• Global stocks this morning are mostly higher with the Euro Stoxx 50 up +1.24% and Mar S&Ps up +7.80 points. The dollar and Treasuries are lower as stocks and commodities rose, with gold at a 1-3/4 month high after Chinese manufacturing activity unexpectedly expanded last month, which improves the outlook for global economic growth. The euro gained against the dollar after the Jan German manufacturing PMI was unexpectedly revised up +0.1 to 51.0, a 6-month high, while Spanish, Italian and Portuguese government bonds rallied after Greece offered a sweetener to win a debt-swap deal with bondholders. People with knowledge of the debt talks said creditors negotiating with Greece may get a sweetener tied to a revival in economic growth that would ease the impact of accepting a lower interest rate on the new bonds. European stocks also received a boost after the Jan U.K. manufacturing PMI rose +2.4 to 52.1, stronger than expectations of +0.4 to 50.0 and the fastest pace of growth in 9 months.
• Asian stocks today closed mostly higher with Japan up +0.08%, China -1.43%, Australia -0.87%, South Kore +0.06%, India +0.62%. Asian stocks advanced as expanding manufacturing activity in China and India eased concern that global economic growth was slowing. The Jan China manufacturing PMI unexpectedly rose +0.2 to 50.5, stronger than expectations of a -0.7 point decline to 49.6, while the Jan India HSBC and Markit Economics manufacturing PMI rose +3.3 to 57.5, an 8-month high. Despite the unexpected expansion in Chinese manufacturing activity last month, the Shanghai Stock Index still closed lower as the rebound in manufacturing reduces the need for looser monetary policy. Another negative for Chinese stocks was the report from the 21st Century Business Herald that Jan China new loans may be below 1 trillion yuan ($158.6 billion), which signals slowing loan growth as new loans in China have been above 1 trillion yuan every Jan over the past 3 years. Gains in Japanese stocks were limited as exporters retreated as a rally in the yen to a 3-month high against the dollar undercuts exporters' earnings prospects.

• March S&Ps this morning are trading up +7.80 points. The US stock market on Tuesday opened higher but erased its advance mid-morning and settled mixed after weaker-than-expected U.S. economic data raised concern about the sustainability of the economic recovery: Dow Jones -0.16%, S&P 500 -0.05%, Nasdaq Composite +0.07%. The Nasdaq posted a 10-3/4 year high. Bearish factors on Tuesday included (1) the larger-than-expected decline in U.S. home prices after the Nov S&P/CaseShiller composite-20 home price index fell -0.7% m/m and -3.7% y/y, weaker than expectations of -0.4% m/m and -3.3% y/y, (2) the unexpected drop in Jan U.S. consumer confidence from the Conference Board (-3.7 to 61.1 versus expectations of +3.5 to 68.0), and (3) the unexpected decline in the Jan Chicago PMI (-2.0 to 60.2 versus expectations of +0.5 to 63.0).
• Bullish factors included (1) carry-over support from a rally in European stocks after Jan German unemployment rate unexpectedly fell to a record low of 6.7% along with reduced European debt concerns when Greek Prime Minister Papademos said he's "strongly committed" to reaching a debt-swap pact with bondholders and as yields on Portuguese bonds fell when Prime Minister Coelho said his country's debt has been judged "perfectly sustainable" by the EU and IMF and that there is no risk of writedown on the bonds, (2) decent Q4 earnings results thus far as 66% of the 192 companies in the S&P 500 that reported earnings results since Jan 9 have beaten analysts' estimates, and (3) the decline in the 10-year T-note yield to a 3-3/4 month low of 1.794%.

