Stocks Slightly Higher into Final Hour on More Financial/Tech Sector Optimism, Lower Energy Prices, Short-Covering, Less Eurozone Debt Angst

Broad Market Tone:

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

Equity Investor Angst:

• VIX 18.16 -2.10%
  
• ISE Sentiment Index 100.0 -6.54%
  
• Total Put/Call .87 +3.57%
  
• NYSE Arms .93 +12.31%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 99.89 +.58%
  
• European Financial Sector CDS Index 169.77 -3.20%
  
• Western Europe Sovereign Debt CDS Index 330.22 -.75%
  
• Emerging Market CDS Index 261.32 -.15%
  
• 2-Year Swap Spread 26.0 -2 bps
  
• TED Spread 45.0 -3 bps
  
• 3-Month EUR/USD Cross-Currency Basis Swap -69.0 +4.5 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .08% +3 bps
  
• Yield Curve 160.0 -2 bps
  
• China Import Iron Ore Spot $143.10/Metric Tonne +.21%
• Philly Fed ADS Real-Time Business Conditions Index .0768 -.78%
  
• Citi US Economic Surprise Index 49.50 -.4 point
  
• 10-Year TIPS Spread 2.14 +1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +9 open in Japan
• DAX Futures: Indicating +1 open in Germany

Portfolio:

• Slightly Higher: On gains in my Biotech, Medical and Tech sector longs
  
• Disclosed Trades: Added to my (IWM), (QQQ) hedges and then covered some of them
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish, as the S&P 500 tests last week's high on falling Eurozone debt angst, more financial/tech sector optimism, falling energy prices and gains in overseas equities. On the positive side, Coal, Alt Energy, Oil Service, Networking, Homebuilding, Gaming and Airline shares are especially strong, rising more than +1.0%. Financial and Tech shares are outperforming again. Oil is falling -.75%. Oil continues to trade poorly given the stock rally, euro rally, rising interest from speculators, falling euro debt angst, subsiding emerging market hard-landing fears, improving US data and Mid-east tensions. Major Asian indices rose around +1.0% overnight, led by a +2.0% gain in Hong Kong shares. I think investors have gotten a bit carried away with stocks in the region as slowing growth and stubbornly high inflation remain significant issues. Major European indices are up around +.5%, led by a .87% gain in Spanish shares. The Bloomberg European Bank/Financial Services index is up +1.1%. Investors continue to price in a European debt crisis “can-kicking” and a stabilization/improvement in economic activity in the region. While this optimism could last awhile longer, I still expect further economic contraction as more austerity measures take hold over the intermediate-term. The Portugal sovereign cds is falling -4.2% to 1,317.22 bps, the France sovereign cds is down -2.94% to 169.32 bps and the Japan sovereign cds is down -2.54% to 133.39 bps. Moreover, the European Investment Grade CDS Index is falling -3.1% to 122.40 bps. On the negative side, Oil Tanker, Defense, HMO and Education shares are under pressure, falling more than -.75%. The Transports are also underperforming. Copper is dropping -1.33%, Lumber is down -.8% and Gold is rising +.95%. The Italy sovereign cds is rising +.42% to 393.95 bps, the Russia sovereign cds is gaining +1.52% to 220.67 bps and the Brazil sovereign cds is rising +.61% to 141.85 bps. The Portugal sovereign cds is up +23.7% in 14 days and near its recent all-time high. Lumber has declined -7.1% 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 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 is flat at 1.82%, which remains a large concern considering the recent stock rally, falling Eurozone debt angst and improvement in US economic data. The Philly Fed’s ADS Real-Time Business Conditions Index has stalled over the last 3 weeks after showing meaningful improvement from mid-Nov. through year-end. The Western Europe Sovereign CDS Index is still fairly close to its Jan. 9th all-time high. The TED spread, 2Y Euro Swap Spread, 3M Euribor-OIS spread and Libor-OIS spread have improved, but are still at stressed levels. China Iron Ore Spot has plunged -21.0% since Sept. 7th of last year. Shanghai Copper Inventories are up over +300.0% ytd to the highest level since March of last year. The AAII % Bulls fell to 43.81, while the % Bears rose to 25.08 this week. Overall, investor sentiment gauges are still registering too much complacency given the macro backdrop. Several key market-leading stocks have stalled of late. I still believe that a more cautious approach is warranted in the short-term given that several key investor sentiment gauges are registering too much complacency, stocks are technically extended, global growth is still slowing and some market-leaders are stalling. For an intermediate-term equity advance from current levels, I would still expect to see further European credit gauge improvement, subsiding 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. One of my longs, (ISRG), hit a new all-time high on volume today. The stock is extended short-term, but I still expect significant outperformance over the intermediate-term. I expect US stocks to trade mixed-to-higher into the close from current levels on more tech/financial sector optimism, short-covering, declining Eurozone debt angst and lower energy prices.

