Stocks Reversing Higher into Final Hour on Falling Energy Prices, More Financial Sector Optimism, Better US Economic Data, Short-Covering

Broad Market Tone:

• Advance/Decline Line: About Even
  
• Sector Performance: Mixed
  
• Volume: Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.89 +3.24%
  
• ISE Sentiment Index 125.0 +92.31%
  
• Total Put/Call .86 -21.10%
  
• NYSE Arms .80 -28.35%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 95.65 -.14%
  
• European Financial Sector CDS Index 178.93 +2.02%
  
• Western Europe Sovereign Debt CDS Index 350.33 +1.20%
  
• Emerging Market CDS Index 252.16 -.11%
  
• 2-Year Swap Spread 30.50 -.5 bp
  
• TED Spread 38.75 -1.25 bps
  
• 3-Month EUR/USD Cross-Currency Basis Swap -68.0 +4.0 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .10% +1 bp
  
• Yield Curve 163.0 -4 bps
  
• China Import Iron Ore Spot $140.50/Metric Tonne +1.08%
• Citi US Economic Surprise Index 47.80 -10.2 points
  
• 10-Year TIPS Spread 2.26 -2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -34 open in Japan
• DAX Futures: Indicating +4 open in Germany

Portfolio:

• Higher: On gains in my Biotech, Medical, Retail and Tech sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish, as the S&P 500 reverses morning losses and trades slightly higher despite rising Eurozone debt angst, high energy prices, global growth fears and recent equity gains. On the positive side, Oil Tanker, paper, Bank, Hospital, Retail and Airline shares are especially strong, rising more than +.75%. Oil is falling -1.5%, Gold is down -.2% and Copper is rising +.2%. (XLF) is outperforming and the Transports are trading better today with oil's decline. On the negative side, Coal, Steel, Disk Drive and Education shares are under meaningful pressure, falling more than -.75%. Technology shares are underperforming today. The UBS-Bloomberg Ag Spot Index is rising +.86% and Lumber is declining -.95%. The Germany sovereign cds index is rising +2.03% to 82.38 bps, the Japan sovereign cds is rising +1.7% to 124.0 bps, the Israel sovereign cds is gaining +1.5% to 191.83 bps and the Brazil sovereign cds is gaining +2.8% to 139.0 bps. Lumber is -2.5% since its Dec. 29th high despite the better US economic data, more dovish Fed commentary, improving sentiment towards homebuilders, equity rally and decline in eurozone debt angst. Moreover, the weekly MBA Purchase Applications Index has been around the same level since May 2010. The Baltic Dry Index has plunged over -60.0% from its Oct. 14th high and is now down over -50.0% ytd. The 10Y T-Note Yield, which is falling another -5 bps to 1.92%, remains a concern considering the recent stock rally, falling Eurozone debt angst and improvement in US economic data. Despite more positive US economic data today, the Philly Fed/ADS Real-Time Business Conditions Index has declined -6.0% over the last 5 days and continues to trend lower from its peak in mid-December. The Western Europe Sovereign CDS Index is still fairly close to its Jan. 9th all-time high. Overall, credit gauge improvement has stalled over the last few weeks and these gauges are still at stressed levels. China Iron Ore Spot has plunged -22.4% since Sept. 7th of last year. Shanghai Copper Inventories are up +687.0% ytd and are still very near their recent all-time high. I still think this is more of a red flag for falling demand rather than the intentional hoarding, which many suggest. Major Asian indices were mostly lower overnight, led down by India’s -2.7% decline. India shares had been one of this year’s best-performers, but have declined -4.6% over the last five days. Major European indices fell around -.5%, led down by a -1.1% decline in Italian stocks. The Bloomberg European Bank/Financial Services Index is down -1.42% today. As usual, US equity dip-buyers appeared in aggressive fashion after opening weakness. Stocks remain extremely resilient to all negative news. I would normally view this as a positive, but with bullish investor sentiment already elevated given the macro backdrop this positive technical action is breeding even more complacency. However, as long as the largest company in the world, market leader (AAPL), continues to trades as if shot from a cannon, it is hard to envision a meaningful market correction materializing. US stocks are still technically extended short-term and are right near intermediate-term resistance, which likely means more sideways action near-term. For an intermediate-term equity advance from current levels, I would still expect to see further European credit gauge improvement, a further subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade mixed-to-lower into the close from current levels on rising Eurozone debt angst, high energy prices, global growth fears, profit-taking, technical selling, less tech sector optimism and more shorting.

