Stocks Slightly Higher into Final Hour on Lower Long-Term Rates, Less Emerging Markets Debt Angst, Short-Covering, Metals & Mining/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 12.42 -3.65%

• Euro/Yen Carry Return Index 148.32 -.30%

• Emerging Markets Currency Volatility(VXY) 8.47 -4.83%

• S&P 500 Implied Correlation 49.23 -1.97%

• ISE Sentiment Index 97.0 -30.71%

• Total Put/Call .74 unch.

• NYSE Arms 1.24 +10.82% 

Credit Investor Angst:

• North American Investment Grade CDS Index 63.78 -2.11%

• European Financial Sector CDS Index 86.0 -.17%

• Western Europe Sovereign Debt CDS Index 50.0 unch.

• Emerging Market CDS Index 280.48 -.33%

• 2-Year Swap Spread 12.0 +.25 basis point

• TED Spread 20.50 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -1.75 -.5 basis point

Economic Gauges:

• 3-Month T-Bill Yield .04% unch.

• Yield Curve 249.0 -5 basis points

• China Import Iron Ore Spot $130.70/Metric Tonne -.23%

• Citi US Economic Surprise Index 65.50 +1.6 points

• Citi Emerging Markets Economic Surprise Index -.9 -5.6 points

• 10-Year TIPS Spread 2.27 -3 basis points

Overseas Futures:

• Nikkei Futures: Indicating -52 open in Japan

• DAX Futures: Indicating +27 open in Germany

Portfolio: 

• Slightly Lower: On losses in my index hedges 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:

• Brazil 2013 Inflation Exceeds All Estimates and 2012 Level. Brazil’s consumer prices in 2013 exceeded every analyst estimate and accelerated from last year, boosting pressure on the central bank to extend the world’s biggest cycle of raising interest rates. Swap rates increased. Inflation in the year through December as measured by the benchmark IPCA index accelerated to 5.91 percent from 5.84 percent in 2012, the national statistics agency said today in Rio de Janeiro. That was higher than all estimates from 34 economists surveyed by Bloomberg, whose median forecast was for 5.81 percent. Monthly inflation accelerated to 0.92 percent from 0.54 percent in November, also higher than all forecasts and the fastest increase in more than 10 years. 

• Treasuries, Gold Rally as Dollar Drops After Jobs Growth Slows. Treasuries rallied with gold and the dollar retreated after U.S. payrolls rose less than forecast in December, easing concern stimulus cuts would accelerate. The Standard & Poor’s 500 Index fell, extending a yearly loss. The 10-year Treasury yield fell nine basis points to 2.88 percent at 11:38 a.m. in New York. The S&P 500 dropped 0.3 percent. The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 of its major peers, reversed a gain to fall 0.4 percent. Gold futures rose 1.2 percent to $1,243.56 an ounce.

• SAP Fourth-Quarter Software Sales Hurt by Strengthening Euro. SAP AG (SAP), the largest maker of business-management software, reported a decline in software license sales and slowing growth of its Hana data-processing engine, hurt by a strengthening euro.

• European Stocks Advance as Investors Weigh U.S. Payrolls. European stocks climbed, completing their first weekly rally of 2014, as investors weighed data that showed the U.S. unemployment rate unexpectedly fell in December while hiring slowed. Swatch Group AG advanced the most in 11 months after forecasting “dynamic growth” in 2014. Metro AG gained 2.8 percent as a report that was later denied claimed the retailer’s biggest shareholder may push for selling some units. Brenntag AG fell 2.4 percent after UBS AG downgraded the shares. The Stoxx Europe 600 Index advanced 0.5 percent to 329.95 at the close of trading, extending its highest level since May 2008.

