Stocks Slightly Higher into Final Hour on Diminished Global Growth Fears, Yen Weakness, Biotech/Bank Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.84 +3.22%

• Euro/Yen Carry Return Index 147.49 +.16%

• Emerging Markets Currency Volatility(VXY) 8.70 +1.05%

• S&P 500 Implied Correlation 50.95 -1.14%

• ISE Sentiment Index 105.0 -20.45%

• Total Put/Call .75 +7.14%

• NYSE Arms 1.53 +14.19% 

Credit Investor Angst:

• North American Investment Grade CDS Index 65.69 +.43%

• European Financial Sector CDS Index 87.70 +.96%

• Western Europe Sovereign Debt CDS Index 50.0 +3.62%

• Emerging Market CDS Index 291.62 -.12%

• 2-Year Swap Spread 13.5 +.25 basis point

• TED Spread 20.5 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -2.0 -1.0 basis point

Economic Gauges:

• 3-Month T-Bill Yield .03% unch.

• Yield Curve 245.0 +1.0 basis point

• China Import Iron Ore Spot $123.20/Metric Tonne -1.28%

• Citi US Economic Surprise Index 64.10 -2.5 points

• Citi Emerging Markets Economic Surprise Index 4.5 -.3 points

• 10-Year TIPS Spread 2.24 unch.

Overseas Futures:

• Nikkei Futures: Indicating +33 open in Japan

• DAX Futures: Indicating +29 open in Germany

Portfolio: 

• Slightly Lower: On losses in my index hedges

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg:

• UBS Tells Davos Leverage Ratio Over-Reliance Threatens Stability. UBS AG (UBSN), Switzerland’s biggest bank, said a shift in emphasis to leverage ratios from risk-based capital measures could endanger financial stability. “We caution against over-reliance on leverage ratios as a regulatory tool,” UBS said in a report, which the Zurich-based bank prepared for release at the World Economic Forum in Davos, Switzerland, and made available to Bloomberg. Such a focus “could lead to further deleveraging by banks and pose risks for financial stability.” 

• German ZEW Investor Confidence Unexpectedly Fell in January. German investor confidence unexpectedly fell for the first time in six months, signaling caution over the outlook for the euro area’s economic recovery. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, slid to 61.7 in January from a seven-year high of 62 in December. Economists predicted an increase to 64, according to the median of 40 estimates in a Bloomberg News survey.

• Russia Mounts Security Sweeps to Choke Insurgency Near Sochi. Russia sent troops across Dagestan today as the government pressed an offensive against insurgents and new threats emerged weeks before the Winter Olympics kick off in the Black Sea resort of Sochi. Two counter-terrorism operations were under way in Dagestan, a Muslim-majority region on the Caspian, east of Sochi, said Alexander Polyakov, a spokesman for the National Anti-Terrorist Committee. Security forces also embarked on a third mission, surrounding a group of suspected militants in a house, Interfax reported, citing an unidentified local official.

• Alstom Cuts Margin and Cash Flow Outlook as Demand Falls. Alstom SA (ALO), the French maker of trains and power equipment, cut its forecast for operating margins for the second time in nine months because of weaker-than-expected sales of thermal-power equipment. The operating margin will remain at about 7 percent this fiscal year ending March, and “may slightly decline next year,” the company based near Paris said in a statement today. Alstom previously forecast this year’s margin to be little changed from fiscal 2013’s 7.2 percent, before gradually rising over the next two to three years to about 8 percent of sales. Alstom shares fell as much as 14 percent. “Confidence is broken,” said Gael de Bray, an analyst at Societe Generale. (GLE) He cut his target price for Alstom shares to 26 euros from 32 euros. “The expected deleveraging process was the main support to the shares but is further postponed.” 

• EU Must Contain Energy Costs or Risk ‘Deindustrialization’: EU. Europe must get a grip on energy prices to protect growth and stop its industry from fleeing abroad, according to two top policy makers. The region needs to reduce the cost gap with the U.S., where a shale-gas revolution has slashed prices, European Union Energy Commissioner Guenther Oettinger told a conference in Berlin via a video link from Brussels.

• SAP Falls on Delayed Profitability Target From Cloud Push. SAP AG (SAP) pushed back its profitability target by two years as it shifts sales efforts from traditional business software licenses to programs delivered over the Internet. The shares fell the most in six months.

