• Global stocks are lower with the European DJ Stoxx 50 Index down -1.73% at a 5-1/2 month low and March S&Ps down -4.20 points at a 3-month low. The cost of credit-default swap insurance against a default by Greece, Portugal and Spain surged to a record which sent the euro tumbling to an 8-1/2 month low against the dollar as investors remain concerned that the indebted Euro-Zone members threaten the stability of the euro. Financial companies in Europe are leading stock prices lower, led by an 18% plunge in ICAP, after the world's largest broker of transactions between banks lowered its outlook for full-year profit, saying some of its newer businesses are taking longer than anticipated to become profitable. Mining companies and raw-material producers fell after the dollar index surged to a 6-1/2 month high, which sank most commodities, as gold dropped to a 3-month low and copper tumbled to a 3-1/2 month low. Renault SA, France's second biggest carmaker, retreated nearly 4% after Royal Bank of Scotland Group Plc downgraded the company to "hold" from "buy." Rounding out the negative factors for stock prices in Europe is the unexpected decline in Dec German industrial production which fell -2.6% m/m and -7.1% y/y, its biggest monthly fall in 8 months and the 16th straight year-over-year decline, which suggests the recovery in Europe's largest economy has slowed.

• The Asian markets today closed sharply lower with Japan down -2.89%, Hong Kong -3.33%, China -2.04%, Taiwan -5.40%, Australia -2.33%, Singapore -2.24%, South Korea -3.15%, India -2.68%. Asian stocks dropped in sympathy with declines in European and US markets on concerns over the sustainability of the global economic recovery. Japanese exporters fell with Nissan Motor down 3.9%, Honda Motor down 3.7% and Canon down 3.5% as a stronger yen threatens to crimp their earnings. Toyota Motor Company's corporate credit rating was placed on credit watch with negative implications at Standard & Poor's Ratings Services today, which cited concerns about quality issues. In South Korea, Samsung fell 3.4% after the world's largest maker of computer-memory chips was being investigated by the US International Trade Commission on complaints from Sharp that allege Samsung infringed on Sharp's LCD patent. EPFR Global reported that investors removed almost $1 billion from global emerging market stock funds in the week ended Feb 3, the most in more than a year, and withdrew $516 million from Asian equities outside of Japan, as earnings and Greek debt woes raised concerns that the global recovery may be faltering.

• March S&Ps this morning are trading down -4.20 points and at a 3-month low. The US stock market yesterday opened sharply lower and sold-off steadily throughout the day and finished with large losses (Dow Jones -2.61%, S&P 500 -3.11%, Nasdaq Composite -2.00%). The S&P 500 Index and the Dow Jones both fell to 2-3/4 month lows. Bearish factors for stocks included (1) carry-over weakness from a plunge in European stocks on concerns about sovereign default risk in Europe when Spain's and Portugal's bonds plunged on fears that they will be unable to finance their growing budget deficits, (2) the unexpected increase in weekly initial US unemployment claims which rose to their highest level in the last 7 weeks and raised concern that the improvement in the job market is stalling (+8,000 to 480,000 versus expectations of -15,000 to 455,000), and (3) the plunge in energy and raw-material producers after the surge in the dollar index to a 6-1/2 month high aided the fall in metals and crude oil with copper slumping to a 3-1/2 month low.

• Bullish factors for stocks included (1) the surge in US Q4 nonfarm productivity by +6.2% q/q and by +2.9% for all of 2009, its biggest increase in 6 years as companies squeezed more out of workers to boost earnings, (2) continued slack wage inflation after the larger-than-expected decrease in Q4 unit labor costs (-4.4% q/q versus expectations of -3.4% q/q) with total unit labor costs for 2009 falling -0.9%, the biggest yearly decline in 7 years, and (3) the larger-than-expected increase in Dec US factory orders (+1.0% versus expectations of +0.5%).

• Alcoa (AA) slipped 1.9% and Newmont Mining (NEM) fell 1.8% in pre-market trading as the overnight surge in the dollar index to a 6-1/2 month high sent metals prices tumbling, with gold falling to a 3-month low and copper down to a 3-1/2 month low.

