Today's Headlines

Bloomberg:  

• Merkel Demands Cyprus Action Amid Clashes on Haircuts. German Chancellor Angela Merkel said Europe must act to support Cyprus as euro-area officials scrambled to overcome differences on losses for investors and the role of the International Monetary Fund in a bid to end nine months of bailout talks. Making way for the bloc’s 17 finance ministers in Brussels, Merkel said that while euro countries won’t provide assistance “under any conditions,” the currency union needed to prevent Cyprus from lurching toward insolvency.

• Prodi Says Europe Hurt by Too Much Austerity Amid Very High Euro. Former Italian Prime Minister Romano Prodi said fiscal austerity measures in Europe have been excessive and called the euro too high. “The euro has a very high rate of exchange,” Prodi, a former European Commission president, said in an interview with Sara Eisen airing on Bloomberg Television today. “I do think that it’s stronger than needed.”   

• Singapore’s February Home Sales Decline to 14-Month Low on Curbs. Singapore’s home sales plunged 65 percent to a 14-month low in February after the government introduced its seventh round of cooling measures to cool record home prices. Home sales dropped to 708 units in February from a revised 2,016 units in January, according to data released by the Urban Redevelopment Authority today. That’s the smallest number of residences sold since December 2011, when sales declined to a two-year low of 632 units. 

• El-Erian Say Fed ‘Forced’ Central Banks to Ease Policy. The Federal Reserve’s record monetary stimulus has compelled central banks from Mexico to Japan to follow suit, said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co. The Fed’s “artificially low” benchmark interest rate has put upward pressure on several currencies, threatening to erode the competitiveness of those nations’ economies, El-Erian said in a speech today in Stanford, California. “Ultimately, they are forced -- Mexico has been forced, Brazil has been forced, Korea has been forced, Japan has been forced -- into doing exactly the same thing” as the Fed.

• Eagle Ford Shale Boom Fuels ‘Madhouse’ in South Texas Counties. The shale boom has changed all that here and throughout an oil-rich swath of counties extending to the Canadian border. Figures released yesterday by the U.S. Census Bureau show counties in south and west Texas are now among the fastest- growing places in the U.S. as oilfield workers rush to the Eagle Ford Shale. The underground formation holds an estimated 3 billion barrels of oil and 150 trillion cubic feet of natural gas reserves.

• No-Bid U.S. Government Contracts Jump 9% Defying Obama Direction. President Barack Obama in 2009 told federal agencies that no-bid contracts were “wasteful” and “inefficient.” Four years later, his administration spent more money on non-competitive contracts than ever before. Federal agencies awarded $115.2 billion in no-bid contracts in fiscal year 2012, an 8.9 increase from $105.8 billion from 2009, according to data compiled by Bloomberg. The jump unfolded even as total contract spending decreased by about 5 percent. Lockheed Martin Corp., Boeing Co. and Raytheon Co. were top recipients of sole-source contracts. 

• Obama Will Use Nixon-Era Law to Fight Climate Change. President Barack Obama is preparing to tell all federal agencies for the first time that they should consider the impact on global warming before approving major projects, from pipelines to highways. The result could be significant delays for natural gas- export facilities, ports for coal sales to Asia, and even new forest roads, industry lobbyists warn. “It’s got us very freaked out,” said Ross Eisenberg, vice president of the National Association of Manufacturers, a Washington-based group that represents 11,000 companies such as Exxon Mobil Corp. (XOM) and Southern Co. (SO) The standards, which constitute guidance for agencies and not new regulations, are set to be issued in the coming weeks, according to lawyers briefed by administration officials. In taking the step, Obama would be fulfilling a vow to act alone in the face of a Republican-run House of Representatives unwilling to pass measures limiting greenhouse gases. He’d expand the scope of a Nixon-era law that was first intended to force agencies to assess the effect of projects on air, water and soil pollution.