Today's Headlines

Bloomberg:

• Merkel: "Incalculable' Damage If Greek Plan Rejected. Chancellor Angela Merkel won a parliamentary vote on Greek aid after warning German lawmakers that pushing Greece out of the euro would risk “incalculable” damage, defying a public backlash against more bailout funds. In a vote that showed dissent in her coalition growing, 496 members of the lower house, or Bundestag, voted in favor of the 130 billion-euro ($174 billion) package in Berlin; 90 voted against and five abstained. While questions on Greece’s remaining in the euro “have their justification,” Merkel warned that a failure of the euro might endanger the Europe Union and the global economy. “I think those risks are incalculable, and therefore indefensible,” Merkel told lawmakers in the Bundestag today. As chancellor, “I should and have to take risks, but I cannot embark on adventures. My oath forbids that,” she said. Merkel’s government pushed through the measure to stave off a collapse of the Greek economy amid signs of growing resistance and as one of her Cabinet ministers said Greece should leave the single currency. Euro leaders will now shift their focus on whether to bolster the region’s bailout firewall as they prepare for a summit meeting in Brussels on March 1-2.
• Draghi's Unlimited Loans Are No Panacea for Banks: Euro Credit. European Central Bank President Mario Draghi's success in quelling a bond-market rout across the euro region's periphery masks a failure by the region's banks to bolster their capital. The ECB will offer a second round of unlimited three-year funds on Feb. 29. Firms will seek 470 billion euros ($629 billion), approaching the 489 billion euro take-up by 500 banks at the first long-term refinancing operation on Dec. 21, the median estimate of 28 analysts surveyed by Bloomberg show. "The worry is it may act to keep afloat institutions that aren't exactly viable," said Stewart Robertson, chief European economist at Aviva Investors in London, which manages more than $425 billion. "This buys time for banks, but does it really provide them with an incentive to sort out their books? The worry is it doesn't."
  
• Sovereign, Corporate Bond Risk Rises, Credit-Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments climbed two basis points to 346.5 at 8:15 a.m. in London. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increased 7.5 basis points to 582.5, according to BNP Paribas SA. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose two basis points to 132 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 1.5 basis points to 214.5 and the subordinated index rose five to 365.
• Europe Bond Risk 9 Times Higher Than U.S. After Greek Pact. The bailout that rescued Greece from a looming default has failed to restore confidence in credit markets, where traders are paying nine times more to insure European government bonds than they are for Treasuries. While European stocks are off to their best start since 1998, the relative cost of credit default swaps has risen to a record, more than double the July level, according to CMA. To obtain 130 billion euros ($175 billion) in aid to help pay interest on bonds due March 20, Greek Prime Minister Lucas Papademos agreed to reduce debt to 120.5 percent of gross domestic product by 2020 from about 160 percent last year. While chances of defaults and the breakup of the euro may have diminished, investors are no longer rewarding European governments for reducing spending to cut debt as their economies shrink.
• Pending U.S. Home Resales Show Housing Market Regaining Footing: Economy. More Americans than forecast signed contracts to buy previously owned homes in January, indicating the industry that sparked the last recession is improving. The index of pending home resales climbed 2 percent after a 1.9 percent decrease the prior month that was smaller than previously estimated, the National Association of Realtors said today in Washington. The median forecast of 44 economists surveyed by Bloomberg News called for a 1 percent advance.
• Private Equity Funds Expect Credit Access to Worsen, PwC Says. Private equity funds expect the situation in the markets and access to credit to worsen this year, according to a study by PricewaterhouseCoopers LLP. Some 51 percent of the 170 private equity companies included in the study said they believe it will be more difficult to get funding, while 47 percent expect markets to deteriorate, PwC said in an e-mailed statement today. Still, 46 percent forecast rising investment volumes while 37 percent see a higher number of exits in 2012, according to the study.