• March 10-year T-notes this morning are trading up +6.5 ticks as the fall in global equities increases the saf-haven demand for Treasuries. T-note prices yesterday opened higher and rallied steadily the entire day and settled up +21.5 ticks at 118-080. Bullish factors for T-note prices yesterday included (1) strong safe-haven buying of Treasuries after global stock markets tumbled on concerns of sovereign default risk in Europe when Spain's and Portugal's bonds plunged on fears that they will be unable to finance their growing budget deficits, (2) the unexpected increase in weekly initial US unemployment claims which rose to their highest level in the last 7 weeks (+8,000 to 480,000 versus expectations of -15,000 to 455,000), and (3) the larger-than-expected decrease in Q4 unit labor costs (-4.4% q/q versus expectations of -3.4% q/q) with total unit labor costs for 2009 falling -0.9%, the biggest yearly decline in 7 years. Bearish factors yesterday included (1) the larger-than-expected increase in Dec US factory orders (+1.0% versus expectations of +0.5%), and (2) hawkish comments from Kansas City Fed President Hoenig who said growth in the US will "slowly reduce" the unemployment rate and that interest rates "can't stay at zero forever."

• The dollar index this morning is higher and posted a new 6-1/2 month high with the dollar/yen +0.39 yen and the euro/dollar -0.30 cents. The dollar yesterday surged to a 6-1/2 month high and closed sharply higher. Bullish factors included (1) the plunge in the euro to a 7-1/2 month low against the dollar on a "crisis of confidence" in Europe after Spain's and Portugal's bonds plunged on fears that they will be unable to finance their growing budget deficits, (2) comments from ECB President Trichet who said that the economic outlook is subject to "uncertainty," which signals the ECB has no immediate plans to tighten monetary policy, (3) increased safe-haven demand for the dollar as global equity markets slumped, and (4) the recommendation from PIMCO for investors to avoid the euro because the region's finances hinder its ability to adjust to changes in the global economy. A bearish factor was the unexpected increase in weekly initial US unemployment claims which rose to their highest level in 7 weeks and raised concern that the improvement in the job market is stalling, which would prompt the Fed to keep interest rates at a record low and weaken the dollar's interest rate differentials.

• March crude oil prices this morning are trading up +22 cents and Mar gasoline is -0.34 of a cent. Mar crude oil yesterday sold-off sharply throughout the day and closed down -$3.84 per barrel. Mar gasoline closed down -8.54 cents per gallon. Bearish factors included (1) the surge in the dollar index to a 6-1/2 month high, (2) the unexpected increase in weekly initial US unemployment claims which rose to their highest level in 7 weeks, which had negative implications for the economy and energy demand, (3) the prediction from Fitch Ratings Ltd. that OPEC has enough spare capacity to meet demand growth from emerging countries and there's no significant upward pressure on prices, and (4) the worldwide slump in equity prices, which fuels skepticism that the economic recovery and energy demand will be sustained. Bullish factors for crude prices yesterday included (1) the larger-than-expected gain in Dec US factory orders, which indicates increased energy consumption, and (2) the prediction from CNPC Research Institute of Economics & Technology that China's crude oil imports may rise to a record 212 million metric tons this year, 4% above a record 203.8 million tons in 2009.

Earnings reports (confirmed releases, sorted by mkt cap) SPG-Simon Property Group (BEST earnings consensus ($0.53), AET-Aetna (0.42), PPL-PPL Corp. (0.36), AON-AON Corp. (0.82), WY-Wyerhaeuser (-0.38), TSN-Tyson Foods (0.17), AYE-Allegheny Energy (0.48), RAH-Ralcorp Holdings (1.03), TE-Teco Energy (0.25), LEA-Lear (0.75), G-Genpact Limited (0.20), BPL-Buckeye Partners (0.92), SEP-Spectra Energy (0.46), AIV-Apartment Investment and Management Co. (-0.29), TW-Towers Watson & Co. (0.89), NNN-National Retail Properties (0.25).

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