• Obama to Press Congress for $2 Billion Clean-Energy Fund. President Barack Obama is pressing Congress to create a $2 billion clean-energy research fund with fees paid by oil and gas producers to help lower U.S. dependence on oil. Obama will announce the congressional challenge today at the Argonne National Laboratory in Lemont, Illinois, one of the Energy Department’s largest labs for scientific and engineering research.

• Goldman’s O’Neill Says S&P 500 Beyond 1,600 Needs Growth. U.S. economic growth will have to accelerate to “ridiculously strong levels” to justify any advance for the Standard & Poor’s 500 Index (SPX) above 1,600, said Jim O’Neill, chairman of Goldman Sachs Asset Management. After gaining 9.6 percent this year, the S&P 500 is trading at 1,563.23, less than 2 points from a record and within 3 percent of 1,600. O’Neill, who coined the term BRIC in describing the rise of Brazil, Russia, India and China, has an estimate of 1,575 for the U.S. equity benchmark this year. The world’s biggest economy is forecast to grow 1.9 percent in 2013 and 2.7 percent next year. “In order to justify the S&P above 1,600, we’d have to see growth expectations go to something like 4 percent and beyond,” O’Neill said in a Bloomberg Television interview in Singapore. “I don’tsee persistent upside from those kind of levels without some more evidence that the economy would be growing by ridiculously strong levels.” 

• BYD Said to Be Planning Sale of New Stock; Shares Tumble. BYD Co., the struggling Chinese carmaker partially owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), fell on concern existing investors will be diluted after two people familiar with the matter said the company plans to issue new stock. BYD, China’s biggest maker of electric vehicles, fell 9.8 percent to $3.03 at 2:34 p.m. in New York, erasing the year-to- date gains.

Wall Street Journal: 

• IMF Says EU Banks Face Further Losses. With anemic economic growth likely to lead to more losses on loans, risks to the financial stability of the European Union remain "elevated," and urgent action is needed to adequately capitalize the bloc's banks and establish a shared system for closing down or restructuring failing institutions, the International Monetary Fund said Friday. In its first-ever review of the health of the financial system across all 27 EU members, the IMF said the bloc has made some progress in addressing the weaknesses that have exacerbated its fiscal crisis and stalled its economic recovery. But it said much work remains to be done, with banks likely to face higher losses on loans to households and businesses to add to the losses they have suffered on their holdings of government bonds. The Fund added that low economic growth and low interest rates may also weaken insurance companies and pension funds.

• Two SAC Affiliates Agree to Settle Insider Suits. Two affiliates of Steven A. Cohen's embattled SAC Capital Advisors agreed to pay more than $614 million to settle separate civil insider-trading probes, the Securities and Exchange Commission said Friday. One of those affiliates, CR Intrinsic Investors, agreed itself to pay more than $600 million to settle a civil lawsuit filed by the SEC in November, representing the largest settlement ever for allegations of insider trading, the regulator said.

MarketWatch:

• Inflation highest in more than three years. U.S. consumer prices rose 0.7% in February for the largest gain since June 2009. Gasoline prices rose 9.1%, also making the largest jump since June 2009, and accounted for almost three-fourths of February’s gain in the consumer price index. The broader price category for energy increased 5.4%. 

• Obamacare will reduce U.S. employment. Commentary: Mandating health care will hurt workers.

CNBC: 

• Inside Dell: Merger Proxy Will Show Business in Free Fall. (video) The leveraged buyout of Dell requires that only 42 percent of existing shareholders vote against the deal for it to be abandoned. Given the present opposition it faces from large shareholders—such as Southeastern Asset Management and Carl Icahn, who favor a leveraged recapitalization, or the many event driven investors who may simply be betting on a raised offer and have bought stock above the deal price—it is fair to say the LBO is in doubt.  

• Investors Give Samsung Galaxy S4 a Thumbs Down.

