WEST48.COM RESOURCE MASTER FUND FORMATION

Bull Radar

scgadmin — Thu, 23 Feb 2012 06:49:33 +0000

Style Outperformer:

Large-Cap Growth +.20%

Sector Outperformers:

1) Oil Service +2.30% 2) Hospitals +1.30% 3) Road & Rail +.50%

Stocks Rising on Unusual Volume:

FIRE, NBR, INTU, RRC, WNR, SKS, GRMN, HSTM, LAMR, TXRH, SXCI, ASPS, MDCO, IPCM, MYL, HLF, CHS and CYH

Stocks With Unusual Call Option Activity:

1) INTU 2) GRMN 3) MNST 4) CTAS 5) CYH

Stocks With Most Positive News Mentions:

1) INTU 2) FIRE 3) MOS 4) URBN 5) LMT

Charts:

Bear Radar

scgadmin — Thu, 23 Feb 2012 06:49:32 +0000

Style Underperformer:

Small-Cap Value -.69%

Sector Underperformers:

1) Coal -2.19% 2) Banks -1.68% 3) Homebuilders -1.48%

Stocks Falling on Unusual Volume:

SIMO, WMT, DLTR, TRAK, WPRT, KNOL, CAKE, DELL, PZZA, ALTE, YNDX, RP, ICON, Z, FSYS, ZIP, NFX, LAD, TOL, ICON, SDT, RGR, LL and FST

Stocks With Unusual Put Option Activity:

1) KRE 2) JAG 3) YOKU 4) SWY 5) NBR

Stocks With Most Negative News Mentions:

1) YHOO 2) HGSI 3) CMA 4) DLTR 5) AMR

Charts:

Today’s Headlines

scgadmin — Thu, 23 Feb 2012 06:49:32 +0000

Bloomberg:

Greece Cut to Default Cusp as Fitch Takes First Ratings Step. Greece’s downgrade by Fitch Ratings is the first in a series of ratings cuts that the nation can expect after it negotiated the biggest sovereign debt restructuring in history. Fitch lowered Greece’s credit grade by two levels to C from CCC, saying a default is “highly likely in the near term,” and that it will cut the nation again to “Restricted Default” once a bond exchange is completed. Standard & Poor’s said in July it expected to downgrade Greece to “Selective Default” after the restructuring agreement, while Moody’s Investors Service has said it will cut the nation to its lowest rating. “It’s almost a paradoxical exercise,” said Richard McGuire, a strategist at Rabobank International in London. “They downgrade you because you’re not paying your bonds and then upgrade you because the bonds don’t exist, so you’re not in default.”
Euro-Area Manufacturing, Services Unexpectedly Contract: Economy. European services and manufacturing output unexpectedly shrank in February as the euro-area economy struggled to rebound from a contraction in the fourth quarter. A euro-area composite index based on a survey of purchasing managers in both industries dropped to 49.7 from 50.4 in January, London-based Markit Economics said in an initial estimate today. Economists had forecast a reading of 50.5, according to the median of 16 estimates in a Bloomberg News survey.
Sovereign Credit Risk Increases to One-Month High in Europe. The cost of insuring against default on European sovereign debt rose to the highest in a month, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments increased 11 basis points to 349 basis points at 4 p.m. in London, the highest since Jan. 18. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings were 9.5 basis points higher at 581.5, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose two basis points to 133 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 8.5 basis points to 225 and the subordinated gauge was 11 higher at 379.5.
German Risk Exposure to Greece Rises After Bailout, Welt Says. Germany’s risk exposure to Greece will rise after the debt-strapped country secured a second bailout package, Die Welt reported, citing its own calculations. By 2014, outstanding loans and guarantees to Greece will amount to 51 billion euros ($68 billion), of which 31 billion euros are related to this week’s rescue package, provided it’s disbursed in full, the newspaper said. Germany had Greece- related risks of 30 billion euros before the second bailout, of which 10 billion euros will have to be written down by state- owned banks and public lenders as a result of the country’s debt restructuring, Welt said.
Chanos, Zimmerman on Hedge Fund History. (video)
Citigroup(C) ‘Defrauded’ Fannie, Freddie, Whistle-Blower Claims. Citigroup Inc., which last week admitted breaking Federal Housing Administration rules and paid a fine, also violated regulations for home loans sold to Fannie Mae and Freddie Mac, according to a whistle-blower’s complaint. The bank “defrauded, falsified information or misled federal government entities” by selling or securing insurance for mortgages with defects such as improper appraisals and paperwork errors and not reporting them as required, Sherry Hunt, a Citigroup quality-assurance vice president, said in her complaint, which was unsealed yesterday. It was filed under the False Claims Act in federal court in Manhattan in August.
Rising Prices, Efficiency Sink Gasoline Demand: Chart of the Day. Gasoline demand has sunk to an 11-year low as pump prices surge to the highest level since at least 1990 for this time of the year and U.S. consumers favor more fuel-efficient vehicles. Prices at the pump have jumped 85% to $3.57 a gallon Feb. 20 from $1.925 three years ago, according to AAA.
‘Bake Sale Ban’ Rhetoric Swells Over Obama School Snacks Rules. Special-education students at Tooele High School in northwest Utah who rely on weekly bake sales to pay for field trips and supplies may have to go without. Federal regulators, fresh off a contentious nutritional overhaul of U.S. school meals that replaced fried chicken patties with chef salads, are now preparing the first standards for snacks, sodas and other foods sold outside of regularly scheduled lunch and breakfast. That means vending machines, concession stands and some types of PTA fundraisers during school hours may be forced to cut back the calories. “We have Washington deciding if you can hold a bake sale,” Utah state Representative Ken Ivory, a Republican, said in an interview. “They’ve overstepped their bounds.”
Illinois’s ‘Toughest’ Budget May Cut $2.7 Billion From Medicaid. Illinois Governor Pat Quinn will propose a $33.8 billion spending plan that would cut $2.7 billion from the Medicaid program, which provides health care for the poor. It’s the “toughest budget,” Jack Lavin, Quinn’s chief of staff, told reporters in Springfield, capital of the fifth-most- populous U.S. state. The plan, an increase from the current $33 billion, would close two prisons and four mental-health facilities, he said. The state faces a backlog of $9 billion in unpaid bills.
Sales of Existing Homes Rise. Sales of previously owned U.S. homes rose in January to the highest level since May 2010 as investors took advantage of lower prices to buy distressed properties. Purchases climbed 4.3 percent to a 4.57 million annual rate, less than forecast, from a revised 4.38 million pace in December that was slower than previously estimated, a report from the National Association of Realtors showed today in Washington. Distressed properties made up the largest portion of all purchases since April. Almost one in four of all transactions was made by investors.
Wen Seen Paring China Growth Goal in State-of-the-Union on Inequality Rise. China’s Premier Wen Jiabao is seen signaling next month that curbing pollution, inequality and the risk of financial instability eclipse the benefits of faster economic growth, a survey of analysts indicated.

