Trading

TradeTheNews.com European Market Update: German Labor minister cautious on employment outlook; Obama’s State of the Union focus on jobs and Exports saps some dollar upside momentum for the time being

European Market Update: German Labor minister cautious on employment outlook; Obama's State of the Union focus on jobs and Exports saps some dollar upside momentum for the time being
*** ECONOMIC DATA ***
- (PH) Philippines Central Bank Interest leaves Overnight Borrowing Rate at 4.00%; as expected; Raises short term peso rediscounting window by 50bps
- (RU) Russia Gold & Forex reserves w/e Jan 22nd: $435.6B v $441.4B prior
- (GE) German Dec ILO Unemployment Rate 7.5% v 7.5%; Employment: up 35K m/m to 40.1M
- (FI) Finland Dec Preliminary Retail sales Volume Y/Y: 1.6% v -0.1% prior
- (SW) Sweden Jan Consumer Confidence: 8.5 v 8.8e; Economic Tendency: 103.4 v 102.0e; Manufacturing Confidence: v -7e
- (DE) Denmark Dec Unemployment Rate Seasonally adj: 4.3% v 4.5%e
- (SW) Sweden Dec Unemployment Rate: 8.6% v 8.3%e
- (SW) Sweden Dec Retail Sales M/M: 0.2% 0.7%e; Y/Y: 4.5% v 5.3%e
- (IT) Italy Jan Business Confidence: 83.2 v 83.0e
- (<b>GE) Germany Jan Unemployment Change: 6K v 15Ke; Unemployment Rate: 8.2% v 8.2%e</b>
- (NO) Norway Jan Unemployment Rate: 3.3% v 3.1%e
- (PD) Poland 2009 Annual GDP: 1.7% v 1.6%e
- (GE) German Jan CPI - Baden Wuerttemburg M/M: -0.6% v 0.7% prior, Y/Y: 0.8% v 0.7% prior
- (SA) South Africa Dec PPI M/M: 0.7% v 0.4%e; Y/Y: 0.7% v 0.4%e
- (BR) Brazil Jan FGV Inflation M/M: 0.6% v 0.6%e; Y/Y: -0.7% v -0.7%e
- <b>(EU) Euro-Zone Jan Business Climate Indicator: -1.12 v -1.10e; Consumer Confidence: -15 v -15e;</b> Industrial Confidence: -16 v -15e; Economic Confidence: 95.7 v 92.3e; Service Confidence: -1 v -3e
- (BE) Belgium Jan CPI M/M: 0.5% v 0.2% prior; Y/Y: 0.6% v 0.3% prior
- (BR) Brazil Dec Unemployment Rate: 6.8% v 6.6%e

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
- <b>In equities:</b> European equity markets have followed strength from the Asian trading session by opening on their range highs. Macro themes that have led to equity strength began yesterday from the US FOMC, which reiterated that base interest rates would be kept near zero for an 'extended period' (despite one dissenter), along with the tone of US Pres Obama's State of the Union. That address, focusing on jobs and spending, rather than a continued heavy tone on banks led to sector relief. On this move, European financials traded higher leading the initial opening surge. Earnings in Europe continued with strong figures out of Swedish based retailer H&M [HMB.SW] that shook off some concerns with strong earnings that benefited the broader mid-range retail names. Earnings from Swiss drug ingredient manufacturer Lonza [LONN.SZ] carried worrisome commentary that destocking would continue into 2010, shares traded lower. Data proved supportive to the equity relief rally but gains could not be maintained. Into the 5:00EST hour, European markets began a sell off with continental bourses giving back a large portion of their gains. This move comes ahead of a packed NY pre-market session with major earnings in the tech, banking, pharma, industrial and consumer related sectors.

-In individual equities: <b>Kazakhmys</b> [KAZ.UK]: Reports Q4/FY09 production: FY09 Gold production increased by 9% to 135 thousand ounces. || <b>Lonza</b> [LONN.SZ]: Reports FY09 Net CHF159Me v CHF50Me, Rev CHF2.69B v CHF2.7Be, proposes final div CHF1.75/shr. || <b>H&M</b> [HMB.SW]: Reports Q4 Net SEK6.2B v SEK5.1Be, Rev SEK28.0B v SEK27.7Be (ex VAT). || <b>ING</b> [INGA.NV]: To appeal against specific elements of EU decision on restru

