• Global stocks this morning are mostly lower with the Euro Stoxx 50 down -0.67% and Mar S&Ps down -9.60 points. Treasuries and the dollar rose while stocks and commodities fell after European finance ministers held back a rescue package for Greece. Head of the Euro-Zone finance ministers, Jean-Claude Juncker, said Greece must pass its latest austerity package into law and identify 325 million euros in spending cuts before Euro-Zone governments endorse a second bailout for the country. The Euro-Zone finance ministers refused to approve the second aid package for Greece because the government fell short of austerity demands and because of a lack of assurances by Greek party leaders that they will stick to their commitments after elections due as soon as April. The Greek parliament will vote on the measures this weekend and Euro-Zone finance ministers will meet again on the matter Feb 15. Fitch Ratings warned that Greece must secure an agreement to cut its debt burden in the next few days to prevent a "disorderly" default that could cause panic in its banking system and capital flight in nations from Portugal to Ireland. Another negative for stocks was the fall in Dec French industrial production by -1.4% m/m and -1.3% y/y, weaker than expectations of -0.8% m/m and -0.6% y/y.
• Asian stocks today closed mostly lower with Japan down -0.61%, China +0.17%, Australia -0.88%, South Korea -1.26%, India -0.46%. Global economic concerns increased after China's exports and imports declined for the first time in 2 years in Jan and new lending grew less than expected, which adds to signs that growth is slowing in the world's second-largest economy. Jan China exports fell -0.5% y/y, stronger than expectations of a -1.5% y/y, while Jan China imports plunged -15.3% y/y, weaker than expectations of -5.0% y/y and their biggest decline in over 2 years. Jan China new loans rose by 738.1 billion yuan, weaker than expectations of 1.0 trillion yuan and the smallest lending for a Jan in the past 5 years. Growth concerns in Australia weakened its dollar and stock market after the RBA cut its 2012 GDP forecast for Australia to 3.5% from a Nov estimate of 4.0%, while growth concerns increased in India as well after Dec India industrial production rose +1.8% y/y, weaker than expectations of +2.6% y/y.

• March S&Ps this morning are trading down -9.60 points. The US stock market on Thursday settled higher after Greek political leaders struck a deal on a package of austerity measures needed to secure international rescue funds along with an unexpected decline in weekly U.S. jobless claims: Dow Jones +0.05%, S&P 500 +0.15%, Nasdaq Composite +0.39%. The S&P 500 climbed to a 7-month high, the Dow rose to a 3-3/4 year high and the Nasdaq posted an 11-year high. Bullish factors included (1) carry-over support from rally in European stocks after the Greek government reached an agreement on austerity measures it needed to obtain a 130 billion-euro financing package, which reduces Greek default concerns, (2) the unexpected decline in weekly initial U.S. unemployment claims (-15,000 to 358,000 versus expectations of +3,000 to 370,000), and (3) reduced global growth concerns after ECB President Draghi said surveys confirm "signs of stabilization" in the Euro-Zone.
• Bearish factors Thursday included (1) weakness in U.S. bank stocks after U.S. lenders agreed to pay $25 billion in the biggest civil settlement involving states and the federal government to end a probe of abusive foreclosure practices by the lenders, (2) concern that China will be unable to ease monetary policy to stimulate growth after Jan China CPI rose +4.5% y/y, higher than expectations of +4.0% y/y and (3) the increase in the 10-year T-note yield to a 2-week high of 2.073%.

