Stocks Higher into Final Hour on Less Emerging Markets/Eurozone Debt Angst, Weaker Yen, Short-Covering, Homebuilding/Biotech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 16.04 -7.92%

• Euro/Yen Carry Return Index 146.55 +.20%

• Emerging Markets Currency Volatility(VXY) 9.75 -.61%

• S&P 500 Implied Correlation 57.18 -2.31%

• ISE Sentiment Index 138.0 +5.34%

• Total Put/Call .76 -11.63%

• NYSE Arms .72 -12.0% 

Credit Investor Angst:

• North American Investment Grade CDS Index 70.22 -3.26%

• European Financial Sector CDS Index 99.41 -4.88%

• Western Europe Sovereign Debt CDS Index 54.0 -1.82%

• Asia Pacific Sovereign Debt CDS Index 112.27 -4.49%

• Emerging Market CDS Index 323.20 -3.83%

• 2-Year Swap Spread 14.50 -.5 basis point

• TED Spread 19.0 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -3.0 -.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.

• Yield Curve 241.0 unch.

• China Import Iron Ore Spot $123.90/Metric Tonne -.32%

• Citi US Economic Surprise Index 52.0 -7.0 points

• Citi Emerging Markets Economic Surprise Index 8.0 +.9 point

• 10-Year TIPS Spread 2.14 unch.

Overseas Futures:

• Nikkei Futures: Indicating +158 open in Japan

• DAX Futures: Indicating +53 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech/biotech/medical sector longs

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

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg:

• China’s Rescue of Troubled Trust May Stoke Risk-Taking. China’s eleventh-hour rescue of wealthy investors in a high-yield trust threatens to drive more money into the nation’s $6 trillion shadow-banking industry, undermining regulators’ efforts to deter excessive risk-taking. Industrial & Commercial Bank of China Ltd., the nation’s largest lender, yesterday told customers who had invested in the 3 billion-yuan ($496 million) trust product that they can sell their rights to unidentified buyers to recoup the principal. Some clients plan to visit ICBC branches to demand more interest ahead of tomorrow’s 5 p.m. deadline for accepting the offer, according to Du Ronghai, a Guangzhou-based investor. Averting the nation’s biggest trust default may reinforce investors’ belief in implicit guarantees and the government’s backing of such risky products, stoking their appetite for products in the $1.67 trillion trust market. The bailout underscores the pressure on authorities to maintain financial and social stability even as they aim to prune the government’s role in the world’s second-largest economy and curtail debt. 

• Shanghai Sells Residential Land at Record Amid Competition. Shanghai sold a residential plot of land at a record price amid rising competition among developers for sites in cities with fast price gains as some local governments tighten property curbs.

• Rajan Signals India Inflation-Target Shift as Vote Tensions Boil. India central bank Governor Raghuram Rajan signaled he’s preparing to follow through on proposals to make inflation the bank’s top priority even at the risk of friction with Prime Minister Manmohan Singh’s government.

• Santander, BBVA Face Profit Drain on Emerging Currencies. Banco Santander SA (SAN) and Banco Bilbao Vizcaya Argentaria SA (BBVA), Spain’s biggest banks, face a fresh risk to earnings as the slump in emerging market currencies threatens to slow growth from Brazil to Turkey. Santander relies on consumer banking in Latin America for more than a third of profit, while BBVA has made Turkey, whose lira is the second-worst performer against the euro over the last three months, a centerpiece of growth plans. Santander reports fourth-quarter results on Jan. 30 and BBVA a day later. Rio Olympic Infrastructure Costs of $2.3 Billion Are Set to Rise.

• Rio Olympic Infrastructure Costs of $2.3 Billion Are Set to Rise. Brazilian authorities today announced 5.6 billion reais ($2.3 billion) will be spent on infrastructure directly related to the 2016 Rio de Janeiro Olympic Games and those costs will rise as projects are added. The announcement comes months behind schedule, and after pressure on public bodies to reveal exactly how much it will cost for Rio to be the first South American city to host the quadrennial showpiece. Delays and cost overruns to several projects related to this year’s soccer World Cup have sharpened the focus on the Olympics. 