• European Shares Are Little Changed as Unilever Advances. European stocks were little changed, erasing earlier gains, as a rally in food and beverage makers offset a decline in mining stocks. Unilever gained 2.3 percent after the maker of Magnum ice cream and TRESemme shampoo reported fourth-quarter sales growth that exceeded estimates. Rio Tinto Group and BHP Billiton Ltd., the world’s biggest miners, each declined at least 1.7 percent. Alstom SA (ALO) tumbled 14 percent after the French maker of trains and power equipment reduced its operating-margin outlook. The Stoxx Europe 600 Index climbed less than 0.1 percent to 335.76 at the close of trading, paring an earlier rally of as much as 0.6 percent.

• Rebar in Shanghai Drops as Iron Ore, Coke Prices Slump. Steel reinforcement-bar futures in Shanghai fell to a 16-month low as prices of steel-making materials slumped. Rebar for May delivery on the Shanghai Futures Exchange retreated by 1.2 percent to 3,410 yuan ($564) a metric ton. That’s the lowest closing price for a most-active contract since Sept. 7, 2012.

• Brent Crude Rises First Time in Four Days on IEA Forecast. Brent for March settlement climbed 66 cents, or 0.6 percent, to $107.01 a barrel on the London-based ICE Futures Europe exchange at 12:22 p.m. The volume of all contracts traded was 17 percent more than the 100-day average.

• Syria Uses War Crimes to Crush Rebels, Human Rights Watch Says. The Syrian regime has been using a “strategy of war crimes” that’s killing 5,000 people a month to crush the armed opposition and peace negotiators must focus more attention on the deaths, Human Rights Watch said. Roth also upbraided U.S. Secretary of State John Kerry for not wanting to “rock the boat” in his effort to bring both sides to the negotiating table in Switzerland tomorrow. “You don’t even see the U.S. government speaking about the mass atrocities.”

• Global Hedge Funds Assets Climb 17% to a Record $2.63 Trillion. Global assets rose by $376 billion, including $63.7 billion in net inflows from investors and $312 billion in investment gains, the Chicago-based data provider said in a report today. The fourth quarter was the sixth in a row that the industry saw a growth in assets, it said.

• Is S&P Being Sued Because It Downgraded the U.S.?

Barron's:

• Goldman Sachs(GS) Predicts Lower Metal Prices, Cliffs Natural Resources(CLF), Rio Tinto(RIO) Fall.

MarketWatch:

• The market is at a major inflection point.

CNBC: 

• Winter storm set to 'go bananas' across Northeast.

• China's unwelcome export to the US: Air pollution.

ZeroHedge: 

• A Comedy Of IMF Forecasting Errors: Global Trade Growth Tumbles More Than 50% From IMF's 2012 Prediction. (graph)

• Turkish Lira Crumbles To New Record Low As Erdogan Blames Fed Not Politics. (graph)

• Goldman Defends Its "Stocks Are Overvalued" Call From Angry Clients. (graph)

• The First Domino to Fall: Retail-CRE (Commercial Real Estate). (graph)

• Iran Naval Flotilla Makes History, Will Enter Atlantic For First Time.

Business Insider:

• RICHARD RUSSELL: I Believe 2014 Will Be The Year When 'The Excrement Hits The Fan'.

• 3 Big Dow Stocks Are Tumbling After Announcing Earnings.

• Jon Stewart Skewers Obama's Sneaky NSA Speech.

NY Times:

• Deutsche Bank(DB) Loss Underlines European Economy’s Dependence on Banks.

Real Clear Politics:

• Millennials Unhappy With Obama's War on the Young.

Reuters:

• Illinois budget gap to grow despite pension reform -study. A reform package passed late last year will make improvements to Illinois' woefully underfunded public pension system, but the state's budget gap still will increase to $13 billion by 2025 if current policies remain in place, according to an independent analysis released on Tuesday.

• Gold falls about 1 pct on Fed tapering speculation. 

• EMERGING MARKETS-Brazil stocks erase early gains as CSN weighs.

• Loeb's Third Point takes Dow Chemical(DOW) stake, urges spinoff.

• IMF sees up to 20 pct chance of prices falling in Europe.

Financial Times:

• IMF warns on emerging market exposure to capital flight. Weaker emerging economies are exposed to sudden capital flight as the global economy is on course to strengthen as expected this year, the International Monetary Fund said on Tuesday.