Zero Hedge: 

• Bank Of America(BAC): "Today’s Stock Market Has Lost Some Of Its Ability To Reflect Underlying Economic Trends". 

• Is China's 'Real' Economy Crashing? (graphs) 

• Consumer Sentiment Misses By Most Ever, Slumps To 15 Month Lows. (graph) 

• European Financials And Spanish Bonds Ignore Equity Exuberance To End Europe's Week Weak. (graphs) 

• Tempest In A Towering Inferno: JPM's Head CIO Trader: "Things Like This, It's Like The Twin Towers Falling Down".

Business Insider: 

• ANALYST: Now That Wall Street Hates Apple(AAPL), It's Time To Buy!

• Even Fat Incentives Aren't Keeping US Auto From Stalling.

NBCNews.com:

• US to deploy more ground-based missile interceptors as North Korea steps up threats. Defense Secretary Chuck Hagel will announce Friday that the U.S. is deploying 14 new ground-based missile interceptors, probably in Alaska, defense officials told NBC News.

Real Clear Politics: 

• In Reality, Debt Matters. It Matters a Lot. Right now, public debt is more than 75 percent of gross domestic product. So when do we get to worry? At 100 percent? Demographics? Right now, most baby boomers are on the verge of retirement. But don't worry. It would be nice if some reporter asked the president what happened. Why did debt matter in 2006 but not now? Why in 2009 did the president promise to cut the deficit in half if it's nothing to fret over? He was right then, not now. And surely, even he can't argue that our situation has improved. Actually, reality rarely holds him back. 

Reuters:

• Copper falls as mixed U.S. data dampens demand prospects. 

• TABLE-U.S. Feb industrial output rises 0.7 pct.

Handelsblatt:

• A one-time levy of 15% on financial assets might suffice to push Italy's debt to below 100% of gdp, citing Commerzbank chief economist Joerg Kraemer.

Bear Radar

Style Underperformer:

• Mid-Cap Growth -.60%

Sector Underperformers:

• 1) Disk Drives -1.60% 2) Semis -1.60% 3) Medical Equipment -1.33%
  

Stocks Falling on Unusual Volume:

• AMX, BBT, TLK, EGY, MXWL, GEL, PKX, SXL, WOR, RGP, CG, ULTA, DK, TISI, VHC, PKO, CCL, ISRG, CUK, PCN, ARO, BTH, PTY, AMX, WAC, JPM, RAX, KLAC, DTSI, CGI, CLVS, BWS, EBIX and TSLA

Stocks With Unusual Put Option Activity:

• 1) ULTA 2) BBT 3) USG 4) HOV 5) STT
  

Stocks With Most Negative News Mentions:

• 1) DAL 2) CCL 3) TISI 4) VZ 5) F
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value -.24%

Sector Outperformers:

• 1) Oil Service +.62% 2) Gold & Silver +.43% 3) Utilities +.39%
  

Stocks Rising on Unusual Volume:

• CRK, DTV, OGE, CNP, ROSE, SNE and PANL

Stocks With Unusual Call Option Activity:

• 1) FSL 2) RAD 3) ULTA 4) HSP 5) DTV
  

Stocks With Most Positive News Mentions:

• 1) PNC 2) FWLT 3) ARO 4) HIBB 5) BWS

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg: 

• Euro-Crisis Redux Seen as Greatest Threat to German Powerhouse. A resurgence of the debt crisis that scarred the euro-area over the past 3 1/2 years is the biggest threat facing Germany in an election year, policy makers and leading economists said. With sovereign bond yields declining in countries such as Italy and Ireland, governments across Europe cannot be lulled into thinking they can let up on their budget-cutting efforts, economists including Deutsche Bank AG senior adviser Thomas Mayer and Holger Schmieding of Berenberg Bank said during Bloomberg’s first Germany Day conference in Berlin yesterday. “No nonsense,” Schmieding said during a panel discussion at the event, urging governments not to “backtrack in any way on the achievements” made so far. “If any country tried now to undo austerity, it would likely shatter confidence, it would probably spark another row in Europe, another wave of the euro crisis, and that wave of crisis would leave us all with less business investment, less jobs across the euro area.” 