• Argentina’s Lying Prices Show Capital Control Limits: Currencies. When Argentina decided last week to ease limits on dollar purchases, it became the latest emerging-market nation to acknowledge that capital controls usually fail in masking an economy’s flaws.

• Idle Workers Sweep Italy Streets as Alessi Shuns Layoff Fund. When Michele Alessi saw orders drop at his namesake kitchenware designer he paid his staff to sweep streets and prune trees rather than have them stay home tapping a state-backed layoff fund. 

• European Stocks Rise as Siemens Advances on Profitability. European stocks advanced, following their largest three-day slump in seven months, as mining companies climbed and banks rebounded from a three-week low. BHP Billiton Ltd. and Rio Tinto Group both rose more than 1 percent. Banco Santander SA, which generates most of its sales from Latin America, gained 1.6 percent to halt an eight-day losing streak. F&C Asset Management Plc (FCAM) jumped 6.1 percent after Bank of Montreal agreed to buy the owner of the U.K.’s oldest investment fund for 708 million pounds ($1.2 billion). The Stoxx Europe 600 Index increased 0.7 percent to 324.22 at the close of trading. 

• WTI Rises for First Time in Three Days on U.S. Weather. WTI for March delivery rose as much as 69 cents to $96.41 a barrel and was at $96.28 as of 1:20 p.m. London time in electronic trading on the New York Mercantile Exchange. The contract fell 1 percent to $95.72 yesterday, the lowest price since Jan. 21. The volume of all futures traded was about 42 percent below the 100-day average.

• Yellen Faces Test Bernanke Failed: Ease Bubbles. Janet Yellen probably will confront a test during her tenure as Federal Reserve chairman that both of her predecessors flunked: defusing asset bubbles without doing damage to the economy. The central bank’s easy money policies already have led to pockets of frothiness in corporate debt and emerging markets. The danger is that unwinding such speculative excesses will end up shaking the financial system and hurting growth.

• Deep South Set for Rare Winter Storm Amid U.S. Frigid Front. A rare winter storm is forecast to bring heavy snow and icing to parts of the Deep South today as temperatures continue to drop across the U.S. behind an Arctic front sweeping the country. The storm will extend from the central Gulf Coast to the southern Mid-Atlantic coast today, the National Weather Service said in a bulletin at 3:16 a.m. New York time. A wintry mix is possible as far as southern Los Angeles.

• DuPont(DD) Sales Forecast Trails Estimates as Currency Costs Climb. DuPont Co. (DD:US), the biggest U.S. chemical maker by market value, forecast 2014 earnings that missed analysts’ estimates as the company predicted higher costs from foreign currency exchange. Sales this year will climb 4 percent to about $37 billion, Wilmington, Delaware-based DuPont said today in a statement, trailing the $38.1 billion average of 17 estimates compiled by Bloomberg.

• Ford’s(F) Profit Tops Estimates Before 2014 Record Rollouts. Ford Motor Co. (F) reported quarterly profit that topped analysts’ estimates buoyed by growth in North America and Asia, as F-Series pickups extended sales leadership in the U.S. and the Focus compact drove demand in China.

• Nucor(NUE) Profit Forecast Misses Estimates as Steel Prices Decline. Nucor Corp. (NUE), the largest U.S. steel producer by market value, forecast first-quarter profit that missed analysts’ estimates as steel prices were expected to decline.

Wall Street Journal:

• Poll Finds Americans Anxious Over Future, Obama's Performance. President to Face Unsettled Nation in State of the Union Speech.

Fox News:

• 'We have a Constitution': Boehner warns Obama on exec orders. House Speaker John Boehner issued a stern warning to President Obama ahead of Tuesday night's State of the Union address: "We have a Constitution. We abide by it. If he tries to ignore it, he's going to run into a brick wall."

MarketWatch:

• Beware the dead-cat bounce.