Today's Headlines

Bloomberg:

• Greece Seen as Struggle Even After 2nd Rescue. Greece, struggling to seal agreement on a second rescue from creditors in coming days, will remain at risk of abandoning the euro, say economists including Holger Schmieding of Berenberg Bank. Greece may stay saddled with too much debt, too little economic growth and too large a budget hole to do without yet more aid that euro nations led by Germany are increasingly reluctant to offer. Deeper spending cuts required for extra loans of at least 130 billion euros ($170 billion) and domestic resistance to overhauling the economy risk limiting the impact of any second aid package, the economists say. The deal is also slated to include a 50 percent cut in the face value of more than 200 billion euros of Greek debt through a voluntary exchange by private creditors of outstanding bonds for new securities. “Greece is in deep trouble,” Schmieding, chief economist at Berenberg in London, said in a Jan. 30 report. “The current Greek adjustment program is failing. Excessive austerity, a lack of supply-side reforms, administrative incompetence and political deadlock have pushed the Greek economy into an apparent death spiral. More of the same will not work.” Greece remains in intensive care more than two years after triggering Europe’s debt crisis, testing the patience of other European Union nations. Last November, when discussing the Greek situation, French President Nicolas Sarkozy and German Chancellor Angela Merkel for the first time raised the prospect of a country’s exit from the euro.
• Spanish Unemployment Grows Most in Three Years as Recession Looms: Economy. Spanish unemployment registrations jumped by the most in three years in January as the economy edged into its second recession since the end of 2009. The number of people signing on for jobless benefits increased by 177,470 to 4.6 million, the Labor Ministry in Madrid said in an e-mailed statement today. That was the biggest increase since January 2009 and the total is the most since records began 16 years ago. Data last week showed overall unemployment in the fourth quarter reached a 15-year high. “For countries like Spain and Italy, where the fiscal tightening in the pipeline this year is immense already and there will be more to come, we do have concerns about significant contraction in output,” said Chris Scicluna, head of economic research at Daiwa Capital Markets Europe in London.
• Sovereign, Corporate Bond Risk Falls, Credit Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt fell, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments declined five basis points to 321 basis points at 8 a.m. in London, the lowest since Dec. 5. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings decreased five basis points to 580, the lowest since Aug. 8, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell one basis point to 135.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers decreased 2.5 basis points to 207 and the subordinated index dropped four to 358.
• Barclays Plans 25% to 30% Pay Cut for Bankers. Barclays Plc (BARC), the British lender run by Robert Diamond, plans to cut compensation for the 24,000 employees at its investment banking unit by as much as 30 percent, two people with knowledge of the talks said. The lender is preparing to tell employees at Barclays Capital next week that overall pay will be down by 25 percent to 30 percent on average from a year earlier, said the people, who declined to be identified because the plans haven’t yet been made public. The bank will also eliminate about 5 percent of its senior bankers, said the people. Those at risk typically hold titles such as executive directors and managing directors.
• Jobless Claims in U.S. Fell Last Week. Applications (INJCJC) for unemployment insurance payments dropped by 12,000 to 367,000 in the week ended Jan. 28, according to Labor Department figures issued today in Washington. Worker output per hour increased at a 0.7 percent annual rate from October through December, down from a 1.9 percent gain in the prior three months, another report showed.