Wall Street Journal:

• China Plans 'Buy Local' Rule on Government Cars. It adds to the rising number of regulatory restrictions facing foreign auto makers, adding to what some foreign auto executives say is a worrying environment. Previous measures include an increasingly restrictive approval process for expansions and a shift away from efforts to draw foreign capital to the industry.
• Spain Misses Deficit Target. The Spanish government said Monday it missed its 2011 budget-deficit target by a wide margin, highlighting the difficulties in closing one of the euro zone's largest budget gaps as the country's economy entered a new downturn. The Spanish budget ministry said Spain's total public-sector budget deficit stood at 8.51% of gross domestic product last year, above the 8% estimate the new government of Prime Minister Mariano Rajoy gave in December. Spain had been aiming for a budget deficit equal to 6% of GDP in 2011. According to the budget ministry, Spain's regions were responsible for the biggest portion of the 2011 overrun. They had a budget gap equal to 2.94% of GDP, compared to a target of 1.3%. In highly decentralized Spain, the regions control over one third of spending, complicating the government's deficit-reduction push.

CNBC.com:

• Why Gasoline Prices Are So Different Around The US.

Business Insider:

• A Complete Guide to Greece's Selective Default Next Month.
• Fearing a National Collapse, The State of Wyoming is Putting Together a 'Doomsday Bill'.
• Iran Is About To Execute This Man For Converting To Christianity And Everyone Is Outraged.
• UK Chancellor: 'The British Government Has Run Out Of Money'.
• Chart of the Day: By This Measure, Stocks Are Still Incredibly Cheap.
  

Zero Hedge:

• The Perfection of Crony Capitalism: Use Regulation to Destroy Competitors.
• Here Is Why Someone Will Be Disappointed By The LTRO.
  

The Detroit News:

• Detroit Running Out of Cash. City has $76M on hand, could be broke by April, according to figures on website.

Telegraph:

• Bill Clinton and Bradley Manning Nominated for Nobel Peace Prize. A total of 231 nominees are up for the Nobel Peace Prize this year, the Nobel Institute said on Monday, with Bill Clinton, Helmut Kohl, the EU and US soldier and WikiLeaks suspect Bradley Manning known to be on the list.

Bear Radar

Style Underperformer:

• Mid-Cap Value +.01%

Sector Underperformers:

• 1) Coal -2.10% 2) Disk Drives -1.40% 3) Steel -1.10%

Stocks Falling on Unusual Volume:

• PEGA, IBN, HBC, HDB, BCPC, DNDN, NIHD, SKUL, DRQ, INVN and EBS
  

Stocks With Unusual Put Option Activity:

• 1) LNG 2) CBG 3) PHM 4) HYG 5) WDC
  

Stocks With Most Negative News Mentions:

• 1) ANR 2) BHI 3) MCP 4) CPRT 5) NFLX
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.16%

Sector Outperformers:

• 1) Papers +.99% 2) Airlines +.57% 3) Oil Tankers +.38%

Stocks Rising on Unusual Volume:

• MHS, TRGP, KMI, VVUS, SODA, CLNE, ESRX, MAKO, ARBA, WMK, CTB, VVI, CCO, FFG, LNG, CQP, WHR, PB, FTK, CXW and LVLT
  

Stocks With Unusual Call Option Activity:

• 1) SNE 2) LPX 3) HTZ 4) ATPG 5) KMI
  

Stocks With Most Positive News Mentions:

• 1) MOS 2) LMT 3) STJ 4) BA 5) IPG
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume
  