Telegraph:

• Euro 'increasing unemployment and social hardship', says EC. Deepening economic divisions between North and South, rich and poor eurozone countries threaten to undermine the European Union itself, report states.

Bear Radar

Style Underperformer:

• Large-Cap Value -.33%

Sector Underperformers:

• 1) Steel -4.01% 2) Hospitals -2.65% 3) Homebuilders -1.12%

Stocks Falling on Unusual Volume:

• LIVE, CEO, EXPE, LKQ, RENT, NUS, SKX, TFM, MDLZ, STML, TRV, PUK, EDU, FEYE, PETS, HAL, FLT, SGNT, VALE, CHSP, ALV, VZ, TJX, XON, DB, ATI, RGR, ONVO and CLF

Stocks With Unusual Put Option Activity:

• 1) CREE 2) EWH 3) TXN 4) CLF 5) EWZ
  

Stocks With Most Negative News Mentions:

• 1) SBUX 2) COST 3) EXPE 4) TOLL 5) XOM
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value +.16%

Sector Outperformers:

• 1) Gold & Silver +1.2% 2) Tobacco +.90% 3) Education +.85%
  

Stocks Rising on Unusual Volume:

• VGR, SBNY, IQNT, DOW, IRWD, AMTD, AA, NAT, AMPE, CENX, BCRX and CADX

Stocks With Unusual Call Option Activity:

• 1) STSI 2) PETM 3) RMD 4) BSX 5) GERN

Stocks With Most Positive News Mentions:

• 1) DOW 2) INTC 3) IBM 4) PEP 5) GOOG
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Weekend Headlines 
Bloomberg:  

• China Workforce Slide Robs Xi of Growth Engine. China's second straight annual drop in its working-age population is robbing President Xi Jinping of an engine of three decades of growth, underscoring the need to close the gap between his achievements and ambitions. Xi and Premier Li Keqiang, who in November unveiled the broadest policy shifts since the 1990s, are facing a labor force decline that the United Nations estimates will total almost 30 million in the decade through 2025. China’s working-age population, or people age 16 to 59, fell by 2.44 million in 2013, the National Bureau of Statistics said yesterday.  

• Crunch Escalates as Money Funds Rival Shadow Banks: China Credit. A doubling in China’s money-market funds in the past six months is draining bank deposits and raising the risk of financial failures during cash crunches, according to Fitch Ratings. The assets under management of such plans surged to a record 737 billion yuan ($122 billion) on Dec. 31 from 304 billion yuan on June 30, said Roger Schneider, senior director at Fitch’s Fund and Asset Manager Rating Group. Yu’E Bao, managed by Tianhong Asset Management Co. and sold online by Alibaba Group Holding Ltd., offers an annualized return of 6.7 percent, compared with the 3 percent official one-year savings rate. Some funds are offering higher rates, with news portal Eastmoney.com marketing a product that targets 10 percent.

• China’s 2013 New Home Sales Hit $1.1 Trillion, Record High. China’s new home sales last year exceeded $1 trillion for the first time as property prices in cities the government considers first tier surged in the absence of more nationwide property curbs. The value of new homes sold in 2013 rose 27 percent from 2012 to 6.8 trillion yuan ($1.1 trillion), National Bureau of Statistics said in a statement today. New-home prices in December climbed 20 percent in Guangzhou and Shenzhen from a year earlier, and jumped 18 percent in Shanghai and 16 percent in Beijing, the bureau of statistics said Jan. 18. 

• Bird Flu Kills Health Worker, Stokes Transmission Concern. A medical worker at a Shanghai hospital died from bird flu, stoking concern that the influenza virus known as H7N9 may have spread from person to person. The 31-year-old man died on Jan. 18, according to a statement on the Shanghai Municipal Commission of Health and Family Planning website yesterday. The city has identified seven cases of infection with the virus this year, the statement said.

• Thai Default Risk Soars as Funds Pull $4 Billion: Southeast Asia. The cost of protecting the country’s debt soared after investors including Wells Fargo Inc. pulled more than $4 billion from Thai stocks and bonds since Oct. 31, as rallies clogged up Bangkok roads and clashes left nine dead with about 550 injured. Pacific Investment Management Co., Goldman Sachs Group Inc. and Kokusai Asset Management Co. reduced holdings before protests erupted in late October, regulatory filings show. Credit-default swaps insuring Thai debt against non-payment for five years rose to 158 as of 10:37 a.m. in London, versus 150 on Jan. 17, according to data compiled by Bloomberg. They touched 160 earlier today in Asian trading, according to CMA prices, the highest since June 2012. The spread has widened 53 basis points since anti-government protest broke out on Oct. 31, compared with increases of 30 for Indonesia and 19 for the Philippines. 