• Dollar Drops Versus Major Peers as Jobs Decline Damps Taper Bets. The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 of its major counterparts, decreased 0.5 percent to 1,023.51 at 2:13 p.m. New York time, after earlier rising 0.2 percent to 1,030.38. Yesterday it touched 1,030.42, highest since Sept. 9. The dollar fell 0.8 percent to 104.03 yen after rising to 105.44 on Jan. 2, the strongest since October 2008. The U.S. currency weakened 0.5 percent to $1.3670 per euro. The yen added 0.3 percent to 142.20 per euro.

• Gross Says Fed on Course to End QE Even With Slowing Job Growth. Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said the Federal Reserve is on course to end its bond buying this year even with job growth at the slowest pace since January 2011. “I do believe that by the end of 2014, the Fed wants to be out,” Gross said in a radio interview.

• VW Said to Favor Tennessee Factory to Build New U.S. SUV. Volkswagen AG (VOW), Europe’s largest carmaker, will add a mid-sized sport-utility vehicle in the U.S. and probably produce it in Chattanooga, Tennessee, two people familiar with the matter said.

• VW Passes GM in China for First Time in Nine Years. Volkswagen AG (VOW) outsold General Motors Co. (GM) in China for the first time in nine years to recapture the lead among foreign automakers in the world’s largest car market. VW’s 2013 deliveries in the country climbed to at least 3.27 million vehicles, according to delivery figures released in the last two days by the German automaker’s VW, Porsche, Audi and Skoda brands. Detroit-based GM said earlier this week that the U.S. automaker sold 3.16 million cars in the country.

CNBC:

• Nasdaq reopens options trading after brief halt. Nasdaq OMX said it has reopened trading at its Nasdaq options market after a brief halt that affected trading in stocks A through M. At approximately 11:42 am ET, Nadsaq OMX experienced an issue with options pricing data that affected one of the exchange group's three U.S. options markets, Nasdaq Options Market (NOM), for trading in symbols A through M.  

• Tesla(TSLA) upgrading wall adapters after garage fire reports.

• Supply squeeze push US 'choice' beef price to new high.

• As bulls run, Deutsche Bank isn't so sure. (video)

ZeroHedge:

• Fed's Lacker Admits "Asset Bubble" - Reluctant To Pop It.

• It's Official: The US Created Less Jobs In 2013 Than 2012. (graph)

• Real Unemployment Rate Of 11.5% Means Difference To Reported Rises To Record. (graph)

• Goldman's(GS) Payrolls Postmortem: Weak Job Report But Fed Still Tapers Another $10 Billion In January.

• Obama To Nominate Former Bank Of Israel Head As Fed Vice Chairman Today. 

• Market Bulls Should Consider These Charts. (graph)

• $292 Million Down The Drain: White House Fires Main Obamacare IT Contractor.

• The Fed Is Playing Global Pump-And-Dump.

ValueWalk:

• Target(TGT) Warns Data Breach Hits Sales, 70 Million People Affected.

Business Insider:

• Eddie Lampert And His Hedge Fund Have Lost Over $290 Million Combined On Sears Since Yesterday.

• US Spooks Worried 'Virtual Osama Bin Laden' Is A Real Threat.

• Elizabeth Warren's Going To Call Out JP Morgan(JPM) CEO Jamie Dimon On TV This Weekend.

• The Most Damning Chart That Shows How Far The Economy Still Has To Recover.

• In Another Bad Sign For Microsoft(MSFT), HP(HPQ) Aims Its New Android PC At The Enterprise.

NY Times:

• Falluja’s Fall Stuns Marines Who Fought There. “I don’t think anyone had the grand illusion that Falluja or Ramadi was going to turn into Disneyland, but none of us thought it was going to fall back to a jihadist insurgency,” he said. “It made me sick to my stomach to have that thrown in our face, everything we fought for so blatantly taken away.” The bloody mission to wrest Falluja from insurgents in November 2004 meant more to the Marines than almost any other battle in the 12 years of war in Iraq and Afghanistan. Many consider it the corps’ biggest and most iconic fight since Vietnam, with nearly 100 Marines and soldiers killed in action and hundreds more wounded.