Monday Watch

Weekend Headlines
Bloomberg:

• Germany Rejects 'Ever Bigger' Firewalls, Schaeuble Says. German Finance Minister Wolfgang Schaeuble rejected calls to make rescue funds “ever bigger” and reiterated the opposition of Europe’s biggest economy to joint euro-area debt issuance as means to fight the debt crisis. Writing in an op-ed in Mexican newspaper El Universal published on Feb. 24 and distributed to German reporters today, Schaeuble said that debt burdens can’t be lowered “by inflating it away,” and that debt-based strategies “stunt” growth in the long term. “Should we also mutualise sovereign debt in the euro zone?” Scaheuble said in the article. “Should the European Central Bank print money to finance the member states’ budgets? Should we make the firewalls ever bigger? The answer is an empathic no.” Schaeuble’s comments harden Germany’s stance going into a meeting in Mexico City beginning today of Group of 20 finance ministers and central bank governors that is dominated by efforts to stem Europe’s debt crisis. G-20 officials gather less than a week after Europe agreed to a second bailout for Greece in a bid to avert the euro-area’s first sovereign default. “I dare to say that Europe has done its homework,” Schaeuble said in a speech in Mexico City today, referring to a range of measures endorsed by European leaders in October. “The tightening of the interest spreads within the euro zone in recent weeks shows that we’re on the right course.” Schaeuble said that budget consolidation and more flexible labor markets and wages are necessary “if euro-zone countries want to grow in the long run, if we want the euro to be a stable and lasting currency,” Schaeuble said. “That’s the only way we’ll be able to restore confidence.”
• G-20 Snubs Germany on IMF Funding. Germany was left to dig deeper to combat the euro-area debt crisis after the Group of 20 nations told Europe to come up with more financial firepower before they consider lending outside support. The decision by G-20 officials to rebuff European calls for assistance in their crisis-fighting effort pending an increase in its own financial backstop puts the onus on Germany, already the biggest national contributor to bailouts, to overcome its resistance to doing more. With a parliamentary vote on a second Greek aid package looming in Berlin today, Chancellor Angela Merkel’s government must now decide whether to back plans at a March 1-2 European Union summit to combine rescue funds and produce a potential firewall of 750 billion euros ($1 trillion). Europe “doesn’t really need any outside money,” Jim O’Neill, chairman of Goldman Sachs Asset Management, said in an e-mail. “It needs their own policy makers, especially Germany, to show leadership.”
• Spanish Economy Minister to Meet John Paulson, Expansion Says. Spanish Economy Minister Luis De Guindos will meet Paulson & Co. hedge-fund founder John Paulson as he seeks investor support for government reforms, Expansion said, citing unidentified people familiar with the matter. Guindos’s finance-industry meetings on Feb. 27, to promote initiatives such as Spain’s bank-overhaul plan, include sessions with Richard Axilrod, a managing director at Moore Capital Management LLC hedge fund, and Derek Kaufman, head of global fixed income at Citadel Asset Management, the Madrid-based newspaper reported. The minister will also meet Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc. (GS), which is organizing Guindos’s road show along with Citigroup Inc. (C) and Banco Bilbao Vizcaya Argentaria SA (BBVA), Expansion said.
• The bailout that rescued Greece from a looming default has failed to restore confidence in credit markets, where traders are paying nine times more to insure European government bonds than they are for Treasuries. While European stocks are off to their best start since 1998, the relative cost of credit default swaps has risen to a record, more than double the July levels, according to CMA.
• Paulson Said to Tell Clients Gold Fund Will Top Others. John Paulson, the hedge fund manager seeking to rebound from record losses in 2011, told investors his Gold Fund will outperform his other strategies over five years, according to a person with knowledge of the matter. The billionaire, at a meeting yesterday at the Metropolitan Club in New York, said the metal is the best hedge against currency debasement as countries inject money into their economies, said the person, who attended the event and asked not to be named because the information is private. Paulson also cited gold as a hedge against the euro currency, as a breakup may occur, and an eventual increase in inflation. The manager told clients his own money comprises 55 percent of the Gold Fund’s $1.2 billion in assets, the person said.