• Lenovo Said to Be in Discussions to Buy IBM(IBM) Server Business. Lenovo Group Ltd. (992) is in discussions to acquire International Business Machines Corp. (IBM)’s low-end server business, and a deal may be signed within weeks, according to a person with direct knowledge of the matter.

• Asian Stocks Rise as China Acts to Pare Rates; Yen Drops. Asian stocks climbed as China’s money-market rates fell the most in four weeks after the nation’s central bank injected funds into the financial system. The yen slid against major peers as policy makers meet to review Japan’s monetary policy and oil retreated. The MSCI Asia Pacific Index gained 0.4 percent by 11:18 a.m. in Tokyo.

• WTI Oil Drops on Concern Slowing China Economy Will Curb Demand. WTI for February delivery fell as much as 94 cents to $93.43 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.90 at 12:27 p.m. Sydney time.

• Rubber Trades Near 5-Month Low on Concern Chinese Demand to Slow. Rubber futures in Tokyo traded near a five-month low amid concern that slowing economic growth in China may weaken demand from the world’s largest consumer of the commodity used in tires. The contract for delivery in June on the Tokyo Commodity Exchange was at 252.2 yen a kilogram ($2,413 a metric ton) at 10:42 a.m. local time after swinging between 251.8 yen and 254.6 yen. Futures settled at 252.3 yen yesterday, the lowest settlement for a most-active contract since Aug. 7. 

• Copper Drops as Economic Growth Slows in Leading Consumer China. “The base metals have made a fairly subdued start to the week, digesting the Chinese data,” Leon Westgate, an analyst at Standard Bank Plc in London, said in a report today. Copper for delivery in three months dropped 0.4 percent to $7,314 a metric ton on the London Metal Exchange. Copper for delivery in March dropped 0.2 percent to $3.3375 a pound on the Comex in New York.

• European Banks Face $1 Trillion Gap Before Review, Study Shows. European banks have a capital shortfall of as much as 767 billion euros ($1 trillion) before the European Central Bank’s probe into the financial health of the region’s lenders, according to a study. French banks show the biggest gap of 285 billion euros, followed by German lenders with as much as 199 billion euros, Sascha Steffen of the European School of Management and Technology in Berlin and Viral Acharya at New York University said in their study dated Jan. 15. The figures assume a benchmark capital ratio for other book measures of leverage of 7 percent, they wrote. “A comprehensive and decisive AQR will most likely reveal a substantial lack of capital in many peripheral and core European banks,” the authors wrote, referring to the central bank’s Asset Quality Review stage of the Comprehensive Assessment.

• OECD Says Denmark Ignores Debt at Own Risk as Higher Rates Loom. Denmark needs to put in place policies that help households deleverage before central banks start raising interest rates, according to the Organization for Economic Cooperation and Development. “Sooner or later rates in Denmark and the rest of Europe will go back to more normal levels,” Robert Ford, deputy director at the Paris-based OECD, said in an interview in Copenhagen. The nation’s household debt level is “a risk. It’s very high compared to any other.” At 321 percent of disposable incomes, Denmark boasts the world’s highest private debt burden. 

• Spain’s Worst Year for Work Leaves Rajoy Counting Cost. Spanish Prime Minister Mariano Rajoy can count the social cost of the economy’s slump when data this week show how 2013 was probably the worst year for work in its democratic history. Economists predict the unemployment rate in Spain, home to almost a third of the euro region’s jobless, stayed above 25 percent for the sixth quarter in a row. The National Statistics Institute in Madrid will release the report for the final three months of the year on Jan. 23.

• Deutsche Bank(DB) Foresees Challenging 2014 After Surprise Loss. Deutsche Bank AG, Germany’s biggest bank, said this year will be challenging after a surge in legal costs and lower debt trading revenue spurred a surprise fourth- quarter loss. The shares slumped.