The Blaze:

• Dad ‘Furious’ After He Switches to Obamacare Only to Find It Didn’t Cover His Children.

Real Clear Markets:

• President Obama's Legacy Of Economic Failure.

Reuters:

• India's industrial output shrinks, trade gap widens. India's economic woes worsened on Friday with a surprise contraction in industrial production and a wider trade deficit, adding to troubles of the ruling alliance as it heads into a tough national election seeking a third term. Production at factories, mines and utilities shrunk for the second straight month in November, by 2.1 percent, data from the Statistics Ministry showed, dragged down by a contraction in consumer goods output. Analysts polled by Reuters had predicted output to grow 1.0 percent. "The November industrial production figures continue to show that the Indian industrial sector remains in recession, with clear evidence that domestic consumption remains weak," wrote Rajiv Biswas, Asia-Pacific chief economist at His.

• For QE cuts, Fed's Bullard not focused on December jobs. A top Federal Reserve official said he is "disinclined" to focus on December's jobs data alone as he considers whether the U.S. central bank should continue to trim bond purchases. 

• Fed's Lacker sees $10 bln taper on table at next meeting. U.S. Federal Reserve policymakers will likely discuss another $10 billion reduction in the monthly pace of bond buying at their next meeting, said a senior Fed official on Friday, who warned against reading too much into a weak jobs report for December. 

• Contrarians bet against European periphery's stocks rally.

Financial Times:

• US subprime car loans return with a bang. Sales of risky pools of securities backed by car loans are accelerating at the start of 2014 as investors snatch up the higher-yielding bonds that were popular in the build-up to the financial crisis. This week alone, about $2bn in deals that bundle car loans made to subprime borrowers have hit the US debt capital markets, following a 20 per cent jump last year to $21.5bn. Demand for the securities is forecast to increase further in 2014, helping push sales to the $25bn mark, according to Deutsche Bank estimates.

TheGuardian:

• Chris Christie was a ticking time bomb as a politician. It was only a matter of time before he blew up. The bridge scandal is just one of many instances where Christie couldn't control his temper. He lacks discipline for higher office.

Bear Radar

Style Underperformer:

• Large-Cap Value -.22%

Sector Underperformers:

• 1) HMOs -1.08% 2) Banks -.60% 3) Internet -.55%

Stocks Falling on Unusual Volume:

• NRP, GIB, MTH, SHLD, FNP, FIVE, YRCW, XLRN, CTRP, PSMT, SHOO, AEGR, HUM, SNX, DSLV, KRO, CEC, AMBA, AA, ADEP, TIF, GWPH, ARMH, CYD, KEYW, SZYM, WETF, UIS, FWM, ZUMZ, GOGO, CUDA and SEM

Stocks With Unusual Put Option Activity:

• 1) GT 2) HTZ 3) CCL 4) TIF 5) XHB
  

Stocks With Most Negative News Mentions:

• 1) AA 2) SHLD 3) TSLA 4) JCP 5) FB
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Value +.15%

Sector Outperformers:

• 1) Gold and Silver +2.74% 2) Homebuilders +2.48% 3) Airlines +1.28%
  

Stocks Rising on Unusual Volume:

• CNAT, GALT, ICPT, FRAN, ANF, ECYT, RPTP, INFY, CNW, IRWD and MDCO

Stocks With Unusual Call Option Activity:

• 1) FTNT 2) ARR 3) ABT 4) ANF 5) XOMA

Stocks With Most Positive News Mentions:

• 1) TIF 2) HES 3) LNKD 4) AAPL 5) TGT
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg: 

• Morgan Stanley(MS) Warns of Crisis Amid Inflation Sign: Japan Credit. Morgan Stanley said inflation and overspending threaten to push Japan's finances to the brink, amid signs government-bond investors are preparing for rising consumer prices. "There's the risk interest payments would swell should the government fail to cut budget deficits when inflation and yields grind higher," Feldman said in an interview in Tokyo on Jan. 8. "Absent an increase in tax revenues stemming from a tangible improvement in the real economy, there is a risk of collapse." 