• Oil Declines to Six-Week Low as U.S. Inventories Climb Amid Weak Demand. Oil fell to a six-week low in New York as U.S. supplies climbed and fuel demand tumbled. Brent crude in London traded at the biggest premium to the American benchmark grade in 12 weeks. Futures declined for a fifth day after the Energy Department reported yesterday that crude supplies in the U.S. rose to a three-month high last week. Total fuel use dropped 8.3 percent to 17.7 million barrels a day, the least since 1999. Tension over Iran’s nuclear program may ease after United Nations inspectors announced more talks in Tehran. “The market is looking heavy because supplies are rising and demand is very weak,” said Phil Flynn, an analyst at PFGBest in Chicago. “A major reason for the recent rise in prices was concern about Iran. The hyperbole about the Iranian situation has calmed down.” Crude oil for March delivery declined $1.84, or 1.9 percent, to $95.77 a barrel at 12:49 p.m. on the New York Mercantile Exchange. Futures dropped to $95.44, the lowest level since Dec. 20. Prices are down 3.1 percent this year. Gasoline consumption decreased to 7.97 million barrels a day, the lowest level since September 2001, according to Energy Department data. Stockpiles of the fuel increased 3.02 million barrels last week, the report showed yesterday. “Gasoline supplies rose 3 million barrels even though production was down because demand is so weak,” said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania. “Demand looked weak across the board, which is going to weigh on the entire U.S. energy complex,” Wittner said. “It’s now February and refineries have already started planned maintenance, which explains the rise in Cushing supplies.” Refineries operated at 81.8 percent of capacity, down 0.4 percentage point from the week before. It was the lowest operating rate since May. Units are often idled for maintenance in February as attention shifts away from heating oil and before gasoline use rises. OPEC output in January rose to the highest level in more than three years, led by a rebound in Libyan output, a Bloomberg News survey showed on Jan. 31. Production (OPCRTOTL) increased 183,000 barrels, or 0.6 percent, to an average 30.9 million barrels a day in January.
• Gold Futures Climb to Eight-Week High. Gold futures for April delivery gained 0.5 percent to $1,757.60 an ounce at 10:37 a.m. on the Comex in New York. Prices earlier reached $1,758.10, the highest since Dec. 8. The metal climbed 11 percent last month, the biggest January rally since 1983.
• Facebook(FB) Punters Put Shares at $35 Each. The odds are pointing to Facebook Inc. pricing its IPO at between $35 and $44.99 a share in the $5 billion initial public offering it filed for yesterday, according to the Irish bookmaker Paddy Power Plc. (PAP) Facebook, based in Menlo Park, California, will price the new shares within that range at odds of 10 to 11, according to an e-mailed statement from Paddy Power. The likelihood of the social networking firm selling shares as low as $25 stands at 7 to 2, and at 9 to 2 for prices of more than $65, the gambling company site said.

Wall Street Journal:

• Fitch's Riley Says Euro-Zone Crisis To Persist Another 12-18 Months. The sovereign debt crisis in Europe will persist for "at least" another year, the head of sovereign ratings at Fitch Ratings said during a conference here Thursday. "This is going to be a long hard slough that will be punctuated with extreme market volatility," said Fitch's David Riley. The New York-based debt-rating firm believes it will take "at least 12 to 18 months before we have stabilization for the euro zone," Riley said. Italy, the euro-zone's third-largest economy, is a core country, Riley said. It also has the region's largest sovereign bond market. "It is too big to fail," because if it did it would undermine confidence and stability in the euro, he said. Riley said the question then becomes if Italy is too big to rescue. The country must roll over about EUR200 billion this year. "The challenge (for Italy) is to shift expectations" not only by delivering on its fiscal plan for a balanced budget, but also its ability to grow, he said.
  