CNBC: 

• Why people fear a shadow banking crisis in China.

• Paul Singer: Minimum wage hike would 'destroy' jobs. (video)

• Stocks investors are shorting the most.

ZeroHedge: 

• Spot The "Recovery" In This Abysmal Durable Goods Chart. (graph)

• Case-Shiller Home Price Index Posts First Monthly Drop In One Year. (graph)

• Russia Threatens With Pulling Bailout As Ukraine Government Resigns. (graph)

• Ten Days After Epic UMich Consumer Confidence Miss, A Second Confidence Index Surges. (graph)

• Chart Of The Day: Orders Of Computers And Electronic Products Plunge To 1993 Levels.

• A Turkey Of A Wealth Effect: Turkish Stocks Drop To July 2012 Levels. (graph)

• These Are The Riskiest Emerging Markets. 

• The 'Economic' State Of The Union. (graph)

Business Insider: 

• CARL ICAHN: I Just Invested Another $500 Million In Apple(AAPL), And The Reason For Apple's Drop Is Totally Misunderstood.

• HANK PAULSON: We're Sowing The Seeds For Another Crisis.

• WHEN THE HEDGE FAILS: Hedge Fund Manager Describes What It's Like When It All Goes Terribly Wrong — Like Last Friday.

• Researchers Discover How Traders Act Like Herds And Cause Market Bubbles.

CNN:

• Ukraine government resigns, parliament scraps anti-protest laws amid crisis. (video) Ukrainian President Viktor Yanukovych accepted the resignation of Prime Minister Mykola Azarov and his government Tuesday, amid a political crisis fired by violent protests on the country's streets. Azarov and his Cabinet will continue in their roles until a new government is formed, a notice on the presidential website said. Yanukovych's announcement comes only hours after Azarov submitted his resignation and as the national parliament met in an emergency session aimed at ending the crisis.

Reuters:

• Corning(GLW) warns of further fall in LCD glass prices. Specialty glass maker Corning Inc warned that prices of LCD glass would decline further in the current quarter, raising concerns about growth in its display business. Corning shares fell as much as 9 percent on Tuesday.

• Emerging market sell-off, Fed moves hit currency carry trades. A sell-off on emerging markets is likely to flush out many of the remaining carry trade investors who went there in search of higher returns, and this shift should boost more liquid currencies such as the dollar, yen and Swiss franc.

Financial Times: 

• China is biggest risk to emerging markets. Tight credit and slowing growth create ripple effect across EMs. Debt markets have now seen 17 straight weeks of outflows and equities 13 weeks, the latter the longest streak in 11 years, according to data from BofA Merrill Lynch.

Telegraph:

• Britain's economic recovery: unbalanced and unsustainable. Iraq and Iran plot oil revolution in challenge to Saudi Arabia. Iraq's goal of pumping 9m barrels a day of crude could be a game changer for oil prices and British companies. 

• Iraq and Iran plot oil revolution in challenge to Saudi Arabia. Iraq's goal of pumping 9m barrels a day of crude could be a game changer for oil prices and British companies. 

FAZ:

• Germany Sheds One Third of Solar Jobs in 1 Year. Number of people employed in solar-cell and solar-module production fell to 4,800 in thr yr through November, citing data from Germany's Federal Statistics Office. The industry is suffering from Chinese manufacturer pricing, according to the report.

The Economic Times:

• RBI's Rate Hike Leaves India Inc Disappointed. India Inc. today expressed disappointment over the Reserve Bank increasing the key rate by .25% and hoped that banks would refrain from hiking lending rates as such a move will scuttle economic recovery. "The monetary policy statement of the RBI has disappointed the industry. Growth has been anemic and investments have been hit hard over the last two years and there are signs of contraction in employment opportunities across industries," Ficci said in a statement. The Reserve Bank of India today raised key policy rate by .25 per cent to 8% in a bid to curb inflation, a move that may translate into higher EMIs and push up the cost of borrowing for corporates.
  