Wall Street Journal:

DirectTV(DTV) Could Be Next To Enter Streaming. Pressure is mounting on DirecTV to unveil its own streaming service as Comcast(CMCSA) joins the bandwagon.
Regulator Questions Role of High-Frequency Traders. Securities and Exchange Commission Chairman Mary Schapiro said Wednesday she is worried about the role of high-frequency traders in the stock market and hinted at new policies aimed at curbing frenetic market activity. A large portion of trading in the equities market has little to do with “the fundamentals of the company that’s being traded” and more to do with “the minuscule aberrational price move” that computer-assisted traders with direct connections to the exchange can “jump on” in fractions of a second, Ms. Schapiro said.
Gingrich Releases Half-Hour Energy Ad. (video)

CNBC.com:

Romney Proposes Slashing Top Tax Rate to 28%. Former Massachusetts Gov. Mitt Romney, seeking to kick-start his presidential campaign among recalcitrant conservatives, will propose cutting the top income tax for individuals to 28 percent, advisers said today.

Business Insider:

Zero Hedge:

NY Post:

Google(GOOG) Ready to Launch Pilot Pay-TV Program in Kansas City.

New York Times:

E.U. Banks and States Caught in Vicious Cycle. Like drunks at a bar door, the euro zone’s governments and banks are leaning unsteadily on each other for support. The banks know they have to sober up, but governments are urging them to have one more for the road. European policy makers may have managed to stop the entire building from swaying in the past few weeks, but they have not yet found a way to break the dangerous mutual dependency between overindebted states and overleveraged banks. ‘‘If you don’t cut the dependency between sovereigns and banks, inevitably states will be inhibited by the risks of their banks and banks will be inhibited by the risks of their states,’’ said Jean Pisani-Ferry, director of Bruegel, a economic research group based in Brussels.

Jalopnik:

Tesla Motors’(TSLA) Devastating Design Problem. Tesla Motors’ lineup of all-electric vehicles — its existing Roadster, almost certainly its impending Model S, and possibly its future Model X — apparently suffer from a severe limitation that can largely destroy the value of the vehicle. If the battery is ever totally discharged, the owner is left with what Tesla describes as a “brick”: a completely immobile vehicle that cannot be started or even pushed down the street. The only known remedy is for the owner to pay Tesla approximately $40,000 to replace the entire battery. Unlike practically every other modern car problem, neither Tesla’s warranty nor typical car insurance policies provide any protection from this major financial loss.

Financial Times:

An EFSF Credit Derivative Is Born. The European Sovereign Bond Protection Facility now has its own website! More to the point, the Summary Terms for the certificates can be found here, and a Base Prospectus here.

BBC:

Argentina Train Crash in Buenos Aires ‘kills dozens’. A train crash at a station in the Argentine capital, Buenos Aires, has killed 49 people with at least 600 more injured, officials say. The train slammed into the barrier at the end of the platform at the Once station during the morning rush hour.

MailOnline:

Google(GOOG) Glasses With Built-In Terminator-Style Computer Displays ‘could be on sale by the year’s end at a cost of $250′.

Handelsblatt:

Germany Plans ‘Drastic’ Cuts in Solar Subsidies. Subsidies for some photovoltaics installations to be cut by more than 30%.

Shanghai Daily:

China Appliance Sales Drop 10% in January. SHANGHAI’S languid home appliance market hopes for new incentives to revive sales after China’s old-for-new home appliance subsidy program expired at the end last year. The industry’s nationwide sales dropped 10 percent in January from a year earlier.

Stocks Falling into Final Hour on Rising Eurozone Debt Angst, Global Growth Fears, Less Financial Sector Optimism, Profit-Taking

scgadmin — Thu, 23 Feb 2012 06:49:31 +0000

Broad Market Tone:

Advance/Decline Line: Lower
Sector Performance: Most Sectors Declining
Volume: Below Average
Market Leading Stocks: Performing In Line

Equity Investor Angst:

VIX 18.20 +.05%
ISE Sentiment Index 115.0 +21.05%
Total Put/Call .91 +5.81%
NYSE Arms 1.24 +27.37%

Credit Investor Angst:

North American Investment Grade CDS Index 98.08 +.96%
European Financial Sector CDS Index 183.02 +2.76%
Western Europe Sovereign Debt CDS Index 350.54 +2.55%
Emerging Market CDS Index 252.57 -.23%
2-Year Swap Spread 29.50 unch.
TED Spread 41.0 -1 bp
3-Month EUR/USD Cross-Currency Basis Swap -68.50 unch.

Economic Gauges:

3-Month T-Bill Yield .08% +1 bp
Yield Curve 171.0 -3 bps
China Import Iron Ore Spot $135.90/Metric Tonne +.37%
Citi US Economic Surprise Index 59.80 -2.0 points
10-Year TIPS Spread 2.30 +1 bp

Overseas Futures:

Nikkei Futures: Indicating +19 open in Japan
DAX Futures: Indicating -1 open in Germany

Portfolio:

Slightly Lower: On losses in my Retail and Tech sector longs
Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short, then covered some of them
Market Exposure: 75% Net Long