- Speakers: <b>ECB's Tumpel Gugerell</b> stated that now was the time for monetary/fiscal policies to return to normal as tensions have eased. Enhanced credit support would gradually expire and that Euro zone gov's needed to map out budget consolidation plans. The fiscal policy in EMU states were a reason for concern and reitereated the view that excess debt could increase medium and long-term interest rates. Inflation in Euro zone was firmly anchored at this time and saw sustained improvement of financial markets. Central banks to more closely watch risks in financial markets but added that systemic risks did not come from banks alone***<b>German Econ Min</b> stated that it opposed any bailout of any troubled EMU state and noted that some states did show dangerous weakness. He noted that private consumption would stay weak in 2010. He expressed confidence that the ECB would find the right moment to exit special measures and if exit wre time correctly, then there would be no inflation problem ***<b>Japan's Diet passed the second extra budget for FY09</b>; includes Hatoyama's &#165;7.2T stimulus measure *** <b>Germany Labor Min Weise</b> commented that he saw a structural change towards part-time employment in Germany. He noted that short -term work has stabilized employment and did not see any fundamental labor market turnaround seen at this time and would be a while before companies hire again*** BOE confirmed expiration of temporary liquidity swap line with FED and would; No longer will conduct USD repo operations *** <b>Thai Central Bank</b> stated that it planned to make more moves to liberalize capital outflows next week ***<b>Korea Fin Min Yoon</b> commented that was not considering direct control measures on Forex liquidity but more steps to enhance soundness of currency assets were possible. He added that now was not the time for Korean Central Bank to increase interest rates but needed to prepare measures to prevent negative impact from any tightening out of China's central bank***<b>Swiss Fin Min</b> commented that he saw no pressure for currency intervention and expressed satisfaction with current EUR/CHF exchange rate

- <b>Currencies:</b> The USD reversed earlier strength as European traders reacted positively to President Obama's State of the union address, which focused on job creation and exporters. The dollar upside momentum seen during Asia waned as European traders surmised that a firmer greenback tone was not compatible to the Administration's goal to double exports. The EUR/USD tested 1.3935 in Asia before regaining some composure to test 1.4050 in the European morning. Comments from the German Labor Minister highlighted the headwinds that employment would have on a sustainable economic recovery. EUR/USD just above the 1.40 handle as the NY morning approached.
- The USD/JPY pair was firmer as dealers noted the yield on the 2-year note moved from 0.83%pre-Fed to 0.93% in early Europe.

- <b>Fixed Income</b>: - Govt bonds weaker as Obama's state of the union address fuels risk appetite, Europe plays catch up to FOMC/Hoenig induced higher yields. 10y Bund +2bps at 3.22%, curve a touch steeper.
- Gilts underperform after the DMO's Stheeman concedes that end of BoE Gilt buying would likely put upward pressure on yields *** Greek yield spreads widen to fresh highs at Bunds+360bps, after former PBOC member states that Greek debt is "more unsafe than US Treasuries" and that China should not rescue Greece by buying its debt
- S&P and Moody''s both make cautious comments on Portugal but fall short of taking any action. Portugal 10s 3bps wider at Bunds+106bps.*** Italy sells &#8364;7B in 3 and 10y BTP's - top of the range of expectations in terms of size.

- <b>Geo-Politica</b>l: US Pres (D) Obama delivered his first <b>State of the Union address</b> by focusing 2010 squarely on job creation. Attempting to rekindle the 'Change' approach of 2008/09 that has since seen electoral, populist and legislative bruising through his first year in office, job creation and spending formed the bulk of the address. Obama refused to surrender the Health Care issue, reiterating the watered down compromise agenda released last week. $787B in stimulus spending was vigorously defended by Obama along with plans to double levels of US exports over a 5-year period and further small business tax breaks in an effort to promote job growth. The UK is holding a joint conference to debate and plan the future of the now 9-year old ISAF deployment in Afghanistan. Talks will focus on a reported $500M plan to purchase support from various warlords and tribal officials in exchange for jobs and services. The conference also plans to discuss a 'transition of security' from NATO and international forces to local Afghan security forces, much like the approach used in Iraq. Karzai, Brown, Clinton and Ban Ki-moon will also address issues regarding planned Parliamentary elections set for the Spring of 2010. A standoff in Sri Lanka has continued following defeated Presidential candidate Fonseka refusing to accept the polling results. Official results gave incumbent Rajapaksa a clear majority with approx 58% of the vote. Fonseka remains secured in a hotel in the capital city of Colombo, surrounded by hundreds of heavily armed police and soldiers. Fonseaka's former high standing in the military and loyalty of the regular armed forces has presented loyalty questions to the Sri Lankan military.