  The Reserve Bank today raised key policy rate by 0.25 per cent to 8 per cent in a bid to curb inflation, a move that may translate into higher EMIs and push up the cost of borrowing for corporates.
  
  
  

  Read more at:
  http://economictimes.indiatimes.com/articleshow/29503619.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
  NEW DELHI: India Inc today expressed disappointment over the Reserve Bank increasing the key rate by 0.25 per cent and hoped that banks would refrain from hiking lending rates as such a move will scuttle economic recovery.
  
  "The monetary policy statement of the RBI has disappointed the industry. Growth has been anaemic and investments have been hit hard over the last two years and there are clear signs of contraction in employment opportunities across industries," Ficci said in a  ..
  
  
  

  Read more at:
  http://economictimes.indiatimes.com/articleshow/29503619.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

India's statistics office is likely to say in two weeks that growth this year will slump further to an 11-year low, undermining the government's optimism that it would at least be flat at 5% on the back of a recovery in the second half.

The advanced estimate for FY14 is set to come in below that level, said an official who didn't want to be named.

The economy expanded 4.6% in the first half and would need to rise 5.4% in the second for growth to come in at 5%, which doesn't lo ..

Read more at:
http://economictimes.indiatimes.com/articleshow/29268974.cms?utm_source=hootsuite&utm_campaign=hootsuite&utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Gloomy outlook: India's GDP may sink below 5% to an 11-year low

Read more at:
http://economictimes.indiatimes.com/articleshow/29268974.cms?utm_source=hootsuite&utm_campaign=hootsuite&utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Xinhua:

• China reports 8 new human H7N9 cases.

Bear Radar

Style Underperformer:

• Large-Cap Growth +.06%

Sector Underperformers:

• 1) Disk Drives -1.34% 2) Oil Service -.32% 3) Computer Services -.27%

Stocks Falling on Unusual Volume:

• CHEF, RCII, AOS, VIP, STX, PII, HDS, SCBT, MX, SRCL, GLW, AAPL, LIVE, FCFS, OCN, DWCH, FEIC, OLN, POST, MONT, MBT, SWKS, TTS, XPO, X and ESI

Stocks With Unusual Put Option Activity:

• 1) SYMC 2) AOL 3) LOW 4) KBH 5) XLF
  

Stocks With Most Negative News Mentions:

• 1) VIP 2) QCOM 3) MMM 4) JPM 5) CHEF
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Growth +.86%

Sector Outperformers:

• 1) Homebuilders +4.12% 2) Airlines +2.28% 3) Gaming +2.09%
  

Stocks Rising on Unusual Volume:

• TXI, SIMO, MLM, LXK, KLIC, OSK, DHI, MXIM, TROW, SANM, OSK, PDCE, SWFT, CLF, JAZZ, WAT, ANF, VMC, LEN, ISIS, KBH and AAL

Stocks With Unusual Call Option Activity:

• 1) LXK 2) AEO 3) UPL 4) CHRW 5) CPWR

Stocks With Most Positive News Mentions:

• 1) LMT 2) PG 3) AAPL 4) CMCSA 5) PFE
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg: 

• China Local-Government Borrowing Costs Drop After Trust Bailout. Borrowing costs for China’s financiers of roads, subways and sewage plants dropped after a troubled trust product was bailed out, averting a threatened default that added to concern about record local debt. The average yield on five-year notes rated AA, the most common grade for the so-called local-government financing vehicles, dropped two basis points yesterday to 7.58 percent, thebiggest decline in more than two weeks. “The news is good for all high-yield bonds, including LGFVs. The positive sentiment may last until the next repayment problem arises.”

• China's Trade Data Under Scrutiny as Hong Kong Imports Diverge. China's trade numbers, distorted by fake exports last year, are set to come under renewed scrutiny after a discrepancy between Hong Kong and Chinese figures for bilateral trade widened to the largest in eight months. Hong Kong's December imports from China fell 1.9% from a year earlier to HK$176 billion($22.7 billion). the city's statistics department said today. That compares with $38.5 billion in exports to Hong Kong reported earlier this month by China's customs administration, up 2.3%, based on data compiled by Bloomberg. 