BOTTOM LINE: Today’s overall market action is mildly bearish, as the S&P 500 trades slightly lower on rising Eurozone debt angst, high energy prices, global growth fears, profit-taking, technical selling and more shorting. On the positive side, Oil Service and Hospital shares are especially strong, rising more than +1.0%. Lumber is rising +2.98%. The UK sovereign cds is falling -2.1% to 72.17 bps. On the negative side, Coal, Alt Energy, Computer, Disk Drive, Networking, Bank, HMO, Insurance, Homebuilding and Airline shares are under meaningful pressure, falling more than -1.0%. Financial shares are underperforming today and the Transports continue to trade poorly. The Transportation Index is now down -4.3% since Feb. 3 versus a +1.1% gain for the S&P 500. Gold is surging +1.0% and the UBS-Bloomberg Ag Spot Index is rising +.34%. Weekly retail sales rose +2.7% versus a +2.6% gain the prior week. The recent breakout in oil will provide another headwind for sales. Lumber is -2.0% 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 remains a 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 month 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. Overall, credit gauges have deteriorated recently despite the Greece debt deal and remain at stressed levels. China Iron Ore Spot has plunged -25.0% since Sept. 7th of last year. Shanghai Copper Inventories are up +670.0% 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 European indices fell around -.75% today, led by a -1.3% decline in Spanish shares. The Bloomberg European Financial Services/Bank Index is dropped -2.44%. US stocks are still technically extended short-term and are right near intermediate-term resistance with bullish sentiment elevated, energy price becoming a major global headwind and quite a bit of good news likely priced in around current levels. 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. 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 and more shorting.

Thursday Watch

scgadmin — Thu, 23 Feb 2012 06:49:30 +0000

Evening Headlines
Bloomberg:

IMF Resources Talks Should Follow Europe Financial Firewall, Brainard Says. Group of 20 nations should discuss possible further resources for the International Monetary Fund after Europe decides on its financial firewall, the U.S. Treasury Department’s top international official said. “I’m sure when Europe’s response becomes clear the G-20 will be able to better assess IMF resources.” Brainard said a discussion on further IMF resources should follow European leaders’ assessment on the capabilities of a firewall at a March 1-2 summit. The IMF is seeking $500 billion in additional lending power.
Shanghai Reiterates Property Curbs. Shanghai reiterated its property curbs late yesterday after Shanghai Securities News reported that China’s financial center was easing measures to allow a broader pool of people to buy second homes. Shanghai isn’t changing its housing policies and will continue implementing home-purchase restrictions, Liu Haisheng, the head of the city’s housing authority, said in a statement on its website.
China Stock Rally to End as Polices Disappoint, BofA(BAC) Says. China’s stocks may fall as much as 13 percent by the end of the year as the central bank’s “fine- tuning” of monetary policies won’t be enough to offset an economic slowdown, according to Bank of America Corp. The government needs to cut interest rates or relax curbs in the property market to sustain this year’s 9.3 percent rebound for the Shanghai Composite Index, David Cui, chief China strategist at the Merrill Lynch unit, said in an interview in its Shanghai office yesterday. Cui, 43, who has been bearish on China equities since May 2010, said the Shanghai gauge may drop to 2,100 by year-end. It rose 0.9 percent to 2,403.59 yesterday. “If the government only does fine tuning, it’s not sufficient to remove the major overhangs behind the poor market performance over the past two years or so, including a lack of a new and sustainable growth driver and the banking system’s bad debts,” said Cui. “The markets will likely remain lukewarm.” The Shanghai gauge tumbled 33 percent over the past two years, making it the worst performer among the world’s 10 biggest markets. “Inflation is still a threat,” Cui said. “That is one of the reasons central bank hasn’t been more forthcoming with loosening.” Bank of America joins China International Capital Corp. in predicting losses for China’s stocks this year. “The reserve ratio cut is largely technical and we don’t really read that as loosening,” Cui said. “The stronger indicator will be M2 growth, loan growth or a cut in interest rates.”
iPad Battle Reveals Bank of China as Apple(AAPL) Opponent. Apple Inc. (AAPL)’s legal fight for the iPad name in China doesn’t just pit the world’s most-valuable company against a failed Hong Kong display maker. Some of the nation’s biggest banks also are opposing the technology giant.
Iran’s Snub of UN Inspectors Dims Prospects for Nuclear Accord. Iran’s refusal to let United Nations experts investigate allegations of illicit nuclear activities at a military base doesn’t inspire confidence for a return to negotiations with the international community, U.S. officials and nuclear-proliferation specialists said. An International Atomic Energy Agency team visiting Tehran was denied access to the Parchin military base during two days of meetings that ended Feb. 21. IAEA Director General Yukiya Amano expressed disappointment that the team “engaged in a constructive spirit, but no agreement was reached.”
Vivus(VVUS) Weight-Loss Pill Qnexa Wins Backing of FDA Panel. Vivus Inc.’s weight-loss pill Qnexa won the backing of a U.S. advisory panel as the company seeks to gain approval for the first new obesity drug in 13 years. Advisers to the Food and Drug Administration voted 20-2 today that Qnexa’s benefits outweigh its risks at a meeting at agency headquarters in Silver Spring, Maryland. The FDA isn’t required to follow the panel’s recommendation. The agency is scheduled to make a decision on the drug, which it rejected in 2010, by April 17.
H-P(HPQ) Forecast Misses Estimates Amid Slump. Hewlett-Packard Co. (HPQ) forecast fiscal second-quarter profit that missed analysts’ estimates as consumers curtail personal-computer buying, doing more computing on smartphones and tablets made by rivals. Profit excluding some items will be 88 cents to 91 cents a share for the period that ends in April, Hewlett-Packard said today in a statement. That fell short of 95 cents, the average analyst estimate, according to data compiled by Bloomberg. Sales in the PC group dropped 15 percent to $8.87 billion in the period that ended in January, as consumers held off on buying new machines in the first full quarter under Chief Executive Officer Meg Whitman. Revenue from servers, printers and storage gear also declined.

