Friday Watch

Evening Headlines 
Bloomberg:  

• Putin's High Tolerance for Pain and Europe's Reluctance to Inflict It. As a cease-fire emerges in Ukraine that gives Putin a lot of what he wants, the comments are a reminder of how the country remains trapped between the weight of Russian history and the force of European economics. In this squeeze, Putin’s narrative backed by Cold War memories is coupled with leaders unwilling to blow up ties with a major trading partner and energy supplier.“ Some EU member states just don’t care that much about Ukraine,” Paul Ivan, a former Romanian diplomat now with the European Policy Centre in Brussels, said this week. “There are countries with historical ties and good relations with Russia, and for some others they think they’re far away from Ukraine and they’re willing to compromise that country’s territorial integrity for their own economic interests.”

• EU Stands by Sanctions on Russia After Ukraine Truce Sealed. European leaders said Russia will have to wait for relief from economic sanctions, reflecting concern that Thursday’s cease-fire agreement will only mark a pause in the war that has devastated eastern Ukraine. The accord was struck after more than 18 hours of non-stop talks between Ukrainian President Petro Poroshenko, his Russian counterpart Vladimir Putin, German Chancellor Angela Merkel and French leader Francois Hollande. It envisages a truce from midnight at the start of Feb. 15 and reaffirms some commitments from a failed September bid to end the conflict that has devastated eastern Ukraine. The collapse of previous cease-fires has stoked doubts as to whether this one will hold. Ten months of fighting have killed more than 5,000 people, crushed Ukraine’s economy and propelled Russia toward a recession through U.S. and European sanctions. European Union sanctions -- whether to ease or stiffen them -- remained off the agenda for a summit in Brussels, with the bloc awaiting proof the truce is holding.  

• China Money Rate Set for Longest Run of Weekly Gains Since 2013. The seven-day repurchase rate, a gauge of interbank funding availability, climbed for a fifth week, adding 27 basis points to 4.62 percent as of 10:26 a.m. in Shanghai, according to a weighted average from the National Interbank Funding Center. The rate fell one three basis point Friday.

• Too Many Car Factories in China? Automakers have been successful at adding factories. Maybe too successful. Domestic and foreign-based carmakers are building more factories in China than anywhere else, a construction binge that risks hurting margins in what remains one of the world’s most profitable vehicle markets. By 2017 there will be 140 car production plants in China, vs. 123 at the end of 2014, estimates JSC Automotive Consulting. According to IHS Automotive forecasts, factories across the mainland in 2015 will be able to build 10.8 million more vehicles than will be sold in Greater China. In North America, however, IHS expects plants to churn out about 3.2 million more cars this year than the factories were intended to produce when they were built.  

• Collateral Damage From China's Antigraft Drive. Drooping sales of prepaid cards are hurting retailers.
  

• Asian Stocks Advance With Emerging Currencies; Yen Gains. Asian stocks climbed with emerging-market currencies after a ceasefire deal in Ukraine and signs of compromise on Greece’s debt negotiations. The yen held gains on bets that the Bank of Japan will refrain from additional stimulus. The MSCI Asia Pacific Index added 0.7 percent by 12:13 p.m. in Tokyo, as mining and energy shares drove Australia’s S&P/ASX 200 Index toward its highest close since May 2008.

• U.S. Yield Increase in February Hurts Bondholders to Homebuyers. From bondholders to home buyers, this month’s jump in Treasury yields is starting to bite. U.S. government debt has fallen 1.9 percent in February, headed for the biggest monthly loss since May 2013, based on Bloomberg World Bond Indexes. U.S. mortgage rates increased this week. Benchmark Treasury yields are climbing as investors prepare for the Federal Reserve to raise interest rates.

Wall Street Journal:

• Ukraine Peace Talks Yield Cease-Fire Deal. Leaders Caution There Is Much to Do to Ensure Truce Holds. Germany and France’s leaders emerged from 17 hours of all-night negotiating with Russian President Vladimir Putin on Thursday with a truce for Ukraine intended to glue together the shards of the last one—but with little confidence in the West that it would.