• SEC Reviewing Trading Practices After Shift to Automation. The U.S. Securities and Exchange Commission is examining equity trading practices that gained dominance in the past decade amid a shift to automation, according to an official in the agency’s enforcement division. Daniel Hawke, head of the market-abuse unit, said at an event yesterday that the SEC is looking into techniques such as co-location, in which exchanges let traders place computers close to the market’s systems to shave time off executions. He said other practices under examination include the rebates that venues pay to spur transactions, direct market access where brokers let investors send orders to venues themselves, and whether the types of orders exchanges offer are being misused. Regulators are evaluating U.S. markets after rules since the 1990s boosted competition and spread stock trading across 13 exchanges and dozens of private, broker-run venues. While the shift cut investors’ costs, it made trading more complex, and scrutiny increased after a May 2010 rout erased $862 billion from equities in less than 20 minutes. Several practices Hawke highlighted are used by firms engaged in high-speed trading.
• Murdoch Says Sunday Sun Sold 3 Million Copies as Hacking Anger Wanes. Rupert Murdoch said News Corp.’s first Sunday edition of the Sun sold 3 million copies, topping the circulation of its News of the World predecessor that he closed in the wake of a phone-hacking scandal last July.
• BP(BP) Said to Consider $14B Spill Settlement. BP Plc (BP/) and plaintiffs suing over the 2010 Gulf of Mexico oil spill are discussing a $14 billion accord that would be funded with money originally set aside by the U.K.-based energy company for out-of-court settlements, according to three people familiar with the talks. BP would agree to close down its $20 billion Gulf Coast Claims Facility and shift the remaining $14 billion to plaintiffs who contend the spill harmed their businesses and properties, the people said. BP set up the claims fund in August 2010 to allow spill victims to receive compensation more quickly than they would by waiting for lawsuits to proceed. The fund has paid out about $6 billion so far, according to its website. The discussions between the plaintiffs and London-based BP are nearing completion, said the people, who declined to be identified because they weren’t authorized to speak publicly.
• Warren Buffett Says Banks Victimized by Excesses of Evicted Homeowners. Warren Buffett, who controls the biggest shareholding of the No. 1 U.S. mortgage lender, said banks were victimized by some homeowners who refinanced their loans before getting evicted. “Large numbers of people who have ‘lost’ their house through foreclosure have actually realized a profit because they carried out refinancings earlier that gave them cash in excess of their cost,” Buffett, chairman and chief executive officer of Berkshire Hathaway Inc. (BRK/A), said Feb. 25 in his annual letter. “In these cases, the evicted homeowner was the winner, and the victim was the lender.”
• No Company Follows Apple's(AAPL) Expanded China Audits. Apple Inc. (AAPL)’s rivals aren’t rushing to emulate the iPhone maker’s decision to subject supplier factories to audits by a labor group. Instead, they’re sticking to internal checks that may leave room for violations -- and negative public relations fallout.
• China's Billionaire Congress Makes Capitol Hill Look Poor. The richest 70 members of China’s legislature added more to their wealth last year than the combined net worth of all 535 members of the U.S. Congress, the president and his Cabinet, and the nine Supreme Court justices. The net worth of the 70 richest delegates in China’s National People’s Congress, which opens its annual session on March 5, rose to 565.8 billion yuan ($89.8 billion) in 2011, a gain of $11.5 billion from 2010, according to figures from the Hurun Report, which tracks the country’s wealthy. That compares to the $7.5 billion net worth of all 660 top officials in the three branches of the U.S. government.