• Feds Disclose New 401(k) Rules.
• The Really Negative Story on Natural Gas. Natural-gas prices are on the floor. Could they go negative? The probability that wholesale gas prices will drop below $2 per million British thermal units, from today's almost $2.50, is rising. Gas hasn't closed below $2 since September 2009. Today's market shares one critical similarity to then: bulging gas inventories. This overhang of excess supply could crash prices even further this spring.
  

CNBC.com:

• Change US Tax Code, Business Will Invest: FedEx(FDX) CEO.
• Retailers Post Mixed Results for January Sales.
• Worst Yet to Come for China Growth: Official Think Tank.
• Moody's Sees Negative Ratings Trend for Asian Firms.
  

Business Insider:

• Ugh: Ben Bernanke Says The Worst Possible Thing In His New Testimony.
• The Moment Eric Holder Almost Lost It During Testimony Today.
  (video)
• Berkshire Hathaway's $5 Billion Investment in Goldman Sachs(GS) in 2008 Has Resulted in a 50% Return.
• Facebook(FB) Is A Miracle of Capitalism.
  

Zero Hedge:

• Israel Accuses Russia of Supporting Iran Terror Organizations, Says Iran Has Enough Material For 4 Nuclear Bombs.
• European Hope Versus Global Growth Risk, Goldman(GS) Quantifies Anxiety.
• ECB Dollar Swaps With New York Fed Jump To Highest Since 2009, Surpass Recent Liquidity Crisis Highs. (graph)
• Under Twist, The Fed Has Purchased 91% Of All Gross Issuance In Long-Dated US Treasurys.
  

Washington Examiner:

• Obama's Economic Approval Just 36%. In another indication of the difficulty President Obama's reelection campaign faces, only 36 percent of likely voters grade the administration's handling of the economy at good or excellent, according to a new Rasmussen poll. In a national survey of 1,000 likely voters January 31-February 1, a whopping 62 percent grade the president at fair to poor, with poor collecting the largest number: 45 percent.

Miami Herald:

• Florida Senate Considers Taxing Internet Sales. Florida lawmakers took the first step Thursday toward joining the ongoing national battle to force online retailers to start collecting sales taxes. A state Senate committee agreed to introduce a bill (SB 7206) that would require online retailers such as Amazon.com to collect the state's 6 percent sales tax if the retailer has a warehouse or provides commissions to Florida residents who direct customers to the website. Those backing the bill say they aren't trying to generate more money for the state but that they are supporting it to help merchants in Florida who are losing out to online retailers that don't collect sales taxes.
  

Reuters:

• Spain Under Pressure After Auction; Greece Eyed.
• MasterCard(MA) Shrugs Off Litigation Charge, Posts Strong Q4.
  

Telegraph:

• Gold Will Rise Against 'Heavily Debased' Currencies.
• Debt Crisis: Live.
  

Bear Radar

Style Underperformer:

• Large-Cap Value -.07%

Sector Underperformers:

• 1) HMOs -1.60% 2) Oil Tankers -1.21% 3) Computer Services -.50%

Stocks Falling on Unusual Volume:

• CI, UL, UN, AZN, TV, GSK, EGOV, UIS, ININ, RSTI, TRCR, JDSU, CELL, KELYA, ISIL, PENN, TSCO, ABCO, MEAS, FNSR, EDMC, PCAR, COHU, ARMH, GNTX, BODY, ATMI, UCO, AGN , ATK, HOT, CHKM, ROP, CSL, AMP, R, JDSU, ANN, FTK, BCO and ANF
  

Stocks With Unusual Put Option Activity:

• 1) ZNGA 2) OVTI 3) EA 4) BX 5) CA
  

Stocks With Most Negative News Mentions:

• 1) ISIL 2) STRL 3) ININ 4) SD 5) BAC
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.49%

Sector Outperformers:

• 1) Coal +5.3% 2) Paper +1.30% 3) Gold & Silver +1.21%

Stocks Rising on Unusual Volume:

• YOKU, MA, NIHD, SINA, TLK, GMCR, HAIN, OTEX, CNQR, CDNS, AMLN, EXXI, EA, CME, HAIN, BMC, IPXL, CDNS, SWM, GPS, RLD, ZNGA, MDC, GRPN, ANR, CMI, PPO, WBC, LNKD, ACI, RAX, SLE, ALL and WHR
  

Stocks With Unusual Call Option Activity:

• 1) EXXI 2) CAR 3) ITMN 4) ZNGA 5) GMCR
  

Stocks With Most Positive News Mentions:

• 1) CMG 2) BIG 3) CNQR 4) OTEX 5) CME
  

Charts:

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

Thursday Watch

Evening Headlines
Bloomberg:

• ECB May Hold Out on Greek Swap Until Investor Deal Reached on Debt Burden. The European Central Bank is likely to refuse to show its hand on how it will help cut Greece’s debt burden until investors and the government have agreed to a deal, said economists from ING Group to Deutsche Bank. While Greece’s creditors are increasing pressure on the ECB to join the bond swap being negotiated with the country, central bankers have remained silent on their intentions. Economists say the ECB wants to see the private-sector agreement concluded before indicating its strategy, which may include forgoing profits from its Greek bonds or a transfer to one of the region’s rescue funds. The Greek government needs to reach a deal and secure a second European Union-led bailout by March 20, when it faces a 14.5 billion-euro ($19.1 billion) bond payment. Charles Dallara, who as managing director of the Institute of International Finance leads a group negotiating on behalf of creditors, says involvement of public institutions is needed as bondholders hold only about 60 percent of Greek debt. “Politicians will bang their heads against the wall trying to get the ECB to be involved at this stage,” said Carsten Brzeski, senior economist at ING in Brussels. “The ECB will stay out of this as long as it can. While they won’t take a haircut, not booking profits would be a realistic option.”
• North Sea Oil Exports to Asia at 8-Year High: Energy Markets. More North Sea oil is being shipped to Asia than at any time in the past eight years as prices fall to their cheapest levels in 15 months compared with Middle East alternatives. Brent traded at $2.41 a barrel more than Dubai crude on Jan. 13, the smallest difference since October 2010, PVM Oil Associates Ltd. data show. Companies led by BP Plc (BP/) and Vitol Group have sent at least 8 million barrels of North Sea oil to Asian ports since mid-December, equivalent to six days of U.K. production, according to ship-tracking data from AISLive Ltd. That’s the most for any month since 2004, data from Galbraith’s Ltd., a London-based shipbroker, show. Rising production in Libya, refinery closures from the U.K. to Switzerland and a drop in U.S. gasoline demand have created a surplus that’s weighing on the price of low-sulfur, or sweet, crude produced in the North Sea (EUCSFORT) and West Africa. “There’s a glut of light-sweet crude,” said Leo Drollas, chief economist at the Centre for Global Energy Studies, the London-based researcher founded by former Saudi Arabia Oil Minister Sheikh Ahmad Yamani. “It’s a demand-and-supply story. The return of Libya is part of it. Then there’s weak demand for gasoline in the U.S. It’s negative.”
• Oil Futures Decline a Fifth Day as U.S. Stockpiles Rise, Fuel Demand Slips. Oil declined for a fifth day in New York, matching the longest losing streak since August, as U.S. crude stockpiles increased more-than-estimated and gasoline consumption fell to a 10-year low. Futures were down as much as 0.6 percent after settling yesterday at the lowest close in six weeks. Crude supplies rose by 4.2 million barrels last week, figures from the Energy Department showed. They were projected to increase 2.6 million barrels, according to a Bloomberg News survey. Gasoline consumption decreased to 7.97 million barrels a day, the lowest since September 2001, according to Energy Department data. Stockpiles of the fuel increased 3.02 million barrels last week, the report showed. They were projected to rise 500,000 barrels, according to the median of 12 analyst estimates in the Bloomberg News survey.
• Facebook(FB) Cites Google+(GOOG), Mobile Shift Among Potential Risks. Facebook Inc., the social-networking giant that filed for an initial public offering today, cited Google+ competition, regulatory scrutiny, hacker attacks and the shift to mobile technology among the stock’s potential risks. Facebook is vying with Google+ and other Google Inc. sites in the social-networking market, along with regional rivals, the company said in the risk-factors section of its filing. Facebook also said it would face competition in China if it manages to gain access to that market, where it’s currently restricted. “Certain competitors, including Google, could use strong or dominant positions in one or more markets to gain competitive advantage against us in areas where we operate,” Facebook said. Their tactics may include “integrating competing social- networking platforms or features into products they control.”
• Zuckerberg Stake Worth Up to $28.4 Billion in Facebook’s IPO. Facebook Inc.’s initial public offering is poised to make Mark Zuckerberg worth $28.4 billion -- wealthier than Google Inc.’s co-founders and almost on par with Larry Ellison, who started Oracle Corp. 35 years ago. The 27-year-old founder and chief executive officer of Facebook is the company’s top stakeholder as it prepares to go public, with 533.8 million shares, or 28.4 percent, according to a regulatory filing today. Investment firms Accel Partners and Digital Sky Technologies own a combined 16.8 percent.
• China Economy Heading for 'Hard Landing' in 2012, Shilling Says. China’s economy is headed for a “hard landing” this year as weaker demand overseas chokes off exports, said Gary Shilling, who correctly forecast the U.S. recession that began in December 2007.
• China Home Prices May Decline as Much as 15%, GreenOak's Kalsi Says. Chinese home prices may fall as economic growth decelerates and income gains lag development, said panelists at the Bloomberg Link China conference. China’s real estate market is caught between diverging goals of the central government and province heads and local mayors, according to the panelists. The central government has been trying to restrain speculation in housing, while local officials encourage development, they said. Reconciling those goals may influence whether a property crash can be avoided. “Every mayor wants their own Gucci store,” said Bhaskar Chakravorti, senior associate dean of the Fletcher School at Tufts University. “You create jobs at the local level when you give away land, motivate developers." Local Chinese officials want to build more high-rise residential housing than the population can support, according to Michael Klibaner, head of China research for Jones Lang LaSalle Inc. “They’re vanity projects,” he said. While local officials favor building offices and shopping centers because of the tax income they produce, the policy may lead to oversupply, Klibaner said. Commercial real estate in China has shown signs of a bubble, according to Kalsi. “You’ve got tremendous commercial building, poorly conceived shopping centers, offices where there’s no demand,” he said. “We’re not investing right now.”