• Ukrainian Clashes Intensify After Night of Violence in Kiev. Ukrainian activists battled police for a second night in the capital, defying new laws to subdue anti-government rallies that began two months ago. By 8:45 p.m. today in Kiev, protesters throwing Molotov cocktails at police were met by rubber bullets and smoke bombs. Activists also began building a catapult to launch projectiles. The two sides exchanged smoke and sound bombs yesterday in subzero temperatures as police vehicles were burned. More than 200 people were injured.

• Taliban Bombs Kabul Restaurant to Kill 21 ‘Invaders’ for Parwan. The Taliban claimed responsibility for an attack near a Lebanese restaurant in Kabul that killed 21 people including the International Monetary Fund’s senior official in Afghanistan and three United Nations workers. Three suicide bombers armed with heavy and light weapons stormed the restaurant on Jan. 17 in retaliation for a strike by U.S. forces in Parwan province, north of the capital, Taliban spokesman Zabihullah Mujahed said in e-mailed statements. La Taverna du Liban was targeted because it’s where “invaders used to dine with booze and liquor in the plenty,” Mujahed said, according to a statement in English.

• Investors Most Upbeat in 5 Years With Record 59% Bullish in Poll.

• CEO earnings skepticism backs weakest S&P 500 forecast in decade. Investors who want to know why U.S. equity strategists are the most pessimistic in a decade need look no further than statements by chief executive officers. For every company predicting in January that earnings that will beat analyst estimates, 2.5 are projecting results that fall short, matching the worst ratio since the rally began in March 2009, according to data compiled by Bloomberg. While analysts say Standard & Poor’s 500 Index profits will rise 8.8 percent in 2014, that’s almost the same estimate they generated a year ago for 2013, when earnings ended up increasing at about half that rate, the data show.

Wall Street Journal:

• Next Cut in Fed Bond Buys Looms by Jon Hilsenrath. Reduction to $65 Billion Could Be Announced on Jan. 29. The Federal Reserve is on track to trim its bond-buying program for the second time in six weeks as a lackluster December jobs report failed to diminish the central bank's expectations for solid U.S. economic growth this year, according to interviews with officials and their public comments. A reduction in the program to $65 billion a month from the current $75 billion could be announced at the end of the Jan. 28-29 meeting, which would be the last meeting for outgoing Chairman Ben Bernanke.

• Deutsche Bank(DB) Loss Could Be Harbinger for Sector. Bank's Shares Down More Than 5% in European Trading.

Fox News:

• 'I’ve got a pen': Obama raises hackles with executive actions. With his newly announced overhaul of National Security Agency surveillance activities, President Obama has once again hit a nerve with members of Congress on both sides of the aisle. The president, as he often does when facing a nettlesome problem, used his executive powers to implement changes. In his address on Friday, Obama said he's approved a "new presidential directive for our signals intelligence activities both at home and abroad."

• UN chief withdraws invitation for Iran to participate in Syria peace talks. U.N. Secretary-General Ban Ki-moon has withdrawn his invitation for Iran to participate in Syria peace talks, a spokesman said, after the invite spurred objections from the United States and the Syrian opposition.

Zero Hedge:

• "X" Marks The Spot Of The Death Of Monetary Policy. (graph)

• Refuting The Biggest "Recovery" Lies In Four Simple Charts. (graph)

• 5 Things To Ponder This Weekend: Beer Goggles, Fires And Luck.

• Up Close And Personal: Volgograd Suicide Bomber Moment Of Detonation Caught On Tape. (video)

• Jeff Gundlach Fears The 'Unthinkable': "It Feels Like An Echo Of The Late-90s".

• Citi(C) Fears The Sustainability Of The US Equity Market Rally.

• "Two Roads Diverged" - Wall Street's Doubts Summarized As "The Liquidity Tide Recedes".

• Tracking "Bubble Finance" Risks In A Single Chart.

• Russian Police Hunt For Alleged Suicide Bomber On The Loose in Sochi.

• Over-Financialization - The Casino Metaphor.

• "Entire Healthcare Reform Program" Jeopardized Unless Accenture Fixes Healthcare.gov By Mid-March.

• What Do "Insiders" Know That You Don't? (graph)

• Bank of America(BAC) Is Actively Preparing For The Chinese January 31 Trust Default.

• The Biggest Pain-Trade? - Bearish Bond Belief At 20-Year Extremes. (graph)

• Chinese Money Markets Spooked Despite Slight Beat (And Miss!) In GDP. (graph)

• Philippine Navy Adds To Regional Arms Build-Up As China Words (And Deeds) Escalate.