• Chinese Shake Up Aluminum. Tax Quirks Prompt Smelters to Mask Metal for Export as Processed. A surge in aluminum exports from China is altering market dynamics for one of the world’s most heavily traded commodities. Because of quirks in China’s tax system, the trend involves reshaping the metal itself.

• GOP Contender Walker Draws Wall Street Cash. New York Fundraisers Plan Donor Events for the Wisconsin Governor in the Coming Days. Wall Street is warming up to Wisconsin’s Republican Gov. Scott Walker. Several GOP fundraisers from the financial-services industry and other Manhattan business sectors are hosting donor events for Mr. Walker, a likely presidential candidate, when he visits New York next week.

• Putin’s Latest Victory. The Minsk accord ratifies a Russian satrapy in Ukraine. The last time the Kremlin signed an agreement to end the war in Ukraine—as recently as September—it promised to withdraw “military equipment as well as fighters and mercenaries” from the war zone, ban offensive operations and abide by an immediate cease-fire. In exchange the Ukrainian government granted unprecedented political autonomy to its rebellious eastern regions.

CNBC:

• These EM bonds are vulnerable to king dollar’s reign. Expectations that the Federal Reserve will hike interest rates later this year have powered a rally in the U.S. dollar, and with further gains likely, analyst warn that some dollar-denominated emerging market (EM) debt is vulnerable. "The dollar's appreciation has pushed up the local-currency value of EM debt that is denominated in U.S. dollars, making it harder to service," said Capital Economics' Senior Asia Economist Daniel Martin.

Zero Hedge:

• Financial Markets: Pinocchio’s Enchanted Island. 

• The Central Planners Are Failing Fast. (graph)

• 3 Things - Uncomfortable Facts, 25-54 Employment, Houston RE. (graph)

• Dijsselbloem Pours Cold Water On Greek Compromise: "Don't Get Your Hopes Up".

• VIXnado Sends Stocks Near Record Highs; Crude Jumps, Dollar Dumps. (graph)

• Feds Hold Hearing On Whether They Should ‘Regulate’ Sites Like Zero Hedge.

• The New-Normal Down-Under. (graph)

• Fourth Turning: The Shadow Of Crisis Has Not Passed - Part 3.

• 2015 US Economic Data Is Worst Since 2009. (graph)

• "Independent" Fed Lobbies GOP Against Audit.

Business Insider:

• The collapse of Yemen's government took the US totally by surprise. 

• A third of China's $2.5 trillion corporate bond market is going to be hung out to dry.

• Sources: Marissa Mayer is firing people at Yahoo(YHOO).

Washington Post: 

• Which image of Obama mugging for BuzzFeed’s cameras diminishes the presidency the most, ranked. (pics)

Reuters:

• Euro zone needs radical change, Juncker tells leaders. The euro zone needs fundamental changes to the way it is run or faces endemic unemployment and the trap of low economic growth for years to come, the European Union's chief executive told the bloc's leaders on Thursday. In a presentation, European Commission President Jean-Claude Juncker called for a deepening of the cooperation that underpins the 19-member currency area, despite the reluctance of countries to cede more sovereignty to EU institutions.

AFP:

• EU leaders warn of further sanctions, if Ukraine deal breached. The leaders of Germany and France have said that more sanctions could be brought against Russia if a new Ukraine ceasefire fails. A deal aimed at ending the bloodshed in eastern Ukraine was reached on Thursday.

Financial Times:

• European leaders cautious over ‘Minsk 2’ agreement. European leaders and analysts were sceptical of the 13-point document that emerged on Thursday after 16 hours of bruising, all-night discussions in Minsk. Some gave warning that President Vladimir Putin of Russia appeared to have come out on top.

Economic Information Daily:

• China May See More Privately Placed Bond Defaults. A combined 17b yuan of privately placed bonds listed on the Shanghai and Shenzhen exchanges will mature this year amid an environment of higher-risk default, citing Wind Info. The economic slowdown and worsening operating environment for small cos. may lead to more defaults, the report cites researchers. Private bonds defaults may also spread to larger cos. the report said.

China Securities Journal:

• China Rate Cut Unlikely in Near Future. An interest rate cut is unlikely as the latest monetary policy moves need time to take effect and a narrower interest margin between China and overseas may intensify capital outflow, a front-page commentary said.