• Yen Seen Rallying 16% Threatens Abe’s Successes: Market Reversal. Mitsubishi UFJ Morgan Stanley Securities Co. and Westpac Banking Corp. are breaking from the pack to bet the yen will rally in 2014, which could threaten Japan’s efforts to reflate the economy. The yen will surge 16 percent to about 90 per dollar this year, which would be the strongest level since last January, from 104.82 in New York yesterday, according to Naohiko Miyata at Mitsubishi UFJ, citing trading patterns. The yen slid 18 percent versus the dollar last year, the most since 1979, after Prime Minister Shinzo Abe began his economic strategy of fiscal spending, monetary easing and growth initiatives. “We’ve probably reached a bottom in the yen, and if that proves to be true, we’ll see a large rebound,” Miyata, the firm’s Tokyo-based chief technical analyst, said by phone on Jan. 6. “Since the start of the Abe trade, we haven’t seen any corrections exceeding 10 yen. 2014 will probably be the year where we’ll see such a move.”

• China Dec. Exports Trail Estimates as Import Gains Accelerate. China’s export growth trailed estimates in December while import gains beat projections, government data showed today. Overseas shipments rose 4.3 percent from a year earlier, the General Administration of Customs said today in Beijing. That compares with the median estimate for 5 percent growth from 39 economists surveyed by Bloomberg News. Imports (CNFRIMPY) increased 8.3 percent, leaving a narrower-than-projected trade surplus of $25.64 billion.

• Taiwan Rejects China Fishing Rules for Foreign Vessels in South. Taiwan said it rejected China’s fishing rules requiring foreign vessels to seek permission from China before entering waters near its southern shores and called for reduced tensions in the South China Sea. Taiwanese fishermen are proceeding as normal without declaring themselves and haven’t been stopped by Chinese authorities, deputy minister of mainland affairs Wu Mei-hung said at a press briefing today. 

• China’s Benchmark Index Heads for Weekly Retreat on IPO Concerns. China’s stocks fell, sending the benchmark index towards losses for this week, amid concern new share offerings will divert funds. Technology shares and brokerages slumped, while dairy producers rallied. The Shanghai Composite Index (SHCOMP) fell 0.2 percent to 2,022.87 at 10:22 a.m., adding to a weekly loss of 2.9 percent.

• Asian Stocks Fall on China Trade Data Before U.S. Jobs. Asian stocks fell, with the regional benchmark index extending its weekly loss, as data showed China’s trade surplus narrowed and investors await reports U.S. payrolls. Rio Tinto Group and BHP Billiton Ltd., Australia’s biggest shippers of iron-ore to China, fell at least 1.5 percent. Mitsubishi Materials Corp., which processes metals, dropped 1.6 percent in Tokyo as it plans to halt a plant after an explosion. Dainippon Sumitomo Pharma Co., which has the Japanese distribution rights for a liver-disease drug developed by Intercept Pharmaceuticals Inc., soared 12 percent after a clinical trial proved successful. The MSCI Asia Pacific Index slipped 0.2 percent to 138.72 as of 11:20 a.m. in Tokyo, on course for a 1.1 percent loss this week.

• Rebar Heads for Fifth Weekly Drop on China Data, Iron Ore Price. Steel reinforcement-bar futures in Shanghai headed for a fifth weekly decline after iron ore prices fell to a five-month low, even as imports of the raw material climbed to a record in 2013. Rebar for May delivery on the Shanghai Futures Exchange traded little changed at 3,452 yuan ($570) a metric ton at 10:54 a.m. local time. The contract has lost 2.5 percent this week, the most since May.