Wall Street Journal:

Santorum Draws Fire in Fight for GOP Lead. Republican presidential candidate Mitt Romney sought Wednesday to portray Rick Santorum’s 16-year career in Congress as a betrayal of conservative principles, using a televised debate to try to define his top rival at a moment when many voters are paying new attention to the former senator.
New Push for Reform in China. Influential Report to Warn of Economic Crisis Unless State-Run Firms Are Scaled Back. An exclusive preview of an economic report on China, prepared by the World Bank and government insiders considered to have the ear of the nation’s leaders, offers a surprising prescription: China could face an economic crisis unless it implements deep reforms, including scaling back its vast state-owned enterprises and making them operate more like commercial firms. “China 2030,” a report set to be released Monday, addresses some of China’s most politically sensitive economic issues, according to a half-dozen individuals involved in preparing and reviewing it.
BATS Gets Closer to Going Public. BATS Global Markets may launch its long-planned initial public offering by the end of March in what would be the first U.S. flotation in almost four years launched on an exchange not run by NYSE Euronext or Nasdaq OMX Group Inc.
U.S. Defends Targeted Killings. The Pentagon’s top lawyer on Wednesday defended the use of targeted killings to eliminate suspected terrorists and militants, in an expansion of the Obama administration’s public justification for its primary counterterrorism tool. Unmanned drone strikes and special-operations raids have been used to kill terrorist leaders such as Osama bin Laden, Anwar al-Awlaki and hundreds of other suspected operatives in attacks that have grown under President Barack Obama, but that have troubled some of the president’s chief political allies.
Asia Firms Stampede to Bonds or Funding. Asian companies are tapping bond markets at a record pace, worried that the euro-zone crisis may deepen and make it more difficult and expensive for them to secure funds later in the year, say bankers who arrange borrowing.
Chinese Suppliers Linked to Impure Heparin. The Food and Drug Administration said Wednesday it found 14 additional Chinese companies supplied contaminated raw material to make heparin, a widely used blood thinner.
Romney’s Tax Reboot. His 20% marginal rate cut changes the tax reform debate.
Health Care’s Coming Price Revolution. The private sector is moving to give people the information they need to get treatments that are worth the money. But ObamaCare blocks the way. The old-line Marxists used to talk about “heightening the contradictions” of capitalism to make things worse and hasten the revolution. One of the great ironies of the Affordable Care Act is that it may be doing just that.

Zero Hedge:

CNBC:

Walgreen(WAG), Other Pharmacies Form Nationwide Network. Walgreen Co. and some independent drugstores are investing in a nationwide push to give pharmacists a chance to work more with patients to improve care and cut costs. The drugstores have invested in RxAlly, a Leesburg, Va., private company that is launching a network involving 20,000 pharmacies focused on better care coordination.
UK and Japan Warn Volcker Rule Poses Threat to Recovery. The UK and Japan have urged the U.S. to rewrite its so-called “Volcker rule”, claiming that trading restrictions on U.S. banks could hit the international sovereign debt market at a delicate moment in the global recovery. George Osborne, the British chancellor, has joined forces with Jun Azumi, his Japanese counterpart, in warning in a column in today’s Financial Times that the U.S. banking reforms could make it “more difficult, costlier and riskier for countries to issue and distribute debt”, at a time when many eurozone countries are already under strain. The article is the highest profile expression of international concern about the impact of the U.S. reforms, coming from the finance ministers of two countries regarded as among Washington’s greatest economic allies.
Huge Private Debts Pose Another Hurdle for Euro Zone. Away from the markets’ fixation with the debts of Greece and other governments, concern is growing at the painfully slow progress Europe is making in tackling a much bigger mountain of corporate and household debt.

IBD:

Liquidity Services(LQDT) Takes eBay Model In Unique Direction.

NY Times:

Opalesque:

CFTC Rescinds Hedge Fund Exemptions. The Commodities Futures Trading Commission (CFTC) has significantly changed how hedge funds will be able to participate in commodities. Earlier this month the Commission rescinded several exemptions provided to private funds that operate commodity pools. By removing these exemptions, funds that operate commodity pools will now be required to register with the CFTC as Commodity Pool Operators (CPOs) and may be required to take certification examinations. The rules also include foreign investment advisers that have US clients.

Reuters:

US Grilling Season Seen Costly as Beef Prices Surge. The grilling season this spring is shaping up to be the costliest ever for Americans already feeling the pinch from rising gasoline prices.

Financial Times:

Germany Fights Eurozone Firewall Moves. The German government is set to resist or delay increasing the size of the eurozone’s financial “firewall” against contagion from the Greek debt crisis, in the face of mounting pressure from its partners, the International Monetary Fund and the US administration.
Record Sterling Oil Price Sparks Fears. Oil prices have soared to a record high in sterling terms and are approaching euro highs, raising fears that European countries struggling with heavy debts will face further barriers to economic recovery. “This is a regional oil shock,” said Amrita Sen, commodities analyst at Barclays Capital in London.

Telegraph:

ECB’s Mario Draghi Magic Corrupts Bond Markets. The European Central Bank’s blitz of measures to stave off a credit crunch and shore up EMU states are profoundly distorting debt markets and may ultimately do more harm than good. ECB boss Mario Draghi has sparked a blistering rally in global asset markets by lending banks as much as they want for three years at 1pc, but bond experts say the side-effects are toxic and the benefits are wearing off. “It’s a sugar rush,” said Alberto Gallo, European credit chief at RBS. “It lowers the risk of defaults, but also lowers recovery rates if things go wrong.” Lenders must provide the ECB with collateral, at a haircut of up to 65pc, using up ever more of their balance sheets. The ECB has first claim on these assets, pushing other creditors down the pecking order. The longer it goes on, the worse it gets. “There is no such thing as a free lunch. Liquidity today comes at the price of subordination tomorrow,” said Mr Gallo, warning that BBVA, BNP, Commerzbank, Intesa, Santander and Unicredit are all vulnerable.
Spain Appeals to Brussels For Easier Deficit Reduction Targets. Spain has appealed to Brussels for softer deficit-reduction targets, raising fears that Europe’s rescue strategies are unworkable in the bigger eurozone economies and not just Greece.

The Australian:

Julia Gillard Calls Leadership Vote as Kevin Rudd States His Case For A Return As PM. JULIA Gillard says she will go to the backbench if she loses a Monday leadership ballot, and would not recontest the prime ministership. Announcing a ballot for 10am on Monday in Canberra, Ms Gillard challenged Kevin Rudd to give the same undertaking, seeking to lock the former foreign minister into a one-shot strategy.

China National Radio:

China will implement resource tax and power price reform in western regions of the country first, citing Du Ying, a deputy director with the National Development and Reform Commission.

Evening Recommendations

None of note

Night Trading

Asian equity indices are -1.0% to -.25% on average.
Asia Ex-Japan Investment Grade CDS Index 165.0 +5.0 basis points.
Asia Pacific Sovereign CDS Index 133.0 +1.75 basis points.
FTSE-100 futures -.14%.
S&P 500 futures -.06%.
NASDAQ 100 futures +.06%.