Evening Recommendations 

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 107.50 -2.5 basis points.

• Asia Pacific Sovereign CDS Index 68.25 -1.25 basis points.

• S&P 500 futures -.06%.

• NASDAQ 100 futures +.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (MT)/.25

• (CPN)/-.11

• (DTE)/1.05

• (EXC)/.51

• (ITT)/.57

• (SJM)/1.51

• (RUTH)/.22

• (TRW)/1.87

• (VFC)/.98

Economic Releases
8:30 am EST

• The Import Price Index for January is estimated to fall -3.2% versus a -2.5% decline in December.

10:00 am EST

• Preliminary Univ. of Mich. Consumer Sentiment for February is estimated at 98.1 versus 98.1 in January.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Fisher speaking, Eurozone GDP and the (MU) analyst conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and real estate 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 Rising into Afternoon on Diminished Russia/Ukraine Tensions, Greece Hopes, Oil Bounce, Commodity/Gaming Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Slightly Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.71 -7.37%

• Euro/Yen Carry Return Index 141.66 -.65%

• Emerging Markets Currency Volatility(VXY) 11.16 -1.41%

• S&P 500 Implied Correlation 63.33 -3.05%

• ISE Sentiment Index 154.0 +81.18%

• Total Put/Call .86 -10.42%

• NYSE Arms .70 -36.0% 

Credit Investor Angst:

• North American Investment Grade CDS Index 66.04 -1.04%
• America Energy Sector High-Yield CDS Index 716.0 +.31%

• European Financial Sector CDS Index 65.81 -3.85%

• Western Europe Sovereign Debt CDS Index 27.0 +1.54%
• Asia Pacific Sovereign Debt CDS Index 69.22 -.27%

• Emerging Market CDS Index 376.17 -1.97%

• iBoxx Offshore RMB China Corporates High Yield Index 113.29 -.01%
• 2-Year Swap Spread 26.75 +.25 basis point

• TED Spread 25.25 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -20.75 +1.25 basis points

Economic Gauges:

• 3-Month T-Bill Yield .01% unch.

• Yield Curve 136.0 +2.0 basis points

• China Import Iron Ore Spot $62.27/Metric Tonne +.14%

• Citi US Economic Surprise Index -36.90 -7.3 points
• Citi Eurozone Economic Surprise Index 31.10 +.1 point

• Citi Emerging Markets Economic Surprise Index -8.20 +1.4 points

• 10-Year TIPS Spread 1.67 -2.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating -65 open in Japan

• DAX Futures: Indicating +33 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.69%

Sector Underperformers:

• 1) Hospitals -.37% 2) Utilities -.30% 3) Social Media -.21%

Stocks Falling on Unusual Volume:

• ZU, ENSG, CAB, PNRA, CAKE, AXP, BIDU, NTAP, THS, BG, AAP, CSOD, AAWW, SLF, OII, MPAA, TIME, TSLA, ZEN, CTL, PPC, JNJ, K, CSTE, CRAY, PIR, GAS, HOS, TSRA, TSO and THS

Stocks With Unusual Put Option Activity:

• 1) XLI 2) SMH 3) EXPE 4) AXP 5) CBS

Stocks With Most Negative News Mentions:

• 1) ZU 2) CAKE 3) OC 4) CVS 5) CENX
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +.84%

Sector Outperformers:

• 1) Steel +3.01% 2) Internet +2.86% 3) Tobacco +2.04%
  

Stocks Rising on Unusual Volume:

• OWW, LXFT, EXPE, SCOR, TRIP, GNIC, FEYE, SKX, CSCO, LTRPA, NVDA, PNK, KS, CYBR, WFM, IFF, SCOR, GNC, FLO, EFX, DBD, WWAV, LPX, VNTV and JAH

Stocks With Unusual Call Option Activity:

• 1) OWW 2) QLIK 3) TRIP 4) ANR 5) DVN
  

Stocks With Most Positive News Mentions:

• 1) NVDA 2) SKX 3) MAR 4) OWW 5) CSCO
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Thursday Watch

Evening Headlines 
Bloomberg: 

• Eurogroup Fails to Agree to Next Greek Bailout Steps. Euro-area governments left tough decisions on the future of Greece’s bailout for next week, after talks failed to bridge differences over the aid program that the Greek government blames for economic hardship. With Greece’s current bailout expiring at the end of February, finance ministers met for six hours in Brussels without signing off on any conclusions on the way forward for the region’s most-indebted nation. That leaves open how Greece can avoid running out of cash and avert a possible exit from the 19-nation currency union.