- <b>Energy</b>: Gazprom has confirmed new long term supply contracts with Polish end users. The Russian firm is to supply up to 10.2b CM of gas per year through 2037. China is considering adjusting its energy pricing mechanism. State news authorities have stated that the current 22-day period lock up may be dropped on adjusted to better reflect domestic supply and demand fundamentals. China CIC fund has also been reported as interested in making new investment in energy and resource related firms. CIC has been reported to be in talks with Brazilian and Mexican names.

- <b>Sovereign Ratings</b>: Moody's commented that Portugal needed a credible deficit reduction. Portugal's new budget proposals revealed the scale of the challenges ahead for the country's economy. Moody's stated that a credible plan for deficit reduction would be needed to ensure the government's ability to reverse its adverse debt dynamics, and in turn to avoid further downward pressure on its ratings.*** S&P stated that it was awaiting details of Portugal's EU stability program before making any change to the country's sovereign ratings

***Notes:
- <b>Obama's State of the Union: Jobs, are the priority; seeks to Double Exports</b>
- First phase of Bernanke''s confirmation set to take place today with a procedural vote
- <b>FOMC: Hoenig dissented.</b> The yield on the 2-year note moves from 0.83% to 0.93%. $/Y in lock step.
- China soothes by pledging reasonable financing. Asian equities bounce after 9 straight down days.
- World Economic Forum in Davos, Switzerland: Dep PBoC gov Zhu warns of consequences on emerging markets on USD carry trade unwind when Fed starts to hike.
- Slew of key US corporate earnings to be released ahead of the equity open with BAX, BMY, CAH, CELG, CL, D, EK, F, HSC, LCC, LLL, LLY, MMM, MO, MOT, NOK, OSK, PG, POT, RTN, T, TXT, TYC, XEL among the notables

***Looking Ahead:
- (CZ) Czech Dec Preliminary Industrial Output: 2.0%e v -0.1% prior
- (PD) Poland Dec Budget Level (PLN): No est v -498.2M prior; Budget Level YTD: No est v -24.4B prior
- (SP) Spain Nov Total Housing Permits M/M: % v 14.8% prior; Y/Y: % v -36.1% prior
- 7:00 (CL) Chile Dec Industrial Production Y/Y: 1.2%e v 1.0% prior; Industrial sales Y/Y: -0.4%e v -1.25 prior
- 7:00 (CL) Chile Dec Unemployment Rate: 8.9%e v 9.1% prior
- 7:00 (CL) Chile Dec Total Copper Production: No est v 477.3K tons
- 7:30 (BR) Brazil Dec Nominal Budget Balance: No est v -2.4B prior; Primary Budget Balance: 1.0Be v 12.7B prior; Net debt to GDP ratio: 43.1%e v 43.0% prior
- 8:30 (US) Dec Chicago Fed National Activity Index: -0.40e v -0.32 prior
<b>- 8:30 (US) Dec Durable Goods Orders: 2.0%e v 0.2% prior; Ex Transportation: 0.5%e v 2.0% prior</b>
<b>- 8:30 (US) Initial Jobless Claims: 450Ke v 482K prior; Continuing Claims: 4.593Me v 4.599M prior</b>
- 11:00 (BR) Brazil to sell fixed rate bonds due in 2014 and 2017
<b>- 13:00 (US) To sell $32B in 7-year notes

---

TradeTheNews.com European Market Internals update at 5:00am ET

European Market Internals update at 5:00am ET
- FTSE100 volume 204.5M shares, about 2% lower than its 30 trading day moving average
- DAX30 volume 45.1M shares, about 55% higher than its 30 trading day moving average
- CAC40 volume 33.2M shares, about 20% higher than its 30 trading day moving average

---

TradeTheNews.com Asian Market Update: S&P 500 Futures lead most Asia stocks higher, following Obama’s pledge to focus on job creation and tax relief

Asian Market Update: S&P 500 Futures lead most Asia stocks higher, following Obama's pledge to focus on job creation and tax relief
- ECONOMIC DATA:
- (NZ) RBNZ left rates unchanged at 2.50% (as expected); Governor Bollard reaffirmed that the central bank would begin raising rates "around mid 2010" if the economy recovers in line with projections.
- (NZ) New Zealand Dec Money Supply M3 y/y: -1.1% v -1.8% prior
- (JP) JAPAN DEC RETAIL TRADE M/M: -1.2% V -0.2%E (1-yr low); Y/Y: -0.3% V 0.3%E (15-month high); Large Retailers' Sales y/y: -4.6% v -7.3%e
- (PH) Philippines Q4 GDP q/q: 0.9% v 1.0%e, y/y: 1.8% v 1.1%e