• March 10-year T-notes this morning are up +16.5 ticks on a flight-to-quality. T-note prices on Thursday tumbled to a 2-week low after the Greek government agreed on austerity measures it required to obtain a bailout along with an unexpected decline in weekly jobless claims and a chilly reception for the Treasury's $16 billion 30-year T-bond auction: TYH2 -10.0, FVH2 -6.0, EDM2 +0.5. Bearish factors Thursday included (1) decreased safe-haven demand for Treasuries after the Greek government reached an agreement on austerity measures it needed to obtain a 130 billion-euro financing package, which reduces Greek default concerns, (2) the unexpected decline in weekly initial U.S. unemployment claims (-15,000 to 358,000 versus expectations of +3,000 to 370,000), and (3) weak demand for the Treasury's $16 billion auction of 30-year T-bonds that had a bid-to-cover ratio of 2.47, below the 12-auction average of 2.68, while indirect bidders, a proxy for foreign buying, took only 29.2% of the auction, below the 12-auction average of 34.4%. Bullish factors included (1) the Fed's action to purchase $4.948 billion of Treasuries as part of its Operation Twist program to replace $400 billion of short-term debt in its portfolio with longer-term Treasuries in an effort to reduce borrowing costs and (2) short-covering as bond dealers lift hedges with the conclusion of this week's $72 billion Treasury auctions of T-notes and T-bonds.
• The dollar index this morning is higher with the dollar/yen +0.13 yen and the euro/dollar -0.87 cents. The dollar index on Thursday dropped to a fresh 2-month low and settled lower after Greek leaders finally approved an agreement on austerity measures needed to obtain a bailout: Dollar Index -0.075, USDJPY +0.629, EURUSD +0.00250. The euro climbed to a 1-3/4 month high and the yen fell to a 1-1/2 week low. Bearish factors included (1) decreased safe-haven demand for the dollar after the Greek government reached an agreement on austerity measures it needed to obtain a 130 billion-euro financing package, which reduces Greek default concerns, and (2) euro positive comments from ECB President Draghi who said surveys confirm "signs of stabilization" in the Euro-Zone, which may signal the ECB will refrain from implementing additional euro negative stimulus measures. Bullish factors Thursday included (1) signs of U.S. economic strength after weekly initial unemployment claims unexpectedly declined and (2) comments from ECB President Draghi that the ECB may widen the types of collateral it accepts in its next 3-year loan auction later this month, which could lead to deterioration in the ECB's balance sheet.
• Mar crude oil prices this morning are down -$1.41 a barrel and Mar gasoline is -3.79 cents per gallon. Crude oil and gasoline prices rallied on Thursday after the dollar declined and Greek political leaders reached an agreement on austerity measures which may keep the country from default: CLH12 +$1.13, RBH12 +3.76. Mar crude posted a 1-week high and Mar gasoline soared to a 5-1/4 month high. Bullish factors included (1) the slide in the dollar index to a 2-month low, which boosts investment demand in commodities, (2) reduced concern that Greece will default and cause turmoil to the global economy after its government reached an agreement an a 130 billion-euro financing package, and (3) strength in gasoline on concern that recent closures to refineries in Pennsylvania, the U.S. Virgin Islands along with Thursday's closure of a National Oil refinery in Newfoundland because of fire will curtail global supplies of gasoline. Bearish factors included (1) OPEC's action to cut its 2012 global oil demand forecast to 88.76 million barrels a day, down -120,000 bbl from a previous estimate and (2) overall weakness in demand after the DOE reported Wednesday that total fuel demand in the U.S. fell to 17.6 million barrels a day last week, a 12-year low.

Earnings reports (confirmed releases, sorted by mkt cap): LYB-LyondellBasell Industries NV (BEST earnings consensus $0.75), PPL-PPL Corp. (0.61), LH-Laboratory Corp. of America Holdings (1.53), CPN-Calpine (0.04), NYX-NYSE Euronext (0.48), BPL-Buckeye Partners LP (0.84), APO-Apollo Global Management LLC (1.39), LNT-Alliant Energy (0.56), SUN-Sunoco (-0.30), FLIR-FLIR Systems (0.45), ACI-Arch Coal (0.32), RENN-Renren (-0.01), IPGP-IPG Photonics (0.64), AAN-Aaron's (0.43), THS-TreeHouse Foods (0.88).

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