• Asian Stocks Swing Between Gains, Losses on China, Fed. Asian stocks swung between gains and losses before the Federal Reserve meets to discuss a further reduction in stimulus and as profit growth at China’s industrial companies slowed. BHP Billiton Ltd., the world’s biggest mining company that counts China as its No. 1 market, fell 1.9 percent to be the biggest drag on the index as Australian markets opened after a holiday. LG Display Co. (034220) lost 4.4 percent in Seoul after customer Apple Inc. forecast sales that trailed analyst estimates. Komatsu Ltd., the world’s second-largest maker of construction equipment, gained 2.2 percent in Tokyo after bigger rival Caterpillar Inc. projected earnings that topped expectations. The MSCI Asia Pacific Index was little changed at 134.76 as of 12:22 p.m. in Tokyo, having swung between a gain of 0.2 percent and a loss of 0.3 percent.

• Rebar Drops in Shanghai as Demand Slows Before Lunar New Year. Steel reinforcement-bar futures in Shanghai declined for a second day as physical demand slowed before the Lunar New Year holiday. Rebar for May delivery fell as much as 1 percent to 3,437 yuan ($568) a metric ton on the Shanghai Futures Exchange and traded at 3,451 yuan at 10:44 a.m. local time. Most-active prices, which declined on Jan. 22 to the lowest level since June, are heading for a second monthly drop.

• Rubber Futures Poised for Bear Market as China’s Inventory Rises. Rubber futures in Tokyo headed toward a bear market as stockpiles in China swelled to a nine-year high, signaling weakening demand from the largest consumer of the commodity used in tires. Rubber for delivery in June on the Tokyo Commodity Exchange fell as much as 1.2 percent to 226.5 yen a kilogram ($2,207 a metric ton) before trading at 227.3 yen at 9:13 a.m. local time. A close at or below 228.8 yen would be 20 percent decline from the Sept. 9 settlement for a most-active contract, meeting the common definition of a bear market. That would mark the end of bull run that started on Aug. 26 and stalled as stockpiles monitored by the Shanghai Futures Exchange climbed, advancing for eight straight weeks to 204,451 tons, the largest amount since October 2004.

• STMicro(STM) Posts $36 Million Fourth-Quarter Loss, Trails Estimates. STMicroelectronics NV (STM) reported fourth-quarter results that trailed analysts’ estimates as Europe’s largest semiconductor maker works to restructure plants and revamp its offerings. The net loss narrowed to $36 million, or 4 cents a share, from $428 million, or 48 cents, a year earlier, the Geneva-based company said in a statement yesterday. The loss excluding impairment and restructuring charges totaled 1 cent a share. Analysts projected profit of 2 cents, the average of estimates compiled by Bloomberg.

Wall Street Journal:

• James Chanos: ‘We’re Still Short Caterpillar(CAT)'. Short-seller James Chanos said he’s still betting against Caterpillar Inc. despite the company’s better-than-expected quarterly results.

• Request to SEC for AIG Files Nets Heavily Redacted Documents. Regulator Keeps Details—and Much More—Secret Despite Request for Info on AIG Probe. The Securities and Exchange Commission recently released documents related to its probe into the near-collapse of American International Group Inc. with hundreds of redactions to keep information secret. SEC officials blacked out information more than 800 separate times in one transcript of a witness interview that lasted less than three hours. On one page, redactions left just four words remaining: "okay," "by," "in" and "did." On another page, "um hmm" is one of three short phrases left untouched. Among the blacked-out details: the names of witnesses, their lawyers, the SEC enforcement officials and even the proofreaders who checked the transcripts.

• Government Reaches Deal With Tech Firms on Data Requests. Deal Would Allow Internet Companies to Tell Public More Details About Requests. The Obama administration agreed Monday to let technology companies make more information public about how often the government monitors Internet use, a move that aims to ease public distrust and corporate complaints about snooping.