• Greek Economic Tragedy Sets Scene for Varoufakis on Debt. The root of Greek Finance Minister Yanis Varoufakis’s desperation for debt relief will be laid bare in the coming days. The backdrop for the new government is an economy lumbered with near-record unemployment and a deflationary spiral after the country plunged into its worst slump since World War II. While data on Friday may confirm the economy grew in each quarter of 2014, it has a long way to go to regain output lost in six years of recession, with the current political crunch threatening to trip up the recovery.  

• Greece, Europe Far from Agreement: UniCredit's Nielsen. (video)

• Australian Jobless Rate Jumps to 6.4% in January. Australian unemployment climbed to a 12 1/2-year high, sending the currency lower and underscoring last week’s decision to cut interest rates to a fresh record low. The jobless rate rose to 6.4 percent from 6.1 percent, the statistics bureau said in Sydney today. That was the worst since August 2002 and exceeded the median estimate of 6.2 percent from a survey of 27 economists. The number of people employed fell by 12,200, led by declines in eastern states.  

• Asia Stocks Rise as Weak Yen Buoys Japan, Investors Watch Greece. Asian stocks rose as investors monitored negotiations in Europe on extending Greece’s bailout program and the yen held losses past 120 per dollar, sending Japan’s Topix index toward a seven-year high as it reopened after a holiday. The MSCI Asia Pacific Index gained 0.5 percent to 140.72 as of 9:03 a.m. in Tokyo, heading for its first advance in six days. Japan’s Topix index climbed 1.4 percent, heading for its highest close since Dec. 28, 2007.

• U.S. Earnings Picture Is Just Not Good at All: Bianco. (video) Bianco Research President and Founder Jim Bianco discusses the U.S. economy, no debt deal for Greece and how it's impacting the markets with Bloomberg's Angie Lau on "First Up."

Wall Street Journal:

• Debate Opens on New War Powers. Obama Asks Congress to Back Islamic State Fight. President Barack Obama asked Congress for new powers to wage military operations against the Islamic State militant group, kicking off a renewed national debate over the scope of wartime powers that should be afforded to the commander-in-chief. American warplanes have pounded Islamic State targets for six months, but Mr. Obama on Wednesday said the proposed resolution authorizing military force is important not only for...

• Hedge Funds Focused on Currencies Get Big Payoff. January Was Big Winner for Firms, Especially Those Driven by Algorithms. Currency markets are finally giving hedge funds some bang for their buck. Thanks to a consistently soaring dollar—and plunging euro—investment funds focused on currencies had the best month in years in January. Data from Hedge Fund Research Inc., which compiles a broad measure of currency-fund performance, show the group had its best..

• Beijing Directive Cuts Into Debt Issuance. Sales Are Derailed as Doubt Is Cast on Local-Government Backing for Bonds. In the eastern city of Changzhou, known for its dried radish pickles and a severe housing glut, a government financing vehicle was on track late last year to sell a $190 million bond. For years, such bonds have been typically backed by local governments, helping attract investors while helping fund much-needed infrastructure projects.

• As Oil Price Drops, Texas Lenders Watch for Fallout. Small Banks Brace for Hit to Local Businesses of Any Cutback in Crude Production.

• Countering Putin’s Grand Strategy. With Europe weak and distracted, only the U.S. can thwart the Kremlin’s growing ambitions. The heavy fighting in eastern Ukraine this week isn’t the only reason to be skeptical about the prospects for the peace summit that began Wednesday in Minsk, Belarus. Even if the meeting among Ukrainian President Petro Poroshenko, Russian President Vladimir Putin, German Chancellor Angela Merkel and French President François Hollande produces a cease-fire agreement that holds up—unlike the one signed last fall—the conflict’s underlying reality will remain unchanged: The Russian-backed separatist revolt

Fox News:

• Secret Iranian unit fueling Mideast bloodshed with illicit arms shipments. (video) As conflicts and civil wars rage across the Middle East and North Africa, a shadowy covert cell operating under the Iranian government is fueling the bloodshed.