Wall Street Journal:

• U.S Bulks Up Iran Defenses. Pentagon Plans New Sea, Land Measures to Counter Any Attempt to Close Persian Gulf Oil Gateway. The Pentagon is beefing up U.S. sea- and land-based defenses in the Persian Gulf to counter any attempt by Iran to close the Strait of Hormuz. The U.S. military has notified Congress of plans to preposition new mine-detection and clearing equipment and expand surveillance capabilities in and around the strait, according to defense officials briefed on the requests, including one submitted earlier this month. The military also wants to quickly modify weapons systems on ships so they could be used against Iranian fast-attack boats, as well as shore-launched cruise missiles, the defense officials said.
• Race Tightens as Michigan Vote Nears. Mitt Romney and Rick Santorum moved Sunday to try to prove that each is more conservative than the other ahead of a pivotal primary election here Tuesday. With polls showing the two running neck-and-neck in Michigan, Mr. Santorum was playing heavily on his working-class roots while Mr. Romney again tried to dispel conservatives' concerns about his time as governor of Massachusetts.
• Builders Feel Bite in China. Along this city's historic canal, in a location picked for its good feng shui, a 59-acre complex of commercial and residential towers not long ago looked like a sure winner. Artists' renderings showed a forest of gleaming glass buildings, including a 40-story hotel-anchored skyscraper, overlooking yacht-bearing waterways. Even though Wuxi isn't generally considered among China's marquee cities, the country's property-mad investors were hooked. When the first 303 apartments went for sale in 2009, they sold out within four hours. Today, the Xi Shui Dong development stands less than half complete, hamstrung by its parent company's high debt.
• Behind Corn's Squeeze Play: Farmers. A new phenomenon is underpinning corn prices: prosperous farmers. Having benefited from high prices last year, farmers are becoming more choosy about when they sell their corn. Right now, some are opting to stockpile some of their harvest, rather than sell it, a decision analysts say is helping keep corn prices relatively high. Farmers now hold about 64% of the nation's corn in storage, up from 62.7% a little over a year ago and the highest in two years, according to the latest quarterly government survey.
• Citigroup(C) Wants Foreign Sovereign Debt Exempt From Volcker Rule. Foreign sovereign debt should be exempt from a proposed U.S. ban on proprietary trading, Citigroup Inc.'s head of global consumer banking said Saturday. "We see some risks to our financial system" from the so-called Volcker rule as it stands, Manuel Medina-Mora said in a speech at a conference of the Institute of International Finance here.
• SEC Official Outlines Money Fund Proposals. Regulators sought to shed greater light Saturday on their controversial push to shore up the $2.7 trillion money-market mutual fund industry, while acknowledging industry concerns that overhauls could backfire and cause investors to flee for less regulated markets. Robert Plaze, a top official in the SEC's division of investment management, for the first time publicly defended part of a proposal the SEC is expected to float in the coming months that would require money funds to temporarily hold back 3% to 5% of investors' cash when they sell all their holdings at once.
• Ford(F) Faces China Hurdles. Even With a New $490 Million Chongqing Plant, Further Expansion Could Prove Difficult. Ford Motor Co. is facing stiff industrywide regulatory obstacles to future growth in China, even as the auto maker launches a $490 million plant to boost its presence there.
• Berkshire(BRK/A) Profit Falls 30% on Insurance, Derivatives. Warren Buffett's Berkshire Hathaway Inc. said fourth-quarter profit fell 30% as the conglomerate's insurance units struggled and derivatives bets added less to the bottom line. Mr. Buffett, who serves as Omaha, Neb.-based Berkshire's chairman and chief executive, has urged investors to evaluate the firm by how it is growing in relation to the broader market. He often draws attention to Berkshire's book value, a measure of assets and liabilities that he says understates the company's actual value but can serve as an objective indicator of the company's performance over time.
• America's Iranian Self-Deception. Let's admit the facts about its nuclear program and then have an honest debate about what to do. Those who oppose military action against Iran under any circumstances must say so, and must accept the consequences of that statement. Those who advocate military action must also accept and consider the consequences—regional and possibly global conflict and all of the associated perils of war. But neither American nor Israeli nor any Western interest is served by lying to ourselves and pretending the predicament will go away.