• Italian Lawmakers Face Backlash as Grillo’s Force Arrive. Italy’s incumbent lawmakers, who united last year to impose austerity on taxpayers, are bracing for a fight over their own privileges as the upstart movement led by Beppe Grillo enters parliament and vies for key roles. Up for grabs as the legislature convenes today are the speakerships of the Senate and Chamber of Deputies, followed by appointments to budget committees and commission chairmanships. The posts could give Grillo’s Five Star Movement, which took a quarter of the votes in elections last month, enough leverage over the bodies’ more than 2 billion euros ($2.6 billion) in annual operating expenses. “The costs could be cut in half,” said Elio Lannutti, a consumer advocate, ex-senator and a friend of Grillo’s. “If they keep these people out, the revolution is just going to get bigger.”

• China Seen Overstating Exports to Hong Kong: Chart of the Day. Widening differences in bilateral trade data reported by China and Hong Kong suggest export-import activity is being overstated by the mainland as companies report inflated figures, according to Mizuho Securities Asia Ltd. China's numbers were 47% higher than Hong Kong's in January, compared with a 13% difference two years earlier.

• Wen’s Failure to Tame China Home Prices Leaves Li With Challenge. China’s new leaders are inheriting a challenge that stymied the outgoing government: deflating a bubble in big-city home prices without damping economic growth. In one of its final acts before the leadership change, China’s State Council on March 1 imposed tough new measures intended to cool the market, a step that sent property stocks tumbling. While curbs initiated last year had some success, prices resumed climbing in the second half as the central bank cut interest rates to reverse an economic slowdown.

• BRICs Abandoned by Locals With Fund Outflows Highest Since 1996. The 2.5 million rupees ($45,984) Nirav Vora had in the Indian stock market six years ago have plunged by 72 percent. Now the 39-year-old father of two in Mumbai, who depends on investment income for his livelihood, is plowing money into government bonds. “The confidence of small investors is rock bottom,” Vora said by phone on Feb. 26. “They have no faith in the markets.” Vora’s exit from equities is being repeated across the biggest emerging markets as disappointing profits and growing state intervention cause stocks to trail global shares for a fourth year. Trading by Brazilian individuals has dropped to the lowest level since 1999, exchange data show. Russian mutual funds posted 16 straight months of outflows, the most since at least 1996, and withdrawals in India are the biggest in more than two years. Chinese investors emptied more than 2 million stock accounts in the past 12 months. 

• Rebar Pares Fourth Weekly Drop as Sharp Decline Spurs Purchases. Steel reinforcement-bar futures climbed for the first time in eight days, paring a fourth weekly drop, as the lowest prices in three months spurred purchases. Rebar for delivery in October on the Shanghai Futures Exchange advanced as much as 0.7 percent to 3,791 yuan ($610) a metric ton and was at 3,773 yuan at 9:55 a.m. local time. The price has dropped 4 percent this week, the most since the week ended Feb. 22. “The slump in the rebar futures was too far and too swift,” Dang Man, analyst at Maike Futures Co., said by phone from Xi’an today. “We think rebar futures will remain weak for a while as bearish fundamentals have to run their course.”

• Goldman(GS), JPMorgan(JPM) Ordered to Fix Capital Planning by Fed. Goldman Sachs Group Inc. and JPMorgan Chase & Co., the world’s biggest trading firms, must submit new capital plans to regulators to address weaknesses the Federal Reserve found in their planning processes. The central bank didn’t object to the capital plans of the two New York-based companies, and approved proposals from 14 other banks, the Fed said yesterday in a report. Capital plans submitted by Ally Financial Inc. and BB&T Corp. were rejected, while American Express Co., the biggest U.S. credit-card issuer by customer spending, revised its submission to win approval. The deficiencies found at Goldman Sachs and JPMorgan related to projections of losses and revenue, according to a Fed official. 