Morning Preview Links

Earnings of Note
Company/Estimate

(DDS)/2.02
(PDCO)/.50
(CKP)/-.06
(DISH)/.61
(KSS)/1.80
(AMT)/.72
(TGT)/1.39
(SHLD)/.68
(DNR)/.34
(TTC)/.60
(SWY)/.64
(GPS)/.42
(WBMD)/.29
(OVTI)/.11
(CRM)/.40
(MNST)/.37
(AIG)/.56
(DECK)/3.14
(ADSK)/.45
(MHK)/.72
(VNO)/.1.23
(PSA)/1.58

Economic Releases
8:30 am EST

Initial Jobless Claims are estimated to rise to 355K versus 348K the prior week.
Continuing Claims are estimated to rise to 3455K versus 3462K prior.

10:00 am EST

The House Price Index for December is estimated to rise +.1% versus a +1.0% gain in November.
The House Price Index for 4Q is estimated to rise +.2% versus a +.2% gain in 3Q.

11:00 am EST

Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,350,000 barrels versus a -171,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,500,000 barrels versus a -2,867,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +250,000 barrels versus a +400,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.5% versus a +1.2% gain the prior week.

Upcoming Splits

None of note

Other Potential Market Movers

The 7Y T-Note Auction, Kansas City Fed Manufacturing Index for Februrary and weekly Bloomberg Consumer Comfort Index could also impact trading today.

BOTTOM LINE: Asian indices are 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 modestly lower. The Portfolio is 75% net long heading into the day.

Bull Radar

scgadmin — Wed, 22 Feb 2012 06:39:04 +0000

Style Outperformer:

Large-Cap Value +.59%

Sector Outperformers:

1) Gold & Silver +2.59% 2) Alt Energy +1.19% 3) Coal +1.18%

Stocks Rising on Unusual Volume:

SWC, RIC, AUY, SKS, WYNN, ASIA, DWA, WPRT, PCYC, CHG, PBH, PBT, CHH, SWC, QCOR, CJES, PPO, PCYC, M and RRD

Stocks With Unusual Call Option Activity:

1) SWC 2) CIEN 3) HUM 4) LEAP 5) NI

Stocks With Most Positive News Mentions:

1) BRCM 2) GRMN 3) JEC 4) WYNN 5) ETN

Charts:

Bear Radar

scgadmin — Wed, 22 Feb 2012 06:39:03 +0000

Style Underperformer:

Small-Cap Growth -.41%

Sector Underperformers:

1) Airlines -6.07% 2) REITs -1.51% 3) Homebuilders -1.30%

Stocks Falling on Unusual Volume:

WMT, KLAC, HCN, SAVE, UAL, TSRA, MXWL, Z, CTRP, VVUS, TSRA, CIEN, SHPGY, RYAAY, CALL, MDVN, STMP, SATS, DAKT, ALGT, GILD, REGN, ITRI, TECH, GLNG, WFT, CTGX, RUK, NVE, MOH and CIE

Stocks With Unusual Put Option Activity:

1) STI 2) ASIA 3) HRB 4) YOKU 5) APC

Stocks With Most Negative News Mentions:

1) CTRP 2) KLAC 3) SINA 4) WMT 5) JCP

Charts:

Today’s Headlines

scgadmin — Wed, 22 Feb 2012 06:39:03 +0000

Bloomberg:

Greek Rescue Leaves Europe Default Risk Alive as Austerity Bites. Europe is still struggling to avoid the threat of default as investors warned Greece will soon risk violating the terms of its second bailout in three years. Seven months of negotiations ended in the pre-dawn hours in Brussels with Greece winning 130 billion euros ($172 billion) in aid it needs to avoid a March bankruptcy. Any respite may prove temporary after it signed up to a program of austerity and economic reform aimed at slashing debt to 120.5 percent of gross domestic product by 2020 from about 160 percent last year. Even with investors and central bankers chipping in to relieve the debt burden, economists from Citigroup Inc. to Commerzbank AG concluded Greece may again fail to deliver amid a fifth year of recession, looming elections and social unrest. The upshot could be the removal of aid and renewed debate over the merits of fresh assistance before year-end as policy makers shift toward doing more to inoculate the rest of Europe from contagion. “The bailout bandage is on, but it won’t take much to unravel,” said David Miller, partner at Cheviot Asset Management in London. “The euro zone has done its best to ensure that Greece will deliver on promises, but there is considerable scope for backtracking on deficit reduction.” Financial markets signaled doubt the accord will fix Greece’s travails permanently or spell an end to the two-year debt crisis. The euro surrendered initial gains against the dollar and European stocks fell from a six-month high.
Sovereign Credit-Default Swaps Rise Amid Greek Bailout Concerns. The cost of insuring against default on European sovereign bonds rose on concern the 130 billion-euro ($173 billion) bailout for Greece will fail to resolve the region’s debt crisis. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments increased eight basis points to 342 basis points at 11:26 a.m. in London. The Greek government’s decision to introduce legislation for so-called collective action clauses, allowing it to enforce losses on bondholders, makes it more likely that default swaps on the nation’s debt will be triggered. An International Swaps & Derivatives Association official said in an interview that the group is monitoring the situation “diligently.” The cost of insuring against losses on corporate debt also rose, with contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings climbing 7.5 basis points to 575.5, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 2.25 basis points to 133.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased nine basis points to 222 and the subordinated gauge was 10 higher at 372.5.
Oil Rises to Highest Level in Nine Months on Greek Aid, Iran Exports. Oil rose to the highest level in more than nine months after euro-area finance ministers agreed on a second bailout for Greece and Iran said it stopped selling oil to France and Britain. Prices gained as much as 2.1 percent after the ministers awarded 130 billion euros ($173 billion) in aid, wrung concessions from Greece’s private investors and engineered a profit transfer by the European Central Bank. Iran stopped selling oil to the two countries yesterday to preempt a European Union ban, according to an official news website. Oil for March delivery gained $1.61, or 1.6 percent, to $104.85 a barrel at 12:40 p.m. on the New York Mercantile Exchange after climbing to $105.44, the highest intraday price since May 5. Futures have risen 6.1 percent this year. The March contract expires at the close of floor trading today. The more actively traded April contract increased $1.56, or 1.5 percent, to $105.16 on the Nymex. Floor trading was closed yesterday because of the U.S. Presidents Day holiday. Brent oil for April settlement rose 52 cents, or 0.4 percent, to $120.57 a barrel on the ICE Futures Europe exchange in London.
Wal-Mart Profit Trails Estimates as Low Prices Hurt Margins. Wal-Mart Stores Inc., the world’s largest retailer, reported fourth-quarter profit that trailed analysts’ estimates as an emphasis on low prices hurt margins.
Home Depot(HD) Profit Beats Analysts’ Estimates on Warm Weather. Home Depot Inc., the world’s largest home-improvement retailer, reported fourth-quarter profit that exceeded analysts’ estimates as warmer weather helped spur an increase in residential spending.
Iran Vows to Press On With Its Atomic Program as IAEA Visits. Iran pledged to press on with its efforts to develop atomic energy as the United Nations nuclear watchdog started a second day of meetings in Tehran to clarify aspects of the country’s activities. Iran has mastered the full nuclear-fuel cycle and the International Atomic Energy Agency supervises its work, Ramin Mehmanparast, a Foreign Ministry spokesman, told reporters in Tehran today. Iran is exercising its “right to peaceful nuclear energy,” he said in comments aired live by the state-run Press TV news channel. “There is nothing to negotiate.”