Marketwatch.com:

• China's Massive Property Supply Threatens Market. A virtual shutdown of China’s new home sales during the Lunar New Year holiday week could signal a major crack in buyer confidence, with some analysts seeing prices heading lower as cash-strapped real-estate developers become more aggressive in their selling.

Business Inside:

• Gas Could Easily Go To $5 And Crush The National Economy.
• Is Jon Corzine “Too Big to Indict”? Part VII.
• Nanny-State America Is Regulating Its Economy To Death.
• US: Syria Has A Huge Chemical Weapons Pile That Could Go Anywhere If Assad Falls.
  

Zero Hedge:

• Mark Grant On The Greek Annexation.
• Greece Is Just A Preview Of What's Coming For The Rest Of Us. (video)
  
• Here Is What The Smart Money Is Doing.
• Key Events In The Week Ahead - US Growth Focus And Oil Price Trends.
  

CNBC:

• WikiLeaks to Publish STRATFOR Emails. The anti-secrecy group WikiLeaks said it would begin publishing more than five million emails Monday from a US-based global security think tank, apparently obtained by hackers. In its latest high-profile disclosure, WikiLeaks said in a statement it had acquired access to a vast haul of internal and external correspondence of Strategic Forecasting Inc (Stratfor), based in Austin Texas.
• Greek Debt Deal Merely Buys Time: World Bank's Zoellick. The latest Greek bailout totaling 130 billion euros would merely buy time, outgoing World Bank President Robert Zoellick said in an interview in Singapore with Reuters. "It's too early to know, partly it depends on the actions the Greeks have to take," he said. "I think that the European Union has dealt with Greece as one element but the core elements are really going to be the success of some of the bigger countries, such as Italy and Spain."

Wall Street All-Stars:

• On PIGS on Drugs. An interesting article in the Swiss press this morning regarding the big Swiss drug companies, Roche and Novartis. Apparently the PIGS are not paying their drug bills. The numbers are big. The bills have been unpaid for years. Some excerpts from the article:

Seeking Alpha:

• Maverick Capital's Tech Picks - 3 to Buy, 3 to Avoid.
  

NY Times:

• Auto Workers Tap Network for Obama. The United Automobile Workers union, a primary beneficiary of President Obama’s decision to rescue domestic carmakers, is now trying to return the favor.
• Syrian Conflict Poses the Risk of Wider Strife. Now it is nearly spring again, and there is Syria. As the dead pile up and diplomacy fails to stem the violence, it is clear that this conflict is unique in significant ways, difficult to predict and far riskier to the world. Unlike Libya, Syria is of strategic importance, sitting at the center of ethnic, religious and regional rivalries that give it the potential to become a whirlpool that draws in powers, great and small, in the region and beyond.
• Scramble Is On to Find Deal for 16 Americans in Egypt. American diplomats scrambled on Saturday to work out a deal to resolve the criminal charges against 16 Americans here on the eve of their scheduled trial in a case that has threatened to upend the 30-year alliance with Egypt. As late as Saturday evening, United States officials said they still could not predict what would happen when the trial opens Sunday.

Boston Herald:

• North Korea Threatens Attack on Eve of US-South Korea Military Exercise. SEOUL, South Korea-North Korea’s newly installed leader Kim Jong Un threatened Sunday to launch a powerful retaliatory strike against South Korea if provoked. It was the second such threat in recent days. North Korean state media said Pyongyang’s forces would deal harshly with any threat posed by Monday’s scheduled annual South Korean-U.S. military drills, which North Korea characterize as a dress rehearsal to an invasion.