• JPMorgan(JPM) Hid Trades Banned by Volcker Rule, Senate Probe Finds. JPMorgan Chase & Co. (JPM) engaged in high-risk proprietary trading under the guise of ordinary hedging, said Senate investigators, who urged U.S. regulators to strengthen the proposed ban on such trades known as the Volcker rule. Regulators should require banks that hold federally insured deposits to explicitly link positions in derivatives to the underlying risk they are hedging, the Senate’s Permanent Subcommittee on Investigations recommended in a 300-page report released yesterday.

• Morgan Stanley(MS) Can Be Sued by Hong Leong Over Misselling. Morgan Stanley (MS) can be sued by Singapore’s Hong Leong Finance Ltd. in a New York court over claims it deceptively sold instruments designed to fail.

• U.S. Drone Over Persian Gulf Pursued by Iranian Jet. A U.S. military drone operating over international waters in the Persian Gulf was pursued by an Iranian military aircraft on March 12, according to the Pentagon. The MQ-1 Predator drone, which was accompanied by two manned U.S. military airplanes, was conducting a classified surveillance flight in international airspace when it was approached by an Iranian F-4 jet that came within 16 miles (26 kilometers) of the unmanned plane, Pentagon spokesman George Little said yesterday in an e-mailed statement. After a “verbal warning” from the U.S., the Iranian plane broke off, according to the statement. 

• Microsoft’s(MSFT) Surface Tablet Is Said to Fall Short of Predictions. Microsoft Corp. (MSFT) has sold about 1.5 million Surface devices, people with knowledge of the company’s sales said, a slow start in its bid to crack the fast-growing tablet market to make up for slumping personal-computer demand.

• Ulta Salon(ULTA) Plunges After Forecast Trails Analysts’ Estimates. Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA), the beauty-product retailer that has full-service salons in all its stores, plunged in late trading after its first- quarter profit forecast was less than analysts’ estimates. Ulta slid 12 percent to $78 at 4:30 p.m. in New York.

Wall Street Journal: 

• Employers Blast Fees From New Health Law. Employers are bracing for a little-noticed fee in the federal health-care law that will charge them $63 for each person they insure next year, one of the clearest cost increases companies face when the law takes full effect. Companies and other plan providers will together pay $25 billion over three years to create a fund for insurance companies to offset the cost of covering people with high medical bills. The fees will hit most large U.S. employers, and several have been lobbying to change the program, contending the levy is unfair because it subsidizes individually purchased plans that won't cover their workers.

• New Push to Securitize Renewable-Power Pacts. The Obama administration and some on Wall Street are laying the groundwork for bundling renewable-power contracts into securities, part of an effort to make it cheaper to finance alternative energy. The initiative aims to extend to renewable energy a financial tool already used in the mortgage and credit-card industries. The securities could be sold to pension funds or other investors, who would receive a return funded by payments from users of electricity where solar panels or other equipment is installed. An early focus is the military, which is preparing to spend billions of dollars on electricity from solar, wind and other renewable sources during the next decade. The military services can enter into electricity-purchase agreements without new appropriations from Congress.

• Obama Sets Timeline on Iran Nuclear Bomb. Ahead of Israeli Visit, U.S. Leader Says Tehran Is a Year or More Away from Atomic Weapon; Netanyahu Has Different View. Barack Obama said it would take Iran a year or more to build a nuclear weapon, an assessment that sets up a potential area of discord with Israel's leader days before the U.S. president visits the Middle East. Mr. Obama, who will travel to Israel and Palestinian territories next week in his first presidential visit, told Israel's Channel 2 television that an Iranian atomic weapon was a "red line" that threatened Israel and the U.S. But in setting a timeline for development of an Iranian nuclear weapon that is longer than the more urgent one usually cited by Prime Minister Benjamin Netanyahu, Mr. Obama appeared to be tamping down any expectations for pre-emptive action against Iran while aiming to assure its closest Mideast ally of U.S. support. It was the first time Mr. Obama had himself publicly stated a timeline.