Wall Street Journal:

Top Banks in EU Rush for Safety. Top European banks, responding to new regulations and wary of lending, are stashing increasingly large sums of money at central banks around the world in a collective flight to safety. The eight giant European banks that have disclosed their annual results in recent weeks reported holding a total of about $816 billion in cash and deposits at central banks as of Dec. 31, according to calculations by The Wall Street Journal. That is up 50% from a year earlier, when the same banks were holding roughly $543 billion.
Paulson Sued Over Sino-Forest Wager. A former investor in John Paulson’s hedge funds is suing Mr. Paulson’s firm, alleging it failed to conduct sufficient due diligence into Sino-Forest Corp. before and after purchasing shares of the Chinese forestry company, an investment that cost Paulson & Co. about $500 million last year.
Comcast(CMCSA) Is Launching a Netflix(NFLX) Competitor.

CNBC.com:

Business Insider:

Zero Hedge:

FA:

Citigroup(C) to Allow Hedge Fund Managers Ownership Stakes Ahead of Volcker Rule. Citigroup Inc., the third-biggest U.S. bank by assets, will let managers of its hedge funds own part of the business ahead of rules that limit shareholders’ cash in the unit, Chief Operating Officer John Havens said. Employees in the Citi Capital Advisors division, or CCA, will get a “significant” stake in managing the funds, Havens said in an interview. This will increase, he said, as New York-based Citigroup withdraws its own money and attracts outside investors to comply with the Volcker rule, which restricts deposit-taking banks from making bets with their own capital.

Time U.S.:

Jerry Brown’s Risky Crusade: How to Raise Taxes in California.

Reuters:

Insight: ECB Preparing to Close Liquidity Floodgates. The European Central Bank wants its second offer of cheap ultra-long funds next week to be its last, putting the onus back on governments to secure the euro zone’s longer-term future. Powerful members of the central bank’s 23-man governing council are privately hoping demand at the February 29 auction will fall well short of the 1 trillion euros some expect, backing their view that it should be the last. Central bank sources say they are worried that banks will become too reliant on ECB funds, removing the incentive to restart lending between themselves.
Gold Up One Percent On Greek Deal, Economic Uncertainty. Gold rose about one percent on Tuesday, outpacing gains in the euro and equities, as a massive European bailout deal as investors bought the metal amid doubts the bailout will work. Spot gold rose 1.2 percent on the day to $1,755.19 an ounce by 11:30 a.m. EST (1630 GMT), having earlier hit a high of $1,756.41, the loftiest price since February 3.
Airline Shares Tumble on Oil Price Rally. Airline shares fell broadly on Tuesday, with US Airways Group’s stock leading the decline, as the price of oil rallied, which directly influences the cost of jet fuel. US Airways shares plummeted 10.4 percent to $7.97 on the New York Stock Exchange. Shares of United Continental Holdings were down 7.78 percent at $21.55, and Delta Air Lines’ shares fell 6 percent to $10.18, both on the NYSE.

Financial Times:

Wolf and Authers on Greece. (video)
US Feels Pinch From High Petrol Prices. The average cost of a gallon of regular fuel has hit $3.49 a gallon, a record high for February and up sharply from $2.25 five years ago.

Telegraph:

Debt Crisis: Live.
France and Germany to ‘Harmonize’ Corporate Tax Rates. Germany and France moved even closer to full fiscal union by announcing they will be “harmonising” their corporate tax rates by 2013 – a move that will increase the prospect of an EU-wide enforced tax rate that Ireland and the UK have been heavily opposed to.

Der Spiegel:

Portugal Needs More Money To Stay Afloat. With its massive austerity measures, Portugal has become the poster child of the troika of the EU, ECB and IMF. But the country is still stuck in a deep recession and it is unclear how it will return to growth. It may need to rely on European loans for years to come.

Imerisia:

Greek banks will have to raise 50 billion euros of extra capital, rather than the 30 billion euros, originally estimated, citing a report on Greece’s debt sustainability by the IMF, the EC and the ECB, the so-called troika.

Athens News:

New Measures ‘Murdering the Market’, Retailers Warn. Retailers are warning that new austerity measures set to be approved by parliament this week are “murdering the market” and worsening the country’s recession. “Rampant over-taxation and failed recessionary measures are murdering the market and throwing Greek society into a Third World environment.”