Fox News:

• Senate Republicans pitch ObamaCare alternative on eve of presidential address. Seizing on the public's continued anxiety over the ObamaCare rollout, a trio of Republican senators on Monday unveiled a sweeping alternative proposal they say would gut the law's mandates and taxes while preserving consumer protections.

MarketWatch.com:

• 3 Apple charts that explain stock investor concerns.

CNBC: 

• Emerging markets are still vulnerable to panic. Emerging markets may be unrecognizable from the small and fragile economies that fell like dominoes 15 years ago, but they are just as vulnerable today to the same sort of indiscriminate selling when investor panic sets in. As even the relatively robust economies of Mexico and Poland now feel the heat from disparate flashpoints from Turkey to Argentina, there are growing doubts that emerging markets have built any immunity to such contagion. The wildfire engulfing the developing world is starting to look very like the currency runs of the past, such as the Asian, Russian and Latin American collapses that began in 1997. Dominic Rossi, Global CIO for equities at fund manager Fidelity, likens the current wave of plunging currencies, equities and bonds to watching an old film—one in which some of the biggest emerging markets could feature.

• New home buyers are seeing more barriers. (video)

• Apple(AAPL) drops 5% on weak iPhone sales, revenue outlook. Apple posted quarterly results that beat estimates Monday, but reported weak iPhone sales and handed in a current-quarter revenue forecast that underwhelmed, sending shares lower in extended-hours trading. The company posted earnings of $14.50 a share on sales of $57.59 billion, surpassing expectations for $14.07 a share on sales of $57.46 billion, according to a consensus estimate from Thomson Reuters. Shares dropped more than 5 percent in extended-hours trading.

• America’s recovery a 'false dawn,' says Stephen Roach. Despite signs that the U.S. economy is gaining traction, Stephen Roach, former chairman of Morgan Stanley Asia, says the recovery appears to be a "false dawn." "Financial markets and the so-called Davos consensus are in broad agreement that something close to a classic cyclical revival may finally be at hand for the U.S. But is it?" Roach, a senior fellow at Yale University, wrote in an op-ed published on the Project Syndicate website on Monday.

Zero Hedge:

• Margin Debt Soars To Record High; Investor Net Worth Now Doubly Negative From 2007 Bubble Peak. (graph)

• The Trades That Broke The Nasdaq.

• Gavekal Explains The Emerging Market Panic.

• Stats Of The Union. (graph)

• Doug Noland Warns "Bubbles Are Faltering... China Trust Is The Tip Of The Iceberg".

• Democratic Congressman Admits Obamacare Won't Work (After Announcing Retirement).

• What Constitution? Obama To Emphasize Intention To Use Unilateral Presidential Authority.

Business Insider: 

• A Dangerous New Form Of Heroin Is Spreading Across America.

• Apple(AAPL) Suppliers Tank In Asian Trading.

Washington Post: 

• The lie that hangs over the State of the Union. Today, a record 72 percent of Americans say big government is the biggest threat to our country — the highest that number has been in 50 years of polling. Concern with big government is so bad, even a majority of Democrats — 56 percent — consider it the biggest threat the nation faces. So not only do Americans not trust Obama, they also have never been more skeptical of bi -government solutions to our nation’s problems. So the president can talk all he wants about income inequality, but it’s unlikely anyone will trust him with a solution. That is Obama’s dilemma as he delivers his State of the Union address tomorrow night.

Reuters: 

• China details $3-trillion local public debt risk. China's local governments have published separate audit reports detailing their combined public debt of $3 trillion for the first time ever, to increase transparency and quell investor concerns. The audits showed China's wealthiest eastern provinces are the most indebted, though repayment burdens are more onerous in poorer areas such as the southwestern province of Guizhou, where the ratio of debt to GDP is the highest, at 79 percent. Most governments were shown repaying the vast majority of their debt on time, though a handful, such as Inner Mongolia, have fallen behind, with the portion of loans due but unpaid running as high as 28 percent.