Wall Street Journal:

• German-IMF Rift Stalls Greece Deal. A long-awaited agreement to restructure more than €200 billion ($262 billion) of Greek government bonds in private hands is being held up in large part by big differences between two of Greece's official creditors: the International Monetary Fund and Germany. Several people close to the negotiations say a deal between Greece and private bondholders could be concluded in hours, as only small differences remain between the two sides. But the rift between the IMF and Germany—on top of a desire among all official creditors to secure a solid commitment from Greek politicians across the political spectrum to big changes in the economy's structure—has delayed final completion of the accord. The gap between Germany and the IMF, central players in the decision on a new bailout for Greece, reveals a fundamental divergence in their approach to reducing Greece's huge debt burden.
  
• Complete Facebook(FB) Coverage.
• Dozens Killed at Egypt Soccer Match. Clashes between soccer fans killed at least 74 people Wednesday night in the deadliest single incident since Egypt's revolution last year, and one of the worst sports-related tragedies in decades. The violent outbreak also was seen as reflecting broader tensions in the country—pitting aggressive soccer fans known as "Ultras" against their nemesis, the security forces, who protesters say have continued the harsh crackdowns of the deposed Mubarak regime.
• Corzine Is The Invisible Man. MF Global Hearing to Focus on Ex-CEO, but He Isn't Expected to Be There. Former MF Global Holdings Ltd. Chief Executive Jon S. Corzine won't be attending Thursday's congressional hearing on the demise of the securities firm, but the onetime New Jersey governor's management style and outsize bet on European bonds still will come under the spotlight. Lawmakers are expected to press a pair of former MF Global risk-management executives in the subcommittee hearing about the role played by Mr. Corzine in the decisions leading to its collapse.
• Economy Slows Applications to Europe's Business Schools. The European currency crisis is claiming another victim: the M.B.A student. Having spent decades building up globally competitive business schools, the Continent is finding that tough economic times are cutting into their yields. Applications at two-thirds of Europe's business schools fell last year after rising steadily for years, according to the Graduate Management Admission Council, which administers the common entrance exam for business schools.