• Wells(WFC) CEO Pay Is Tops Among Peers. Wells Fargo & Co. awarded Chief Executive John Stumpf $22.9 million in compensation for 2012, making him the highest-paid chief of a major U.S. commercial bank.

• The Doctor Won't See You Now. He's Clocked Out. ObamaCare is pushing physicians into becoming hospital employees. The results aren't encouraging. Big government likes big providers. That's why ObamaCare is gradually making the local doctor-owned medical practice a relic. In the not too distant future, most physicians will be hourly wage earners, likely employed by a hospital chain. Why? Because when doctors practice in small offices, it is hard for Washington to regulate what they do. There are too many of them, and the government is too remote. It is far easier for federal agencies to regulate physicians if they work for big hospitals. So ObamaCare shifts money to favor the delivery of outpatient care through hospital-owned networks. The irony is that in the name of lowering costs, ObamaCare will almost certainly make the practice of medicine more expensive. It turns out that when doctors become salaried hospital employees, their overall productivity falls.

Fox News:

• Obama Tries to Blow Past Deficit Drama, Voters Disagree.

CNBC: 

• Rusal CEO: 'Last Act of Drama' in Commodity Market. Oleg Deripaska, the CEO of the world's largest aluminum company Rusal said global commodity producers need to cut output by up to 10 percent to bring the market back to balance. "At the moment in many industries not just aluminum, [but] steel, cement, nickel we have a very urgent call to reduce output because the financial crisis created huge distortions in terms of demand," Deripaska told CNBC Europe's "Closing Bell" in London. "We are seeing maybe the last act of the drama when a lot of CEOs with a very good career were punished last year because of shareholders suffering on the return on their investments and I think this has created a very important shift of paradigm," Deripaska added. "We produce so much product which currently occupies warehouse [space] around the world and at the moment we should take a significant reduction, up to 10 percent. Of course, it's different for different industries," Deripaska said of the commodity market. 

• How Your 2012 Tax Return Affects Health Care in 2014. For many Americans, the health reform law passed in 2010 will forevermore tie their health to their taxes. And even though the big changes required by the Patient Protection and Affordable Care don't start until 2014, the tax impact starts now.

• 'Abenomics’ Is Going to Fail: Mr Yen. "Abenomics" will not be able to achieve the two percent inflation target in Japan, Eisuke Sakakibara, former vice finance minister of Japan told CNBC on Friday, referring to Prime Minister Shinzo Abe's combination of ultra-loose monetary policy and fiscal stimulus. He noted that if dollar-yen breaks 100, the next stop for the currency pair could be 130, adding that this would be "risky" for the Japanese economy. "I remember in 1998, 1999 – it [dollar-yen] did go to 150 – I was at that time in the government, I was terrified," he said.

Zero Hedge: 

• High Yield Shorts As Confident As In October 2007. (graphs)

• The Chart That Draghi Should Be Worried About.

• The Complete History Of JPMorgan's "Monstrous" Derivative Risks And Abuses - The Full Senate Report.

• Japan: Front-Runner Of Outright Monetization.

• Because It Worked So Well For Stalin...

Business Insider: 

• The Case For A Stock Market Triple Top.

• ROSENBERG: Restaurant Sales Haven't Looked Like This Since The Start Of The Last Recession.

• Egypt's Muslim Brotherhood Offers 10 Reasons Why Women's Rights Are A Bad Idea.

• Companies Are Putting Sensors On Employees To Track Their Every Move.

• INDICTMENT: Reuters Editor Told Anonymous To 'Go F--- Some S--- Up'.

