• Global stocks are mixed with the European DJ Stoxx 50 Index down -0.23% and March S&Ps up +3.30 points. The dollar and Treasuries are little changed while crude oil climbed to a 1-1/4 month high. European stocks were led lower by a 6.4% drop in Bank of Ireland and a 4% slide in Allied Irish Banks after Bank of Ireland said it will give the Irish government a stake of almost 16% in the bank instead of a dividend. Inditex SA, the world's largest clothing retailer, slid 2.3% after it was downgraded to "neutral" from "outperform" at Exane, which said analyst earnings estimates "look too optimistic." Carefour, Europe's largest retailer fell 2.1% after it was also downgraded to "neutral" from "outperform" at Exane, while Hennes & Mauritz lost 1.8% after Europe's second-biggest clothing retailer was cut to "underperform" from "neutral." GlaxoSmithKline Plc fell 2.2% after US senators released a report showing that safety reviewers had urged the FDA to take the drugmaker's Avandia diabetes treatment off the market because it caused an increased risk of heart attacks. Supporting European stocks was a rally in Greek stocks and bonds after Greek central bank governor Provopoulos said he's confident Greece's government will meet its "very ambitious" deficit-reduction goals.

• The Asian markets today closed mostly higher with Japan up +2.74%, Hong Kong +2.43%, China -0.55%, Taiwan +1.59%, Australia +1.78%, Singapore +0.01%, South Korea +2.19%, India +0.28%. Asian energy producers advanced after crude oil jumped to a 1-1/4 month high, while shipping companies gained following a rally in the Baltic Dry Index, which measures the cost of shipping commodities, for a fourth day. Japanese stocks were also boosted by the 3.7% jump in Nikon after Credit Suisse raised its recommendation on the stock to "neutral" from "underperform," and after Suruga Bank surged 8.2% after the Japanese bank was upgraded to "buy" from "neutral" at Nomura Securities following Suruga's action to increase its stock buyback program. South Korean stocks were boosted after sales at the country's largest department stores rose in Jan for the 11th consecutive month. Chinese real-estate stocks declined following action by Goldman Sachs to cut the share-price estimates of Chinese property developers by as much as 32%, citing increased uncertainty from government tightening measures.

• March S&Ps this morning are trading up +3.30 points. The US stock market last Friday erased early losses duirng late morning and then fluctuated on either side of unchanged into the close to finish slightly higher (Dow Jones +0.09, S&P 500 +0.22%, Nasdaq Composite +0.10%). The S&P 500 Index, the Dow Jones and the Nasdaq Composite all rallied to 1-month highs. Bullish factors for stocks included (1) a lack of consumer price pressures after the smaller-than-expected increase in the Jan CPI of +0.2% m/m and +2.6% y/y (versus expectations of +0.3% m/m and +2.8% y/y), (2) the unexpected decline in the Jan core CPI m/m which declined for the first time on a monthly basis since 1982 (-0.1% m/m versus expectations of +0.1% m/m), (3) dovish comments from New York Fed President Dudley who said the Fed's action in increasing the discount rate is the Fed's last step in ending emergency liquidity for markets and not a signal that the Fed is prepared to tighten credit and from St. Louis Fed President Bullard who said that financial markets' view that borrowing costs will increase later this year are "overblown," (4) the first drop in US mortgage delinquencies in the last 11 quarters when Q4 delinquencies slipped to 9.47% from 9.64% in Q3, and (5) data from EPFR Global which showed that funds that invested in US stocks took in $3.14 billion in the week to Feb 17, the biggest increase in 2 months.

• Bearish factors for stocks included (1) weakness in most US bank stocks following the Fed's action to increase the discount rate along with the prediction from well-known bank analyst Meredith Whitney that large banks won't replicate the capital markets revenue that drove 2009 earnings because "the punchbowl has been taken away this year," as the government ends its emergency liquidity programs, (2) the drop in health insurers on speculation that Medicare will cut payments to insurers along with the reiteration of the Obama administration's intent for more oversight of the health-care industry, and (3) speculation that the recovery will be slowed as the Fed unwinds its emergency stimulus measures.

• Walgreen (WAG) climbed 1.1% in European trading after Barron's reported that Walgreen's acquisition of Duane Reade Holdings may help its stock price rise to $50 a share as it helps Walgreen to expand revenue in metropolitan New York and pare costs.