Barron's:

• Qualcomm(QCOM) Up 5%: FYQ1 Beats, Q2 View Beats, Raises Year View. Wireless chip maker Qualcomm (QCOM) this afternoon reported fiscal Q1 revenue and profit ahead of analysts’ estimates, forecast this quarter’s results above expectations, and raised its outlook for the year above consensus. Revenue in the three months ended in December rose to $4.7 billion, yielding EPS of 97 cents a share. Analysts had been expecting $4.58 billion and 90 cents. An additional deck of slides providing color on the quarter is available here.

Business Insider:

• Facebook's(FB) IPO Will Make These People Millionaires And Billionaires.

Zero Hedge:

• Facebook(FB) Files IPO Prospectus. The most eagerly awaited IPO of the decade has just filed its S-1 statement (link). Some real time observations:
• US Adds $120 Billion In Debt Since Debt Ceiling Hike On Friday, $310 Billion More On Deck In Next Two Months.

CNBC:

• Strong Keurig Demand Lifts Green Mountain Coffee(GMCR) Q1. Green Mountain Coffee Roasters reported quarterly results that sailed past analysts' expectations on strong sales of its Keurig coffee machines, sending its shares up 8 percent in after-market trading.

NY Times:

• As Greece Nears a Big Debt Deal, Investors Now Fret That Portugal Will Ask for the Same. Despite the best efforts of European politicians to place a quarantine fence around the Greek economy, the crisis there continues to plague Portugal. The authorities in Lisbon insist otherwise, but investors are predicting that Portugal will be next in line to impose losses on bondholders as it struggles to meet the terms of a 78 billion-euro, or $103 billion, bailout agreement struck with international creditors last May. While a short-term debt auction on Wednesday went off comfortably, Portugal’s long-term borrowing costs remain unsustainably high, and spending cuts that are cleaning up public finances are also helping to plunge Portugal into one of the deepest recessions in the Western world. Its economy is predicted to contract 3 percent this year, and the unemployment rate, at 13.6 percent, is one of the highest in the euro zone. Whatever deal with creditors is reached in Athens in the coming days, “it’s most likely that Portugal will say that it wants one of those, too,” said Edward Hugh, an economist in Barcelona who has been tracking the euro zone’s debt crisis. Portugal “literally has nothing further to lose, except some of its debt burden,” he said.

NY Post:

• We Hear Little About Warren Buffett's Dark Side by Charles Gasparino.
• Insiders: No DOJ Case Vs. Goldman(GS). Goldman Sachs is ready to turn over a new gold-plated leaf. Nearly nine months after the Justice Department launched a probe into whether the Wall Street firm misled clients and lied to lawmakers, executives are increasingly optimistic that the bank will avoid criminal charges and focus on what it does best: minting money.
  

Reuters:

• Major New Leak at Japan's Nuclear Plant - Kyodo. More than 8 tonnes of water have leaked from Japan's stricken nuclear power plant after a frozen pipe burst inside a reactor buiding, but none of the water is thought to have escaped the complex, Kyodo news agency said on Thursday.
• Russia Says Will Veto "Unacceptable" Syria Resolution. Russia said on Wednesday it would veto any U.N. resolution on Syria that it finds unacceptable, after demanding any measure rule out military intervention to halt the bloodshed touched off by protests against President Bashar al-Assad's rule. The political violence in Syria has killed at least 5,000 people in the past 10 months and activists say Assad's forces have stepped up operations this week on opposition strongholds, from Damascus suburbs to the cities of Hama, Homs and the border provinces of Deraa and Idlib.

