
• Business Inventories in U.S. Increase by Most Since May 2011. Inventories in the U.S. rose in January by the most since May 2011 as companies replenished warehouses and shelves amid signs demand will pick up. The 1 percent increase in goods on hand exceeded the highest forecast in a Bloomberg survey and followed a 0.3 percent gain in December that was more than previously estimated, Commerce Department figures showed today in Washington. The median estimate was for a 0.5 percent advance. At the January sales pace, businesses had enough goods on hand to last 1.29 months, up from 1.28 months in the prior month and the highest since August. Business sales dropped 0.3 percent in January, reflecting declines at factories and wholesalers.

Wall Street Journal:

• New Pope: Live Updates.
• The Resilient Consumer? Not Quite. Resilient? That’s not exactly the word we’d use to describe it. The bulk of the gain came courtesy of auto sales and rising gas prices. Excluding those two items, and building materials, sales were up a far less impressive 0.36%. Sales were down at department stores, restaurants and furniture stores. “That indicates consumers may have cut their spending on non-essentials,” Dow Jones’ Sarah Portlock and Jeffrey Sparshott wrote this morning.

CNBC: 

• Crumbling BRICs: Why You're Better Off Elsewhere. The BRIC nations increasingly look like they will no longer be the building blocks of international investing. As a group, Brazil, Russia, India and China have been seen as the collective pillar of emerging market growth, leading to an exodus of money from U.S. stocks and into global equities. But signs indicate that trade has begun to run its course, and investors are looking for opportunity elsewhere.

Zero Hedge: 

• Chart Of The Day: Chinese Stocks Turn Red For The Year. 
• NFIB: "No Sign Of A Surge In Confidence". 
• Dash For Absolute Trash Outperforms Everything In 2013. (graphs) 
• Has the European Spring Started?
• Farage Slams Eurozone As "Complete Economic Disaster". (video)

Business Insider:

• The Chinese Central Bank Is Finding Itself In An Increasingly Difficult Position. 
• Europe Hasn't Even Done The Most Painful Part Of The Recovery. (graphs)

NYPost:

• Goldman’s(GS) Blankfein on trader talent hunt at Morgan Stanley(MS). Lloyd Blankfein smells blood in the water. The Goldman Sachs CEO is taking dead aim at Morgan Stanley’s most prized assets — its best and brightest employees — after his rival decided to defer pay for senior bankers. Blankfein, as a big game hunter, recently landed 13-year Morgan Stanley veteran Kate Richdale, head of its Asia Pacific investment banking business. The CEO’s talent hunt is continuing, sources said. Goldman currently is in selective talks with other Morgan Stanley bankers and has also lured a handful of traders from the bank. The classic Wall Street maneuvering comes months after Morgan Stanley told some execs it would defer pay, including their cash bonuses, over three years — a move that caused some bankers to grouse.

c/net:

• Paris court to Apple Stores: No more breaking 9 p.m. curfew. The court prohibits late-night work at the retail outlets and orders Apple to pay damages to the unions that filed suit against the company.

Reuters: 

• Exclusive: Obama administration to let spy agencies scour Americans' finances. The Obama administration is drawing up plans to give all U.S. spy agencies full access to a massive database that contains financial data on American citizens and others who bank in the country, according to a Treasury Department document seen by Reuters. The proposed plan represents a major step by U.S. intelligence agencies to spot and track down terrorist networks and crime syndicates by bringing together financial databanks, criminal records and military intelligence. The plan, which legal experts say is permissible under U.S. law, is nonetheless likely to trigger intense criticism from privacy advocates.
• Italy's Berlusconi promises parliamentary battle against magistrates. Italy's former prime minister, Silvio Berlusconi, facing trial on tax fraud and sex charges and under investigation for suspected political bribery, promised to take on prosecutors after parliament opens this week. 
• Russia risks billions of dollars if Cyprus defaults - Moody's.

Telegraph:

• MEPs reject EU spending cuts and demand extra £1.7bn from British taxpayers. MEPs have rejected cuts to European Union budgets agreed at an all-night summit last month and have demanded that national governments pay an extra £14 billion in spending for this year.
• BoE's Bailey warns bailed-out banks need more capital. Andrew Bailey, incoming deputy governor of the Bank of England, has said some of Britain's bailed-out banks need more capital to achieve financial stability.

Bear Radar

Style Underperformer:

• Large-Cap Value +.03%

Sector Underperformers:

• 1) Gold & Silver -2.03% 2) Steel -1.94% 3) Telecom -.75%
  

Stocks Falling on Unusual Volume:

• AMX, CVI, NGD, RY, MLNX, FN, NTWK, CYOU, CLMS, ESC, BNNY, PAMT, EXPR, DOLE, JIVE, CLMS, VLO, PBF, SLCA, FN, HFC, IOC, TLLP, EPB, RGLD, STLD, SA, ASR, EBAY, NUE, KRO and NTWK

Stocks With Unusual Put Option Activity:

• 1) ETFC 2) EA 3) ARO 4) SMH 5) CTSH
  

Stocks With Most Negative News Mentions:

• 1) VLO 2) CVI 3) WMT 4) EPB 5) DKS
  

Charts:

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