• Rubber Set for Biggest Weekly Drop Since April on China Demand. Rubber in Tokyo declined, heading for the biggest weekly loss since April, amid speculation that China’s economy is slowing and will weaken demand for the commodity used in tires. The contract for delivery in June on the Tokyo Commodity Exchange fell as much as 1.1 percent to 254.1 yen a kilogram ($2,424 a metric ton), matching a two-month low reached Jan. 7. Futures traded at 255.8 yen at 10:33 a.m. local time and have lost 6.8 percent this week, the most since the five days through April 19.

• George Concerned Fed Guidance Commits to Low Rates for Too Long. Federal Reserve Bank of Kansas City President Esther George, who dissented against unprecedented stimulus in seven policy meetings last year, voiced concern the Fed may keep the main interest rate too low for too long.

• Debt Rule Faces Dilution as Global Regulators Heed Bank Warnings. Lenders are poised to win concessions from central bank chiefs and global regulators over a debt limit they criticized as a blunt instrument that would penalize low-risk activities and curtail lending. A revised leverage-ratio plan is set to be laxer than a draft published last year by the Basel Committee on Banking Supervision, said a person familiar with the scope of a Jan. 12 meeting of the group’s oversight body at which the measure will be discussed. Leverage ratios are designed to curb banks’ reliance on debt by setting a minimum standard for how much capital they must hold as a percentage of all assets on their books. A quarter of large global lenders would have failed to meet the draft version of the leverage limit had it been in force at the end of 2012, according to data published by the committee in September.

• PCs Mark Steepest Drop With Shipments Slumping 10% in 2013. Personal-computer shipments fell 10 percent in 2013, marking the worst-ever decline after lackluster holiday sales underscored how consumers and businesses are shunning machines for mobile devices, two research firms said. Manufacturers shipped 315.9 million units, returning to 2009 levels and making it the “worst decline in PC market history,” researcher Gartner Inc. said in a statement today. IDC also said shipments had a record decline.

• Pentagon Says Snowden Took Most U.S. Secrets Ever: Rogers. The Pentagon concluded that Edward Snowden committed the biggest theft of U.S. secrets in history, downloading about 1.7 million intelligence files, including information that could put personnel in jeopardy, according to lawmakers. The Defense Department found that Snowden’s disclosures last year could “gravely impact” national security and that much of what he took is related to current military operations, Representative Mike Rogers, chairman of the House intelligence committee, said in a statement today describing the findings.

• Sears Holdings(SHLD) Falls After Forecasting Fourth-Quarter Loss. Sears Holdings Corp. fell as much as 21 percent in late trading after forecasting a fourth-quarter loss and posting lower sales during the holiday period. The shares tumbled 13 percent to $36.90 at 7 p.m. in New York after earlier plunging as low as $33.51. Sears rose 19 percent in 2013.

Wall Street Journal: 

• Banks Face New U.S. Moves Against Laundering. The Justice Department has put Wall Street on notice that it plans additional enforcement actions against banks that haven't done enough to stem the flow of illicit funds into the U.S. financial system. A top Justice Department official, in an interview with The Wall Street Journal, said banks have stepped up efforts to guard against money laundering in the wake of several high-profile federal enforcement actions, but the U.S. is still finding problems as it investigates banks.

• Banks Cut as Mortgage Boom Ends. With Rates Creeping Up and Refinancings Dwindling, Lenders Get Squeezed and Earnings Face Hit. A sharp slowdown in mortgage refinancing is forcing banks to cut jobs, fight harder for a smaller pool of home-purchase loans and employ new tactics to drum up business. The end of a three-decade period of falling mortgage rates has slammed the brakes on a huge wave of refinancing by U.S. households. The drop-off has deprived lenders of a key source of income at a time when the growth in loans for home purchases remains weak. 