Stocks Reversing Lower into Final Hour on Rising Energy Prices, Rising Eurozone Debt Angst, Profit-Taking, Technical Selling

scgadmin — Wed, 22 Feb 2012 06:39:02 +0000

Broad Market Tone:

Advance/Decline Line: Lower
Sector Performance: Most Sectors Declining
Volume: Below Average
Market Leading Stocks: Performing In Line

Equity Investor Angst:

VIX 18.31 +2.98%
ISE Sentiment Index 102.0 -27.14%
Total Put/Call .76 -10.59%
NYSE Arms .89 -16.33%

Credit Investor Angst:

North American Investment Grade CDS Index 97.14 -.13%
European Financial Sector CDS Index 178.23 -.39%
Western Europe Sovereign Debt CDS Index 342.02 +2.02%
Emerging Market CDS Index 253.57 -.52%
2-Year Swap Spread 29.50 -1 bp
TED Spread 42.0 +.25 bp
3-Month EUR/USD Cross-Currency Basis Swap -68.50 +1.75 bps

Economic Gauges:

3-Month T-Bill Yield .07% -1 bp
Yield Curve 174.0 +2 bps
China Import Iron Ore Spot $135.40/Metric Tonne +.22%
Citi US Economic Surprise Index 61.80 -3.1 points
10-Year TIPS Spread 2.29 +3 bps

Overseas Futures:

Nikkei Futures: Indicating -5 open in Japan
DAX Futures: Indicating -31 open in Germany

Portfolio:

Slightly Lower: On losses in my Biotech and Tech sector longs
Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
Market Exposure: Moved to 50% Net Long

BOTTOM LINE: Today’s overall market action is bearish, as the S&P 500 reverses morning gains and trades near session lows on rising Eurozone debt angst, rising energy prices, profit-taking, technical selling and more shorting. On the positive side, Coal shares are especially strong, rising more than +.75%. Copper is rising +3.0%. The 10Y Yield is rising +5 bps to 2.5%. The Russia sovereign cds is falling -3.2% to 203.0 bps and the Hungary sovereign cds is falling -3.9% to 531.0 bps. Moreover, the European Investment Grade CDS Index is falling -4.0% to 117.49 bps. On the negative side, Oil Tanker, Semi, Disk Drive, Medical, Biotech, Hospital, Homebuilding, REIT, Retail, Education and Airline shares are under meaningful pressure, falling more than -1.0%. Tech shares are underperforming today and the Transports continue to trade poorly. The Transportation Index is now down -4.0% since Feb. 3 versus a +1.3% gain for the S&P 500. Oil is gaining +2.2%, Gold is surging +2.0% and Lumber is falling -1.1%. Oil has broken out from its recent range, which is a large negative. Retail sales have already decelerated to below average rates and this will provide another headwind. Lumber is -5.2% 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 remains a 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 month 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. Overall, credit gauges have deteriorated recently despite the Greece debt deal and remain at stressed levels. China Iron Ore Spot has plunged -25.5% since Sept. 7th of last year. Shanghai Copper Inventories are up +676.0% 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 higher overnight, led by a +.75% gain in Shanghai. Asian indices did not trade as well as I would have expected given the recent RRR cut in China and Greece debt deal announcement overnight. As well, major European indices were mostly lower today, led by a -.65% decline in Spanish shares. The Bloomberg European Financial Services/Bank Index is falling -.69%. The Greece debt deal may buy politicians some more time, however I still believe the European debt crisis will flare up again in even more intense fashion down the road. US stocks are technically extended short-term and are right at intermediate-term resistance with bullish sentiment elevated and quite a bit of good news likely priced in. One of my longs, (AAPL), is helping once again to mask broad market weakness today. 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. I expect US stocks to trade modestly lower into the close from current levels on rising Eurozone debt angst, rising energy prices, profit-taking, technical selling and more shorting.

Wednesday Watch

scgadmin — Wed, 22 Feb 2012 06:39:00 +0000

Evening Headlines
Bloomberg:

BOE’s Bean Says Greek Deal Doesn’t Eliminate Risk of Disorderly Outcomes. Bank of England Deputy Governor Charlie Bean said agreement on a second bailout for Greece may not be enough to end the debt crisis and countries in the euro- area periphery must reduce debt and improve competitiveness. “While this morning’s agreement between the Greek government and the euro-area authorities is certainly welcome, there still remains a possibility that events could unfold in a disorderly and damaging fashion at some stage in the future,” Bean said in a speech late yesterday in Glasgow, Scotland. The euro crisis “represents the biggest downside risk” to the U.K.
A Holldande Win in France Would Rattle Europe: George Magnus. If, as opinion polls suggest, the French Socialist Party’s presidential candidate, Francois Hollande, ousts Nicolas Sarkozy in elections this spring, the euro area may be in for a new wave of instability with far- reaching consequences for financial markets and the euro system itself.
Record Nickel Supply Expanding Glut Thwarts Bull Market Rally: Commodities. Mining companies and refineries are producing more nickel than at any time in history, expanding a glut that threatens to reverse this year’s rally. Production will exceed demand by 45,000 metric tons, a 73 percent jump from 2011, Barclays Capital estimates. That’s equal to 46 percent of stockpiles tracked by the London Metal Exchange. Refined output will rise 12 percent, the most in at least eight years, according to Morgan Stanley. Prices, which rose 8 percent to $20,230 a ton this year, may fall as much as 13 percent to $17,630 a ton by Dec. 31, the median of 11 analyst estimates compiled by Bloomberg shows. With new supply expected from Australia to Madagascar to Brazil, consumption still won’t expand fast enough to absorb the extra metal. Most markets for stainless steel, accounting for 76 percent of nickel demand, remain “depressed,” Deutsche Bank AG said in a report Feb. 15. “We’ll get more and more supply over the course of the year,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. “We expect huge surpluses for nickel not only this year, but next year, and probably in 2014. It’s mainly due to an increase in supply, but on the other side the stainless steel industry is facing a tough time.”

Wall Street Journal:

Greece Gets a Stay, With Trouble on the Way. Pact Staves Off Immediate Concerns, but Many Problems Remain Even Under Best-Case Scenarios. No triumphalism accompanied Greece’s bailout and debt-restructuring deal hammered out early Tuesday; the euro zone’s two-year debt crisis has seen too many false dawns. Financial markets were somewhat cheered that months of negotiations aimed at cutting Greece’s heavy debt had reached a resolution, largely putting to rest fears of a chaotic debt default next month. It also removed—at least for the immediate future—the gnawing anxiety that some policy makers in Germany and elsewhere are trying to oust Greece from the euro.
Plan B for China’s Wealthy: Moving to the U.S., Europe. Surveys and visa numbers show that members of China’s wealthy elite are heading for the exits in search of things money can’t buy in China: cleaner air, safer food, better education for their children. This time last year, Shi Kang considered himself a happy man. Writing 15 novels had made him a millionaire. He owned a luxury apartment and a new silver Mercedes. He was so content with his carefree life in Beijing that he never even traveled overseas. Today, a year later, Mr. Shi is considering emigrating to the U.S.—one of a growing number of rich Chinese either contemplating leaving their homeland or already arranging to do it.
Citigroup(C) Faces Smith Barney Hit. Citigroup Inc. is facing a potential multibillion-dollar write-down as it begins unwinding its minority investment in the Morgan Stanley Smith Barney brokerage. Morgan Stanley has the right this spring to start buying Citigroup out of the joint venture, which was formed in 2009, when the sides combined Citigroup’s Smith Barney with Morgan Stanley’s wealth-management unit. Price is likely to be one of the main points under discussion when negotiations begin this spring, people familiar with the situation said.
Obama’s Dividend Assault. A plan to triple the tax rate would hurt all shareholders. President Obama’s 2013 budget is the gift that keeps on giving—to government. One buried surprise is his proposal to triple the tax rate on corporate dividends, which believe it or not is higher than in his previous budgets. Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today’s 15% rate. Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%.

MarketWatch:

George Soros Speaks on China and Other Matters at Davos.

Business Insider:

A New Survey Shows Unemployment Surging Again. (graph)

Zero Hedge:

CNBC:

China Factory Activity Shrinks for 4th Month: HSBC. China’s manufacturing sector contracted in February for the fourth straight month as new export orders dropped sharply in the face of the euro area debt crisis, the HSBC flash purchasing managers index showed on Wednesday. The new export orders sub-index dropped to 47.4 in February from 50.4 in January as the European debt crisis cast a shadow over Chinese exports.

NY Times:

Meredith Whitney Lands Book Deal. Ms. Whitney has signed a deal with Portfolio, an imprint of Penguin Group, to write a book about the growing problems in the municipal bond market, according to a statement from the publisher. The book, tentatively titled “Downgraded: Why the Next Economic Crisis Will Be Local,” is expected to hit bookstore shelves in November.
Greek Crisis Raises New Fears Over Credit-Default Swaps. With Europe’s $172 billion aid package for Greece, it appears that the nation is going to take a step that substantially increases the likelihood that its swaps take effect.

Rasmussen Reports:

Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 25% of the nation’s voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty percent (40%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -15 (see trends).

AP:

UN Nuke Agency Reports Failed Iran Talks. The U.N. nuclear agency says its experts have again failed to dent Iran’s refusal to cooperate in probing allegations that Tehran covertly worked on an atomic arms program. An International Atomic Energy Agency statement says Iran refused an IAEA request for access to a site where the agency suspects explosives testing related to a nuclear weapon took place. It also says that despite “intensive efforts,” no agreement was reached on how to relaunch the probe, which has been stalled for nearly four years.

Reuters:

Dell(DELL) Shares Fall On Earnings Miss, Outlook. Dell Inc forecast fiscal first-quarter revenue below Wall Street’s expectations, stoking fears the PC industry has not fully emerged from its downturn and sending the company’s shares more than 4 percent lower. The world’s No. 3 personal computer maker projected sales would be down 7 percent this quarter from the previous quarter, when it posted revenue of $16 billion. That translates into about $14.9 billion, below the average forecast for roughly $15.2 billion.
Shanghai Court Hears Apple(AAPL) iPad Trademark Case. A Shanghai court began hearing on Wednesday a case brought by a Chinese technology firm seeking to halt the sale of Apple Inc’s iPads across the affluent Chinese city, accusing the U.S. firm of trademark infringement.
CIA to Software Vendors: A Revolution Is Coming. The U.S. Central Intelligence Agency told software vendors on Tuesday that it plans to revolutionize the way it does business with them as part of a race to keep up with the blazing pace of technology advances.

Telegraph:

Greek Debt Accord Hostage To Political Passions. Eurozone leaders have put off the day of reckoning for a few more months but the latest €130bn rescue package for Greece offers no path out of the crisis and is hostage to explosive political passions.
Battle Over EU Financial Firewall Threatens To Derail Greek Bailout. A battle over an increased eurozone bail-out fund and International Monetary Fund support for the European Union’s single currency threatens to derail the latest Greek bailout.

JoongAng Ilbo:

North Korea recently developed a 170-kilometer range rocket launcher, citing an official in the South Korean government. The range is almost double the shooting scope of its existing rocket launcher.

Shanghai Securities News:

CBRC has been warning banks against possible credit risks associated with the real estate market as the government continues its strict property curbs. CBRC has ordered banks to control loans to developers in areas with “overheating” property markets. CBRC has asked banks to check each developer’s liquidity, solvency against a list. The Land and Resource Ministry will announce rules to guard against illicit land sales by local governments.
Non-Local residents are now qualified to buy 2nd homes once they have held residence permits for 3 years, citing the city’s housing regulator.

Evening Recommendations

None of note

Night Trading

Asian equity indices are -.50% to +.75% on average.
Asia Ex-Japan Investment Grade CDS Index 160.0 +1.5 basis points.
Asia Pacific Sovereign CDS Index 131.25 -2.25 basis points.
FTSE-100 futures -.07%.
S&P 500 futures +.10%.
NASDAQ 100 futures +.17%.

Morning Preview Links

Earnings of Note
Company/Estimate

(PWR)/.36
(DLTR)/1.58
(TOL)/.03
(CHS)/.11
(DCI)/.71
(LAMR)/.00
(RRD)/.43
(ZLC)/.77
(MGM)/-.20
(EV)/.43
(TJX)/.63
(ADI)/.48
(FLR)/.82
(LTD)/1.46
(ESRX)/.85
(FLS)/2.29
(WMB)/.41
(RGR)/.46
(JACK)/.25
(HPQ)/.87
(SNPS)/.51
(DDS)/2.02

Economic Releases
10:00 am EST

Existing Home Sales for January are estimated to rise to 4.66M versus 4.61M in December.

Upcoming Splits

None of note

Other Potential Market Movers

The 5Y T-Note Auction, weekly retail sales reports, weekly MBA Mortgage Applications Report, China Flash Manufacturing PMI, CSFB Paper/Packaging Conference, Barclays Industrial Select Conference, Jefferies Clean Tech Conference, (GCI) Analyst Meeting, (TPX) Investor Day and the (DBD) Investment Community Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology 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 75% net long heading into the day.