Financial Times:

• Greece's Karatzaferis Asks EU to Relax Bailout Terms. George Karatzaferis, head of Greece's Laos party, wrote to European Commission President Jose Barroso, European Council President Herman Van Rompuy and party leaders in the European Parliament to ask them to loosen the terms of Greece's second bailout or risk seeing a "social explosion," citing the letter. The next wave of reforms would trigger economic collapse and social unrest "of a kind that Europe has not seen for decades," Karatzaferis wrote.

Telegraph:

• Bundesbank sinks deeper into debt saving Europe. Germany's Bundesbank has entirely exhausted its stock of private assets and run up a quarter of a trillion euros in liabilities propping up the eurozone system, testing the political limits of EMU solidarity in Germany. The operations are part of the European Central Bank's 'TARGET2' network of automatic payments between the national central banks of the Euroland club. The Bundesbank has already provided €496bn (£413bn) to countries in trouble, chiefly Greece, Ireland, Italy and Spain. "This is reaching the danger point. It is already one and a half times the total budget of the German government," said Professor Frank Westermann of Osnabrück University. "If any of the crisis countries exits the euro or if there is an EMU break-up, the Bundesbank bears extreme risks."

Kathimerini:

• 60,000 Greek Shops to Close. About 160,000 jobs will be lost this year in the commerce sector, according to the National Confederation of Greek Commerce (ESEE) as the constant decline in disposable income has led to a sharp drop in turnover and a steep rise in the number of enterprises shutting down.The jobs to be lost concern 60,000 employers and 100,000 employees in the sector, ESEE expects. Given the data for a 6.2 percent fall in household consumption in 2011 and the Eurostat forecast for a further decline by 4.3 percent this year, ESEE warns that soon Greece will be in a condition of absolute poverty. With 60,000 enterprises having shut down since the start of the crisis to date, their number is set to double by the end of this year, ESEE estimates.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are .50% to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 174.50 -8.0 basis points.
  
• Asia Pacific Sovereign CDS Index 143.75 -5.25 basis points.
• FTSE-100 futures -.10%.
  
• S&P 500 futures +.12%.
  
• NASDAQ 100 futures +.11%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ATK)/2.03
• (RGLD)/.48
• (TDW)/.43
• (HOT)/.57
• (PHM)/.07
• (GR)/1.57
• (IP)/.61
• (CAM)/.76
• (CAH)/.76
• (R)/.97
• (BZH)/-.33
• (MRK)/.95
• (LEA)/1.18
• (CME)/3.64
• (CI)/1.19
• (ADS)/1.49
• (K)/.62
• (IRF)/-.06
• (CYMI)/.20
• (APKT)/.28
• (N)/.04
• (RCL)/.15
• (CMI)/2.24
• (VMC)/-.37
• (BX)/.40
• (NVLS)/.45
• (MA)/3.91
• (WYNN)/1.29
• (DO)/.98
• (AGN)/1.00

Economic Releases
8:30 am EST

• Preliminary 4Q Non-farm Productivity is estimated to rise +.8% versus a +2.3% gain in 3Q.
• Preliminary 4Q Unit Labor Costs are estimated to rise +.8% versus a +2.3% gain in 3Q.
• Initial Jobless Claims are estimated to fall to 371K versus 377K the prior week.
• Continuing Claims are estimated to fall to 3535K versus 3554K prior.
  

Upcoming Splits

• (TJX) 2-for-1

Other Potential Market Movers

• The Fed's Bernanke testifying before Congress, Fed's Fisher speaking, Fed's Evans speaking, Challenger Job Cuts report for January, ICSC Chain Store Sales for January, RBC Consumer Outlook Index for February, ISM New York for January, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Raymond James Airline Conference and the (AMD) analyst day could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted by automaker and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the day.