• Apple(AAPL) Devices Flow Into Corporate World. The popularity of the iPhone and iPad among employees is prompting corporate tech managers to rewrite policies and change traditional buying patterns. The iPhone has replaced the BlackBerry as the mobile phone of choice, as the iPad assumes tasks once reserved for PCs.

• FCC Chairman Pledges Vigorous Broadband Oversight. Government Intervention 'May Well Be Warranted' When Market Power Is Concentrated. 

• ObamaCare's Rude Awakening For The Young. Amid rising premiums, the disincentives to sign up are becoming clear.

Fox News:

• Republicans call for removal of Obama supporter leading IRS targeting probe. Republicans claim the Justice Department's investigation of the IRS targeting scandal is "compromised," after revealing that it's being led by one of President Obama's political supporters. In a letter to Attorney General Eric Holder, the lawmakers said they've learned trial attorney Barbara Kay Bosserman is leading the probe. They detailed federal campaign finance records showing she's given more than $6,000 to Obama's two presidential campaigns -- and urged Holder to remove her from the case.

• Afghanistan releasing 72 prisoners considered security threat by US. Afghan President Hamid Karzai said the country is going to release all but 16 of 88 prisoners considered a security threat by the United States. In a statement Thursday, Karzai says that a review of the prisoners' cases by Afghan intelligence and judicial officials turned up no evidence of wrongdoing for 45 of the detainees. Karzai says there was insufficient evidence on another 27 and that they must be released.

MarketWatch.com:

• Liquidity risks are big red flags.

CNBC:

• 5 market worries keeping Cramer up at night. (video)

Zero Hedge:

• The Legends Are Bailing on the Markets… For Good Reason. The capital markets have become artificial with all risk being mispriced due to Fed intervention.

• Goodbye Greenspan/Bernanke Put, Welcome Bernanke/Yellen Collar.

• Numerous Explosives Discovered Near Winter Olympics Site.

• White (And Black) Men Can't...Work. (graph)

• If You're Waiting For An "Economic Collapse", Just Look At What Is Happening To Europe.

• Things That Make You Go Hmmm... Like The Fed's Logical Fallacies.

• Al Qaeda Now Controls More Territory In The Arab World Than Ever Before.

• Forget BRICs & PIIGS; Meet The Fragile 5 Emerging Markets.

• Goldman's(GS) Payroll Preview: Optimistic But Worried About Weather.

ValueWalk:

• TSLA, TWTR, AMZN, NFLX, PCLN: Time To Pop?

Business Insider:

• Hedge Fund Manager Blasts Nobel Prize Winner's Work Calling It 'Utter Nonsense' And 'Unscholarly'. 

• Indian Diplomat Strip-Searched In New York Has Been Indicted For Drastically Underpaying Her Maid.

• West Virginia Governor Declares State Of Emergency For Chemical Spill.

• Warren Buffett Once Said This Was The 'Best Single Measure' Of Stock Market Value. (graph)

• REPORT: Dell(DELL) Layoffs Are About To Hit And Could Be Huge.

• SEARS(SHLD) CRASHING AFTER GIGANTIC LOSS.

LA Times:

• Bomber in Iraq Kills 22 Recruits Seeking to Fight Al Qaeda. A suicide bomber detonated explosives on Thursday among a group of recruits who were joining the Iraqi Army to fight Al Qaeda in Anbar Province, the police said. Twenty-two recruits were killed, and 31 were wounded, officials said.

NY Times:  

• Wall Street Predicts $50 Billion Bill to Settle U.S. Mortgage Suits.

The Blaze: 

• ‘Conservatives Need to Run’: Beck Says Christie Scandal Is ‘Everything We Despise’ in Barack Obama. Glenn Beck on Thursday likened New Jersey Governor Chris Christie’s bridge scandal to a long list of scandals tied to President Obama, saying both illustrate “why you don’t give so much power to the government.” “The ends justify the means,” Beck said. “This Chris Christie story is everything we despise in Barack Obama.”