• Congress gives final approval to Keystone XL pipeline bill, setting up veto showdown. (video) The House gave final congressional approval Wednesday to legislation to complete the Keystone XL oil pipeline -- setting up the first veto showdown between President Obama and the new, Republican-controlled Congress.

CNBC: 

• Tesla(TSLA) earnings: Loss of 13 cents per share, vs. expected EPS of 31 cents. (video) Tesla reported fourth-quarter quarterly earnings and revenue that majorly missed analysts' expectations on Wednesday, but it struck an optimistic tone for the year ahead.

• Cisco(CSCO) shares rise after EPS, revenue beat. (video) Cisco Systems on Wednesday reported quarterly earnings and revenue that beat Wall Street expectations on strong demand for switching equipment and routers. 

Zero Hedge:

• Greek Deal Rumor Falls Apart After Eurogroup Says "No Deal... No Way Forward", Greece "Questions Merit" Of Bailout Extension.

• Goldman Warns "Don't Count On Rig Declines To Balance The Oil Market Just Yet".

• Tesla's(TSLA) Quarter In Just Three Charts.

• If Not Russia, Then China? Tsipras Invited To Visit Premier Li Keqiang In Beijing.

• Stocks Finish Flat As Selling Scramble Becomes Buying Bonanza, Crude Slides. (graph)

• Goldman: Markets Ignore Grexit Threat Due To ECB QE, But If There Is A Grexit Then All Bets Are Off. (graph)

• The president of Brazil is already having the worst year ever.

• Austria's 3rd Largest Bank Goes Full Bear Stearns: CEO Blames "Short Sellers" For Firm's Demise. (graph)

• Fourth Turning: The Shadow Of Crisis Has Not Passed - Part 2.

Business Insider:

• An Arab billionaire shares his explosive views on Obama, Israel, ISIS, and why the Arab Spring failed.

• The Aussie dollar is getting smoked. (graph)

• Here's what the $294 trillion market of global financial assets looks like.

Reuters: 

• Shippers plan 4-day partial shutdown of U.S. West Coast ports. Shipping lines will partially shut down 29 U.S. West Coast ports for four of the next five days, the companies said on Wednesday, as they postponed the latest round of protracted labor talks with the dockworkers union amid mounting cargo backups at the harbors. The loading and unloading of cargo freighters will be suspended, as operations were last weekend, on Thursday and again on Saturday, Sunday and Monday, the companies' bargaining agent, the Pacific Maritime Association, said in a statement.

• Applied Materials(AMAT) hurt by low demand for chipmaking machinery. Applied Materials Inc said new orders in its business that makes semiconductor equipment and made-to-order chips fell in the first quarter due to weak demand from foundry customers. The company, whose customers include Samsung Electronics Co Ltd and Taiwan Semiconductor Manufacturing Co Ltd , also forecast current-quarter profit and sales below analysts' expectations. Applied Materials' shares fell 3 percent to $23.53 in extended trading.

• Baidu(BIDU) revenue falls short of estimates as customers go mobile. Baidu Inc, owner of China's dominant search engine, reported a lower-than-expected 47.5 percent rise in quarterly revenue as more users switched from PCs to mobile devices, which have less space for more lucrative forms of advertising. Shares of the U.S.-listed company fell 7.8 percent to $198 in extended trading on Wednesday.

• Whole Foods(WFM) sales accelerate, shares rise. Whole Foods Market Inc on Wednesday said same-store sales have accelerated, helped by stronger consumer confidence and shoppers' positive response to the upscale grocer's price cutting and its first national advertising campaign.

Telegraph:

• Germany faces impossible choice as Greek austerity revolt spreads. EU elites who forced a currency experiment on countries not ready for it have only themselves to blame.

