Stocks Higher into Final Hour on Less Eurozone Debt Angst, US Economic Data, Short-Covering, Tech/Homebuilding Sector Strength

Today's Market Take:

Broad Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• VIX 11.47 -3.04%

• ISE Sentiment Index 102.0 -8.93%

• Total Put/Call .70 -10.26%

• NYSE Arms .76 -27.70%

Credit Investor Angst:

• North American Investment Grade CDS Index 78.06 -1.18%

• European Financial Sector CDS Index 140.84 -3.10%

• Western Europe Sovereign Debt CDS Index 99.24 +1.68%

• Emerging Market CDS Index 237.14 -.24%

• 2-Year Swap Spread 13.75 +.5 bp

• TED Spread 18.75 -.5 bp

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

Economic Gauges:

• 3-Month T-Bill Yield .09% unch.

• Yield Curve 177.0 +1 bp

• China Import Iron Ore Spot $132.90/Metric Tonne -4.39%

• Citi US Economic Surprise Index 29.3 +1.9 points

• 10-Year TIPS Spread 2.59 +2 bps

Overseas Futures:

• Nikkei Futures: Indicating +85 open in Japan

• DAX Futures: Indicating -6 open in Germany

Portfolio: 

• Higher: On gains in my retail/tech/biotech sector longs and emerging markets shorts
• Disclosed Trades: None
• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:  

• Recession Replaces Debt as Top EU Worry Amid Joblessness. European leaders are loosening the economic shackles once demanded by Germany as the recession and mounting unemployment in southern Europe shove aside the debt crisis as the euro area’s biggest headache. A two-day Brussels summit starting today will endorse plans for “structural” assessments of national budgets, according to a draft statement, using code for granting countries such as France, Spain and Portugal extra time to bring down deficits. “We have to restore sound and sustainable public finances, via continued differentiated fiscal consolidation and focused on structural efforts,” European Union President Herman Van Rompuy said at a pre-summit briefing.
• SNB Keeps Up Franc Defense as Euro Crisis Risks Persist. The Swiss central bank pledged to keep up its defense of the franc cap after almost doubling its currency holdings to shield the country from the fallout caused by the euro zone’s crisis. The Swiss National Bank cut its forecasts for inflation and said it will take all necessary measures to keep the “high” franc within the limit of 1.20 per euro. In its quarterly monetary policy assessment today, the Zurich-based central bank also kept the band for its benchmark interest rate at zero percent to 0.25 percent, as forecast by all 22 economists in a Bloomberg News survey.
• Merkel’s Reform Crown Slips While Turning 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 German 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.

Barron's:

• AAPL(AAPL): BTIG Ups to Buy on Low-Cost iPhone Prospects. Shares of Apple (AAPL) are higher by $4.40, or 1%, at $432.75, after the stock got an upgrade from BTIG Research’s Walter Piecyk to Buy from Neutral, with a $540 price target, based mostly on the prospect the company will have a lower-cost iPhone by the end of this year, which could add $11 billion in revenue in fiscal 2014 ending September of that year. Piecyk, who cut the stock to Neutral in April of last year, arguing at the time for a “breather,” now thinks investors need similarly to take a breather from negative sentiment: 

CNBC:

• Emerging Markets Being Left Out of Global Rally. Despite a revival in risk appetite — which has sent global stocks up 6 percent since the start of the year — emerging markets appear to be losing out as investors pile into larger, developed markets on expectations of improving economic conditions. The MSCI Emerging Markets Index has slipped 1.1 percent since the start of the year, weighed down by recent losses in Chinese and Indian equities — a stark contrast from developed markets, in particular the U.S. and Japan, which are roaring ahead, up 10 percent and 18 percent, respectively, over the same period.
• China's Colossal Credit Bubble Next Big Risk: Faber. (video)
• Chinese Firm Looks to Tap Booming US Natural Gas Market. ENN Group Co, one of China's largest private companies, is quietly rolling out plans to establish a network of natural gas fueling stations for trucks along U.S. highways. 
• More US States Weigh Gasoline Taxes. 
• Weak Economy to Depress Oil Demand Throughout 2013: IEA. Global oil demand is set to be depressed by weak economic growth throughout 2013 while soaring U.S. oil production gives consumers a perfect cushion to withstand most supply outages, the International Energy Agency (IEA) said on Wednesday. "The oil producing world today is in the midst of a once in a generation transition of farreaching consequences," the IEA, which coordinates energy policies of major consuming nations, said.

Zero Hedge: 

• Initial Claims Lower Than Expected At 332K, PPI In Line With Expectations. (graphs)
• RIP Rotation: Two Weeks Of US Equity Fund Outflows. (graph)
• Why Italy Is More Like Japan Than Spain. 
• What Does China Know (Again) That The Rest Of The World Doesn't? (graphs) 
• Morgan Stanley: The Central-Bank-Inspired "Omnishambles" Is Closer Than Most Think. (graphs)

Business Insider: 

• Military Personnel DO NOT Have 'Lavish' Benefits By Any Means. 
• DEUTSCHE BANK(DB): Only Jesus Can Save The Euro. 
• An Electric Car Company Is On The Verge Of Becoming The Next Solyndra. 
• Italy's Worst-Case Scenario Has Become The Most Likely Scenario. 
• The Housing Market Is Experiencing 'Dangerous Foreclosure Flare-Ups'. 
• Amazon(AMZN) Downgraded Over Margin Fears.

Reuters: 

• Spain debt sale taps keen market, but fervour may wane. Spain saw solid demand at a long-term bond auction on Thursday, riding a wave of enthusiasm for its debt relative to Italy's that might soon ebb as investors look more closely at a gloomy economic backdrop. 
• For China Mobile, 4G and next iPhone are key to unlocking Apple demand. China Mobile Ltd hopes to tap pent-up demand for Apple Inc smartphones by rolling out new 4G technology this year and having an iPhone model that will finally run on it.

Telegraph: 

• Greece is no Ireland, says banking group as bailout stalls. Debt-laden Greece was set unachievable fiscal targets, unlike Ireland, said a leading global banking group, as the island's troika of international lenders delayed its next tranche of bailout cash. 
• Eurozone employment hastens downward spiral. The fall in eurozone employment sped up in the last three months of 2012, dashing hopes that the labour market in the troubled bloc could be stabilising.  
• Investors in China should be wary of revolution. China is heading for a social revolution, according to Fidelity fund manager Anthony Bolton. 

Shanghai Securities News:

• China's property prices will "definitely" decline this year, citing Housing and Urban-Rural Development Minister Jiang Weixin.

China Securities Journal:

• China to 'Firmly' Carry Out Property Curbs. China will "firmly" carry out the property curbs announced recently, citing Housing and Urban-Rural Development Minister Jiang Weixin.

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