Reuters: 

• Alcoa(AA) reports big loss after impairment charge. Alcoa Inc reported a massive quarterly loss on Thursday after recent declines in aluminum prices led to a $1.7 billion non-cash impairment charge on smelter acquisitions. Shares of the largest U.S. aluminum producer fell 4 percent in after-hours trade after the company posted a profit adjusted for one-time items that fell short of analyst expectations and it issued an outlook for stagnant growth in global aluminum demand.

• U.S. unemployment benefits extension stalls in Senate. U.S. Senate Democrats on Thursday offered a new plan to revive federal unemployment benefits until mid-November and pay the $18 billion price tag with new spending cuts, but hopes of a bipartisan deal dissolved into bickering by day's end. 

• Humana(HUM) says mix of Obamacare enrollment worse than expected. Health insurer Humana Inc said on Thursday that it projected its enrollment mix in private plans through the exchanges created by President Barack Obama's healthcare law will be, "more adverse than previously expected."

Telegraph:

• IMF: there is still large uncertainty in Greece. IMF spokesman William Murray warns that there are still challenges ahead in Greece.

China Securities Journal:

• China May Start Coal Resource Tax on Price 'Soon'. China may announce rules on implementing coal resource tax based on price "soon," citing a person familiar with the matter.

Evening Recommendations
RBC:

• Cut (PAYX) to Underperform.

Macquarie:

• Cut (NTDOY) to Underperform.

Night Trading

• Asian equity indices are -.50% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 140.50 +2.0 basis points.

• Asia Pacific Sovereign CDS Index 108.50 +.5 basis point. 

• FTSE-100 futures +.37%.

• S&P 500 futures +.11%.

• NASDAQ 100 futures +.16%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (INFY)/46.71

Economic Releases
8:30 am EST

• The Change in Non-Farm Payrolls for December is estimated at 197K versus 203K in November.

• The Unemployment Rate for December is estimated at 7.0% versus 7.0% in November.

• Average Hourly Earnings for December are estimated to rise +.2% versus a +.2% gain in November.

10:00 am EST

• Wholesale Inventories are November are estimated to rise +.4% versus a +1.4% gain in October.

• Wholesale Sales for November are estimated to rise +.7% versus a +1.0% gain in October.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bullard speaking, China New Loan data, UK Industrial Production, USDA's WASDE report and the IBD/TIPP Economic Optimism Index for January 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 modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Slightly Lower into Final Hour on Eurozone/Emerging Markets Debt Angst, Global Growth Worries, Technical Selling, Technology/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 12.99 +.93%

• Euro/Yen Carry Return Index 148.52 +.04%

• Emerging Markets Currency Volatility(VXY) 8.96 -1.97%

• S&P 500 Implied Correlation 49.82 -.20%

• ISE Sentiment Index 138.0 -8.61%

• Total Put/Call .73 +4.29%

• NYSE Arms 1.19 +43.15% 

Credit Investor Angst:

• North American Investment Grade CDS Index 64.96 -.11%

• European Financial Sector CDS Index 86.15 +2.69%

• Western Europe Sovereign Debt CDS Index 50.0 -3.85%

• Emerging Market CDS Index 280.90 -.38%

• 2-Year Swap Spread 11.75 +.75 basis point

• TED Spread 20.50 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -1.25 unch.

Economic Gauges:

• 3-Month T-Bill Yield .04% unch.

• Yield Curve 254.0 -3 basis points

• China Import Iron Ore Spot $131.0/Metric Tonne -.38%

• Citi US Economic Surprise Index 63.90 +.5 point

• Citi Emerging Markets Economic Surprise Index 4.70 +1.6 points

• 10-Year TIPS Spread 2.30 +2 basis points

Overseas Futures:

• Nikkei Futures: Indicating +71 open in Japan

• DAX Futures: Indicating +35 open in Germany

Portfolio: 

• Higher: On gains in my biotech sector longs, index hedges and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long