Economic Information Daily:

• China's Machinery Industry Sales Growth May Slow. Revenue growth for China's machinery industry is expected to slow to 8% this year because of weak demand, citing Chen Bin, an official at the China Machinery Industry Federation.

Macau Business Daily:

• Macau Official Sees Feb. Gaming Revenue Drop. Macau's gross gaming revenue this month will likely be lower than a year ago, citing Secretary for Economy and Finance Lionel Leong.

China Securities Journal:

• China-Listed Banks 2014 Profit Growth May Slow. Profit growth at China-listed banks may have slowed to 8% last year on increased non-performing-loan exposure risk and higher-than-expected loan provisions, citing brokerages. Growth of both NPL amounts and ratios will not improve in the short term, report cites unidentified researchers.

Evening Recommendations 

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 110.0 unch.

• Asia Pacific Sovereign CDS Index 69.50 +.25 basis point.

• S&P 500 futures -.08%.

• NASDAQ 100 futures +.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AAP)/1.47

• (AB)/.51

• (APA)/.77

• (AAWW)/1.43

• (AVP)/.25

• (BWA)/.75

• (BG)/2.52

• (CAB)/1.35

• (CS)/.45

• (DBD)/.53

• (K)/.93

• (AIG)/1.04

• (CBS)/.76

• (TRLA)/.01

Economic Releases
8:30 am EST

• Retail Sales Advance for January are estimated to fall -.4% versus a -.9% decline in December. 

• Retail Sales Ex Autos for January are estimated to fall -.5% versus a -1.0% decline in December.

• Retail Sales Ex Autos and Gas for January are estimated to rise +.4% versus a -.3% decline in December.

• Initial Jobless Claims for last week are estimated to rise to 287K versus 278K the prior week.

• Continuing Claims are estimated at 2400K versus 2400K prior.

10:00 am EST

• Business Inventories for December are estimated to rise +.2% versus a +.2% gain in November.

Upcoming Splits

• None of note

Other Potential Market Movers

• The BoE Inflation report, $16B 30Y T-Note auction, weekly EIA natural gas inventory report, Bloomberg US Economic Survey for February, weekly Bloomberg Consumer Comfort Index, (IT) investor day and the (MLM) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology 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 Reversing Higher into Final Hour on Diminished Russia-Ukraine Tensions, Greece Hopes, Yen Weakness, Transport/Healthcare Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 17.26 +.17%

• Euro/Yen Carry Return Index 141.92 +.55%

• Emerging Markets Currency Volatility(VXY) 11.24 +2.09%

• S&P 500 Implied Correlation 65.10 -2.75%

• ISE Sentiment Index 85.0 +18.06%

• Total Put/Call 1.05 +9.38%

• NYSE Arms 1.17 +46.62% 

Credit Investor Angst:

• North American Investment Grade CDS Index 67.09 +1.21%
• America Energy Sector High-Yield CDS Index 712.0 -.21%

• European Financial Sector CDS Index 68.31 +2.58%

• Western Europe Sovereign Debt CDS Index 26.78 +2.49%
• Asia Pacific Sovereign Debt CDS Index 70.32 +1.46%

• Emerging Market CDS Index 384.23 -.18%

• iBoxx Offshore RMB China Corporates High Yield Index 113.30 -.10%
• 2-Year Swap Spread 26.5 +.25 basis point

• TED Spread 25.25 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -22.0 -1.0 basis point

Economic Gauges:

• 3-Month T-Bill Yield .01% unch.

• Yield Curve 134.0 unch.

• China Import Iron Ore Spot $62.18/Metric Tonne -.32%

• Citi US Economic Surprise Index -29.60 -.8 point
• Citi Eurozone Economic Surprise Index 31.0 -.2 point

• Citi Emerging Markets Economic Surprise Index -9.60 +1.2 points

• 10-Year TIPS Spread 1.69 -1.0 basis point

Overseas Futures:

• Nikkei Futures: Indicating +347 open in Japan

• DAX Futures: Indicating +1 open in Germany

Portfolio: 

• Higher: On gains in my tech/retail sector longs and emerging markets shorts

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

• Market Exposure: Moved to 75% Net Long