• U.S. Steel(X) loss widens as steel shipments fall. United States Steel Corp. reported a wider fourth quarter loss as total steel shipments declined compared to last year. The Pittsburgh-based steelmaker had a net loss of $122 million, or 84 cents per share, compared to a loss of $50 million, or 35 cents per share, a year earlier.

• Seagate(STX) misses estimates as growth slows in cloud business. Hard-disk drive maker Seagate Technology Plc's second-quarter results missed analysts' estimates as growth slowed in its cloud storage business, sending its shares down 7 percent in extended trading.

Evening Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 150.0 -5.5 basis points.

• Asia Pacific Sovereign CDS Index 117.50 -1.5 basis points.

• FTSE-100 futures -.08%.

• S&P 500 futures +.29%.

• NASDAQ 100 futures -.66%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (NUE)/.40

• (CIT)/.80

• (LXK)/1.11

• (TROW)/1.03

• (APD)/1.33

• (PFE)/.52

• (GLW)/.28

• (DHI)/.30

• (DD)/.55

• (DHR)/.95

• (F)/.28

• (CMCSA)/.68

• (OSK)/.31

• (ITW)/.91

• (AKS)/.05

• (CRUS)/.77

• (BXP)/1.25

• (YHOO)/.38

• (ILMN)/.44

• (VMW)/1.00

• (AMGN)/1.69

• (T)/.51

• (JLL)/3.11

• (EA)/1.23

• (OI)/.52

• (WERN)/.29

• (MSTR)/1.10

Economic Releases
8:30 am EST

• Durable Goods Orders for December are estimated to rise +1.8% versus a +3.5% gain in November.

• Durables Ex Transports for December are estimated to rise +.5% versus a +1.2% gain in November.

• Cap Goods Orders Non-Defense Ex Air for December are estimated to rise +.3% versus a +4.5% gain in November.

9:00 am EST

• The S&P/CaseShiller Home Price Index for November is estimated to fall to 165.72 versus 165.91 in October.

10:00 am EST

• Consumer Confidence for January is estimated to fall to 78.0 versus 78.1 in December.

• The Richmond Fed Manufacturing Index for January is estimated at 13.0 versus 13.0 in December.

Upcoming Splits

• None of note

Other Potential Market Movers

• The State of the Unions, German Retail Sales, UK GDP, 2Y $32B T-Note auction, weekly retail sales report, TD Securities Mining Conference and the (VIP) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Slightly Higher into Final Hour on Less Emerging Markets Debt Angst, Yen Weakness, Short-Covering, Utility/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 17.10 -5.73%

• Euro/Yen Carry Return Index 146.49 +.36%

• Emerging Markets Currency Volatility(VXY) 9.93 +1.43%

• S&P 500 Implied Correlation 57.41 +.07%

• ISE Sentiment Index 141.0 +78.48%

• Total Put/Call .86 -4.44%

• NYSE Arms .65 -62.56% 

Credit Investor Angst:

• North American Investment Grade CDS Index 71.72 -1.58%

• European Financial Sector CDS Index 104.88 +.83%

• Western Europe Sovereign Debt CDS Index 55.0 +3.13%

• Asia Pacific Sovereign Debt CDS Index 117.95 -.85%

• Emerging Market CDS Index 334.63 -.82%

• 2-Year Swap Spread 15.0 unch.

• TED Spread 19.0 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -3.25 +.75 basis point

Economic Gauges:

• 3-Month T-Bill Yield .05% +1.0 basis point

• Yield Curve 241.0 +2.0 basis points

• China Import Iron Ore Spot $124.30/Metric Tonne unch.

• Citi US Economic Surprise Index 59.0 -3.6 points

• Citi Emerging Markets Economic Surprise Index 7.1 +.4 point

• 10-Year TIPS Spread 2.14 +1.0 basis point

Overseas Futures:

• Nikkei Futures: Indicating +25 open in Japan

• DAX Futures: Indicating +27 open in Germany

Portfolio: 

• Slightly Higher: On gains in my index hedges and emerging markets shorts

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

• Market Exposure: Moved to 50% Net Long