• The Retail Death Rattle. (graph)

• Short-Sellers Set-Up Shop As Sentiment Starts To Shift. (graph)

• After Seven Lean Years, Part 2: US Commercial Real Estate: The Present Position And Future Prospects. (graph)

• China Liquidity Fears Ease As PBOC Injects 255 Billion CNY - Most Since Feb 2013. (graph)

ValueWalk:

• Albert Edwards and Dylan Grice: Forecasts from Two Top Strategists.

Business Insider:

• China And Japan Are Engaged In An Escalating War Of Words.

• The White House Is Delaying Another Obamacare Provision.

• Key US Senator Dianne Feinstein Objects To Part Of Obama's Spy Data Plan.

• Islamic Militant Group Says There Will Be A 'Present' For Tourists At The Sochi Olympics.

• 17-Year-Old Russian Hacker Behind Target, Neiman Marcus Credit Card Hacks.

• Fear Is Mounting On Wall Street That The Fed Will 'Fall Behind The Curve' Like In 1994.

• A Big Snowstorm And Bitter Cold Are Headed For The Northeast On Tuesday.

• SHADES OF '99: New Data Show The Tech Boom Is Looking More And More Like A Bubble.

• As PC Sales Continue To Implode, HP(HPQ) Starts Pushing Windows 7 Instead Of Windows 8.

Wall Street All-Stars:

• Indicator Update: Pundits calling the market top.

CNN:

• Warships part of U.S. contingency plan for Sochi Olympics. The U.S. military will have up to two warships and several transport aircraft on standby under a contingency plan to help evacuate American officials and athletes from the Winter Olympics in Sochi, Russia, if ordered, a U.S. official said. The State Department would take the lead in organizing and evacuating Americans, if necessary, the official with direct knowledge of the plan told CNN.

Reuters:

• EMERGING MARKETS-Brazil stocks fall nearly 1 pct on China data, Mexico steady. Brazilian stocks fell nearly 1 percent on Monday, hurt by economic data from China suggesting an impending slowdown in the world's No. 2 economy. On a day of light trading due to the Martin Luther King Jr. national holiday in the United States, Mexico's IPC index rose slightly, while Chile's bourse ended a three-day rally. Brazil's benchmark Bovespa stock index closed the day down 0.96 percent.

• JP Morgan(JPM) drops second China IPO amid 'princeling' probe. JP Morgan has ceased working on the proposed US$1bn IPO of Jinzhou-based Tianhe Chemicals amid an ongoing investigation into its hiring practices. 

Telegraph:

• In France, les poulets are coming home to roost. France’s charmed life falls prey to excessive state spending and regulation.

Bild:

• NSA Monitors Merkel Advisers After Obama Reassurances. The NSA will continue to spy on advisers to Chancelor Angela Merkel even after U.S. President Barack Obama said the U.S. isn't observing the chancellor, citing intelligence employees. NSA has analyzed with whom Merkel telephoned, had e-mail conversations, discussed decisions.

AsianInvestor:

• Hedge Fund Bears Take Grisly View On China. 2014 may be the year that China's economy undergoes a reckoning of its economy as the country seeks to tighten credit, argue some managers.

China Securities Journal:

• China's Economic Slowdown Risk Rises. China's risk of a future economic slowdown has risen under continuous relatively tight monetary conditions in early 2014, according to a front-page commentary by reporter Ren Xiao.

Shanghai Securities News:

• China 2013 Insurers' Investment Yield 5.04%. Chinese insurers' 2013 investment yield rose to 5.04%, highest in 4 years, citing an annual meeting of China Insurance Regulatory Commission.

Weekend Recommendations

Barron's:

• Bullish commentary on (DNR), (DF), (MRO) and (GPS).

• Bearish commentary on (NAV).

Night Trading

• Asian indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 144.0 +4.0 basis points.

• Asia Pacific Sovereign CDS Index 110.75 +4.25 basis points.

• FTSE-100 futures +.34%.

• S&P 500 futures +.44%.

• NASDAQ 100 futures +.66%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note

Economic Releases 

• None of note

Upcoming Splits

• None of note

Other Potential Market Movers

• The Germany ZEW Index and the Bank of Japan decision could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by financial 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 25% net long heading into the week.

Weekly Outlook

Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on earnings concerns, a stronger yen, increasing emerging markets debt angst, profit-taking, more shorting and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.