• SOCGEN: Another 'Eurozone Shockwave' Is Coming This Spring.

• KYLE BASS: One Of The Biggest Banks In The World Wants Me To Close My Japan Trade. 

• Here's Everything That Happened At Samsung's Bizarre Galaxy S4 Announcement.

Washington Post:  

• Grand jury investigating Sen. Robert Menendez (D-N.J.), people familiar with probe say. A federal grand jury in Miami is investigating Sen. Robert Menendez (D-N.J.), examining his role in advocating for the business interests of a wealthy donor and friend, according to three people aware of the probe.

Reuters: 

• EU finance experts burn midnight oil over Cyprus deal. EU and IMF officials planned to work on a rescue package for Cyprus through the night in Brussels with the aim of presenting the outline of a bailout programme to euro zone finance experts on Friday morning, sources said.

• Molycorp(MCP) posts loss on writedown, to cut jobs. Molycorp Inc said on Thursday it planned to cut an unspecified number of jobs as it reported a fourth-quarter loss and booked an impairment charge related to its 2012 takeover of rare earth processer Neo Material Technologies.

• Washington could wind up running more health exchanges -official. The U.S. government could have to run more state health insurance exchanges than expected under President Barack Obama's healthcare law, if U.S. states pursuing their own marketplaces cannot complete them on time, a senior official said on Thursday. 

• Aeropostale(ARO) posts weak holiday results, forecasts 1st-qtr loss. Teen clothing retailer Aeropostale Inc on Thursday forecast a loss and a sharp drop in sales for the current quarter, blaming the ongoing need to slash prices and a weak economy. Shares fell 6.7 percent to $13.60 in afterhours trading.

Financial Times: 

• EU needs austerity and reform, not spending By Guido Westerwelle. In the wake of the elections in Italy, some people are trotting out an old theory: that it was not homegrown problems that produced this election result, but a unilateral austerity policy imposed from outside. This “austerity course”, they say, has now been rejected. Growth, according to that thinking, can be created easily through spending programmes financed by borrowing. But this is wrong on two counts.

Telegraph:

• Germany’s prudence is Europe’s poison. The spending cuts planned in Berlin by finance minister Wolfgang Schäuble to balance the budget a year early will make it impossible for others to grow.

Evening Recommendations 
Keefe Bruyette:

• Downgraded (PGR) to Underperform, target $23.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 101.50 -1.0 basis point.

• Asia Pacific Sovereign CDS Index 80.25 -.75 basis point.

• FTSE-100 futures +.05%.

• S&P 500 futures +.06%.

• NASDAQ 100 futures +.11%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BWS)/.08

• (FSS)/.11

• (HIBB)/.72

• (AVID)/.12

• (VECO)/.10

Economic Releases
8:30 am EST

• Empire Manufacturing for March is estimated to fall to 10.0 versus 10.04 in February.

• The Consumer Price Index for February is estimated to rise +.5% versus unch. in January.

• The CPI Ex Food & Energy for February is estimated to rise +.2% versus a +.3% gain in January.

9:00 am EST

• Net Long-term TIC Flows for January are estimated to fall to $40.0B versus $64.2B in December.

9:15 am EST

• Industrial Production for February is estimated to rise +.4% versus a -.1% decline in January.

• Capacity Utilization for February is estimated to rise to 79.4% versus 79.1% in January.

• Manufacturing Production for February is estimated to rise +.5% versus a -.4% decline in January.

9:55 am EST

• Preliminary Univ. of Mich. Consumer Confidence for March is estimated to rise to 78.0 versus 77.6 in February.

Upcoming Splits

• (JAH) 3-for-2

• (FELE) 2-for-1
  

Other Potential Market Movers

• The Eurozone CPI data, JPMorgan(JPM) Senate Hearing and the Japanese upper house vote on Kuroda could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by real estate 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 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.