• March 10-year T-notes this morning are down -3 ticks. T-note prices on Tuesday shed early losses and rallied up to an all-time nearest futures high and closed higher after U.S. consumer confidence and the Chicago PMI both unexpectedly declined in Jan: TYH2 +7.0, FVH2 +2.5, EDM2 +2.5. The 10-year T-note yield fell to a 3-3/4 month low of 1.794%. Bullish factors included (1) the larger-than-expected decline in U.S. home prices after the Nov S&P/CaseShiller composite-20 home price index fell -0.7% m/m and -3.7% y/y, weaker than expectations of -0.4% m/m and -3.3% y/y, (2) the unexpected drop in Jan U.S. consumer confidence from the Conference Board (-3.7 to 61.1 versus expectations of +3.5 to 68.0), (3) the unexpected decline in the Jan Chicago PMI (-2.0 to 60.2 versus expectations of +0.5 to 63.0), and (4) comments from ECB Council member Nowotny who said he "can't be sure" that Greece will be able to carry out the necessary fiscal and economic measures to remain in the Euro-Zone. The main bearish factor Tuesday was reduced safe-haven demand for Treasuries as European debt concerns eased when Greek Prime Minister Papademos said he's "strongly committed" to reaching a debt-swap pact with bondholders and after yields on Portuguese bonds fell when Prime Minister Coelho said his country's debt has been judged "perfectly sustainable" by the EU and IMF and that there is no risk of writedown on the bonds.
• The dollar index this morning is weaker with the dollar/yen -0.18 yen and the euro/dollar +0.46 cents. The dollar index on Tuesday fell to a fresh 1-1/2 month low on optimism progress was being made in Greek debt-swap talks, but the dollar recovered its losses and closed higher after weaker-than-expected U.S. economic data knocked stocks down and boosted the safe-haven demand for the dollar along with euro negative comments from ECB Council member Nowotny: Dollar Index +0.121, USDJPY -0.075, EURUSD -0.00591. Bullish factors included (1) weaker-than-expected U.S. economic data on Nov S&P/CaseShiller home prices along with the unexpected declines in Jan U.S. consumer confidence and Jan Chicago PMI, which undercut stocks and boosted the safe-haven demand for the dollar, (2) weak European economic data that undercut the euro after Dec German retail sales and Dec French consumer spending both unexpectedly declined, (3) comments from ECB Council member Nowotny who said he "can't be sure" that Greece will be able to carry out the necessary fiscal and economic measures to remain in the Euro-Zone, and (4) comments from Japanese Finance Minister Azumi that knocked the yen off of a 3-month high against the dollar when he said "we are ready to act decisively against excessive and speculative currency moves if needed." Bearish factors Tuesday included (1) the bigger than expected drop in Jan German unemployment (-34,000) and the unexpected drop in the Jan German unemployment rate to 6.7%, the lowest since data for a reunified Germany began in 1991, which is euro supportive and (2) reduced safe-haven demand for the dollar as European debt concerns eased when Greek Prime Minister Papademos said he's "strongly committed" to reaching a debt-swap pact with bondholders and after yields on Portuguese bonds fell when Prime Minister Coelho said his country's debt has been judged "perfectly sustainable" by the EU and IMF and that there is no risk of writedown on the bonds.
• Mar crude oil prices this morning are up +64 cents a barrel and Mar gasoline is +1.83 cents per gallon. Crude oil and gasoline prices on Tuesday settled mixed after record low German unemployment and strong Japanese industrial production offset a stronger dollar and weak U.S. economic data: CLH12 -$0.30, RBH12 +1.82. Bullish factors included (1) the unexpected -0.1 point decline in Jan German unemployment to 6.7%, the lowest since data for a reunified Germany began in 1991, which signals economic strength and is positive for fuel demand and consumption, (2) the +4.0% m/m increase in Dec Japan industrial production, stronger than the +3.0% m/m expected and the biggest gain in 7 months, which is positive for energy consumption in the world's third-biggest consumer of crude oil, and (3) comments from Greek Prime Minister Papademos that he's "strongly committed" to reaching a debt-swap pact with bondholders, which reduces concern that the European sovereign-debt crisis could worsen and slow economic growth and fuel demand. Bearish factors included (1) weak U.S. economic data that points to slower than expected fuel demand after Jan U.S. consumer confidence and the Jan Chicago purchasing managers index both unexpectedly declined, (2) the unexpected drop in Dec German retail sales which posted its biggest monthly decline (-1.4% m/m) in 2-1/2 years, (3) the rebound in the dollar after the dollar index recovered from a 1-1/2 month low and closed higher, which discourages investment demand in commodities, and (4) Bloomberg data that shows Jan OPEC oil production rose 183,000 bbl, or +0.6% m/m to an average 30.9 million barrels a day, the highest output in over 3 years. Expectations for Wednesday's weekly inventory report from the DOE are for crude oil supplies to rise +2.7 million bbl, gasoline stockpiles to increase +500,000 bbl, distillate inventories to fall -1.25 million bbl and the refinery capacity rate to slip -0.3 to 81.9% of capacity.

Earnings reports (confirmed releases, sorted by mkt cap): QCOM-Qualcomm (BEST earnings consensus $0.90), EPD-Enterprise Products Partners (0.55), LVS-Las Vegas Sands (0.57), BEN-Franklin Resources (2.09), MRO-Marathon Oil (0.83), TMO-Thermo Fisher Scientific (1.15), EQR-Equity Residential (0.13), AET-Aetna (0.97), NOC-Northrop Grumman (1.67), ALL-Allstate (0.96), HSY-Hershey (0.70), MPC-Marathon Petroleum (-0.05), AVB-AvalonBay Communities (0.55), AMP-Ameriprise Financial (1.40), CMG-Chipotle Mexican Grill (1.83), GMCR-Green Mountain Coffee Roasters (0.36).

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