• March 10-year T-notes this morning are up +2 ticks. T-note prices last Friday traded higher early but slid into negative territory mid-morning and then nearly recovered all of their losses into the close, finally settling down -0.5 tick at 117-060. Mar T-notes dropped to a 1-month low and the 10-year T-note yield climbed to a 1-1/4 month high of 3.82%. Bearish factors last Friday included (1) speculation that a tightening of monetary policy may be right around the corner after the Fed's unexpected discount rate hike shows it has begun to unwind its emergency liquidity measures, (2) a reversal in the equity market which shed early losses and rallied the rest of the day, which reduced the safe-haven demand for Treasuries, and (3) the first drop in US mortgage delinquencies in the last 11 quarters when Q4 delinquencies slipped to 9.47% from 9.64% in Q3. Bullish factors included (1) the smaller-than-expected increase in the Jan CPI (+0.2% m/m and +2.6% y/y versus expectations of +0.3% m/m and +2.8% y/y), (2) the unexpected decline in Jan core CPI m/m which declined for the first time on a monthly basis since 1982 (-0.1% m/m versus expectations of +0.1% m/m), and (3) dovish comments from New York Fed President Dudley who said the Fed's action in increasing the discount rate is the Fed's last step in ending emergency liquidity for markets and not a signal that the Fed is prepared to tighten credit and from St. Louis Fed President Bullard who said that financial markets' view that borrowing costs will increase later this year are "overblown."

• The dollar index this morning is little changed with the dollar/yen -0.18 yen and the euro/dollar -0.10 cents. The dollar index last Friday shot up to an 8-month high early but shed its gains and turned lower and finished the day only slightly higher. Bullish factors yesterday included (1) an early rally in the dollar index to an 8-month high following the Fed's surprise 25 bp hike in the discount rate which improved the prospects for the dollar's interest rate differentials, and (2) the plunge in the British pound to a 9-month low against the dollar after Jan UK retail sales dropped more than twice the amount expected and fueled speculation that the BOE won't be able to exit its emergency liquidity measures anytime soon and will be left behind other G-10 central banks in the process of policy normalization. Bearish factors included (1) comments from Atlanta Fed President Lockhart who said the Fed's decision to raise the discount rate doesn't signal a tightening of policy and from St. Louis Fed President Bullard who said that financial markets' view that borrowing costs will increase later this year are "overblown," which signals the Fed may not be on the verge of tightening monetary policy and that the raising of the discount rate is just part of a "normalization process" in ending its emergency liquidity programs, (2) the larger-than-expected increases in the Feb European PMI manufacturing indexes which expanded at their fastest levels in 2-1/2 years, and (3) the prediction from Sumitomo Banking that the Fed's decision to raise its discount rate was a "misjudgment of historical proportions," and that as the US economic and monetary outlook deteriorates, the US, which relies on overseas money to finance its fiscal deficit, may suffer "an unsavory rise in interest rates" that will send the dollar plunging to 65 yen per dollar by year-end.

• March crude oil prices this morning are trading up cents and posted a 1-1/4 month high and Mar gasoline is +1.17 cents. Mar crude oil last Friday overcame early weakness and rallied after mid-morning to finally close up +$0.75 per barrel. Mar gasoline closed up +1.65 cents per gallon. Mar crude and Mar gasoline both rose to 1-month highs. Bullish factors included (1) the dollar which fell back from an 8-month high and closed only slightly higher, (2) strikes by Total SA refinery workers in France which will cut product output and may lead to fuel shortages in Europe, and (3) the stronger-than-expected increases in the Feb European PMI manufacturing indexes which expanded at their fastest levels in 2-1/2 years and indicated a strengthening economy and an increase in fuel consumption. Bearish factors for crude prices last Friday included (1) the early surge in the dollar index to an 8-month high, which undercut most commodities, and (2) concerns that the Fed's surprise hike in the discount rate will lead to an unwinding of other emergency stimulus measures which may slow the economy and fuel demand.

Earnings reports (confirmed releases, sorted by mkt cap) LOW-Lowe's (BEST earnings consensus ($0.12), CPB-Campbell Soup (0.74), JWN-Nordstrom (0.79), DTE-DTE Energy (0.72), CEG-Constellation Energy Group (0.25), OKS-ONEOK Partners, L.P. (0.96), DNDN-Dendreon (-0.28), COG-Cabot Oil & Gas (0.45), PWR-Quanta Services (0.21), FST-Forest Oil (0.60), VRX-Valeant Pharmaceuticals International (0.52), BRCD-Brocade Communication Systems (0.15), EAC-Encore Acquisition Company (0.20), RSH-Radioshack (0.59).

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