The Telegraph:

• Spanish Revolt Brews as National Economic Rearmament Begins in Europe. Spain's new prime minister has looked into the abyss and recoiled. What is needed to save the South must endanger the North. Germany would overheat, pushing its inflation to 4pc or 5pc until Bild Zeitung erupts in Teutonic fury. It is impossible to reconcile the conflicting imperatives. My guess is that Germany's refusal to countenance any form of EU subsidies, debt-pooling, or fiscal union -- other than policing the budgets of captive states -- has definitively broken the EMU spell. Latin nations by increasingly regard talk euro of solidarity as humbug. It has been a nasty shock. The era of national economic rearmament in Europe has begun.
• It May Well Turn Out That We Are Watching Not A Greek But A Euro Tragedy. Another week, another euro "solution". According to last week's plan, by 2020 the ratio of Greek national debt to GDP will be down to 120.5pc. You don't really need to know much more to see that we are in cloud cuckoo land.

Handelsblatt:

• European Central Bank Executive Board member Joerg Asmussen said the ECB can't commit to offering more three-year cash to euro-area banks after its second batch of loans planned this week, citing an interview.

Der Spiegel:

• German Interior Minister Hans-Peter Friedrich said Greece would have better chances of overhauling its economy and storing growth if it left the euro area, citing an interview. Friedrich, a member of the Bavaria-based Christian Social Union that's allied with German Chancellor Angela Merkel's larger Christian Democratic Union, is her first Cabinet member to suggest Greece's exit from the euro.
• European central banks may be unable to make a profit on Greek sovereign bonds that euro-area governments want to use in the country's second bailout, European Central Bank council member Jens Weidmann said. Weidmann said it's "not certain at all" that the bonds will make a profit, citing an interview. Risks on the central banks' balance sheets have actually increased, Weidmann said.
  

Die Welt:

• Banks in Greece, Spain, Italy, Portugal and Ireland have issued $72.6 billion of bonds this year and most will probably be used as collateral for loans from the European Central Bank, citing its own research.

Bild am Sonntag:

• Sixty-two percent of Germans want lawmakers to reject renewed aid for Greece in a parliamentary vote scheduled for tomorrow in Berlin, citing a poll. Thirty-three percent said parliament should approve German participation in Greece's second bailout, citing the Emnid poll of 500 people.
  

China Daily:

• China property investment growth will slow down this year and industry adjustments will continue, citing Qin Hong, head of policy research at the country's Ministry of Housing and Urban-Rural Development. Qin said now is not an "appropriate" time to remove limits on property purchases.

China Radio:

• China's property market is its biggest economic uncertainty, the country's state radio reported on its website, citing li Daokui, an adviser to the People's Bank of China. It is "unrealistic" to expect a rebound in property prices this year, Li said.

Weekend Recommendations
Barron's:

• Made positive comments on (DAR), (TBNK), (LLY), (ELN), (PFE), (JNJ) and (VPFG).

Night Trading

• Asian indices are -1.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 161.0 +.5 basis point.
• Asia Pacific Sovereign CDS Index 131.75 -1.5 basis points.
• FTSE-100 futures -.25%.
  
• S&P 500 futures -.15%.
• NASDAQ 100 futures -.07%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DNDN)/-.60
• (EP)/.30
• (AES)/.22
• (KWK)/.00
• (LOW)/.23
• (VC)/.79
• (PCLN)/5.05
• (JOE)/-2.42
• (SLXP)/.93
• (CECO)/.26

Economic Releases
10:00 am EST

• Pending Home Sales for January are estimated to rise +1.0% versus a -3.5% decline in December.

10:30 am EST

• Dallas Fed Manufacturing Activity Index for February is estimated to rise to 15.5 versus 15.3 in January.
  

Upcoming Splits

• None of note
  

Other Potential Market Mover7s

• The Italian/Belgian Bond Auctions, German Lower House Vote on Greek Bailout, Morgan Stanley Tech/Media/Telecom Conference, Citi Global Healthcare Conference, Deutsche Bank Media/Telecom Conference and the GSMA Mobile World Congress could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
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 profit-taking, global growth fears, Eurozone debt angst, technical selling, more shorting and rising energy prices. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.