- SPEAKERS/PRESS:
- In his state of the union address, US President Obama noted that the worst of the economic downturn had passed and said his primary focus would be on job creation. Obama also said that he was seeking to double US exports over the next 5 years, which would support US job growth. In terms of the US budget deficit, Obama said he would issue an executive order to create a deficit commission which would issue recommendations on how to lower the deficit. In terms of taxation, Obama said he wanted the capital gains taxes on all small business investment to be eliminated and he pledged to extend middle-class tax breaks.
- On yesterday's session, the US Federal Reserve left rates unchanged and reiterated that rates would stay exceptionally low for an "extended period" and also noted that the deterioration in the labor market was slowing. However, the Fed's Hoenig offered a dissenting vote as he believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.
- In China, Deputy Commerce Minister Zhong noted that China faces problems in maintaining the stability of policy and pressure to adjust its stimulus measures. Also Zhong said the Chinese yuan faced growing international pressure for it to appreciate.

- EQUITIES:
- The Nikkei 225 gained by more than 1%, supported by advances in shares of Sony, following a press report noting that the company's Q3 operating profit might exceed analysts expectations. Additionally, shares of Honda traded higher on earnings speculation. Despite the overall gains in Tokyo, shares of Nippon Steel declined as the company cut its FY10 profit forecast. Shares of Toyota Motors dropped after the company confirmed that it would expand the size of its previously announced product recall to 5.9M units. Australia's S&P ASX 200 gained by more than 0.40%, led by mining shares and financials. South Korea's Kospi rose by more than 0.90% on gains in shares of financials. Additionally shares of Hyundai Motor rose on better than expected earnings. In Taiwan, the Taiex rose by just under 2%, supported by gains in technology shares. In earnings news, Taiwan Semiconductor reported Q4 earnings which exceeded market expectations. In China, the Shanghai Composite has moved between gains and losses and as of the time of writing the index is trading below the key 3,000 level. On yesterday's session, the Shanghai Composite moved below 3,000 for the first time since Oct and the index is near its 200-day moving average which comes in around 2,989. In Hong Kong, the Hang Seng is gaining by over 1% on advances in financials.

- CURRENCIES/FIXED-INCOME/COMMODITIES:
- In foreign exchange, at the start of the Asian session, EUR/USD moved below 1.4000 for the first time since mid-July. However, the Euro later recovered as the US weakened broadly as risk appetite recovered following US President Obama's state of the union address. USD/JPY is trading above 90, as the improvement in risk appetite has also weighed on the Japanese currency.

- Crude oil prices have moved off of the earlier session lows and are trading near $73.50/bbl. During yesterday's US session, the US Department of Energy disclosed that weekly crude inventories were lower than expected, while gasoline stockpiles exceeded expectations (DOE CRUDE: -3.9M V +1.5ME; GASOLINE: +2M V +1ME). Spot Gold, like oil, has pared its earlier losses, supported by the slight recovery in EUR/USD. In China, a press report disclosed that the country's gold production in 2009 rose by 11% y/y to 314 metric tons. Prior reports have suggested that Chinese gold demand in 2009 may have totaled more than 450 tons. In commodity-related corporate earnings, Newcrest Mining, Australia's largest gold producer, disclosed that its Q4 production rose by 17% on a sequential basis, after declining by 5% in the prior quarter. Additionally, Newcrest reaffirmed its FY10 production forecast of 1.8-1.9M ounces.

---

TradeTheNews.com Market Internals update at 3:30pmET

Market Internals update at 3:30pmET
- NYSE volume 980M shares, about 18% above its three-month average; decliners lead advancers by 1.1:1.
- NASDAQ volume 2.06B shares, about 20% above its three-month average; advancers lead decliners by 1.3:1.
- VIX index -2.5% to just under 24.00

---

TradeTheNews.com Market Internals update at 2:00pmET

Market Internals update at 2:00pmET
- NYSE volume 670M shares, about 5% below its three-month average; decliners lead advancers by 2.3:1.
- NASDAQ volume 1.45B shares, about 9% above its three-month average; decliners lead advancers by 1.1:1.
- VIX index +1.0% to just under 25.00

---

TradeTheNews.com US Market Update

US Market Update
Dow -34 S&P -3.7 NASDAQ -1.6
***Economic Data***
- (US) MBA Mortgage Applications w/e Jan 22nd: -10.9%% v 9.1% prior
- (US) Dec New Home sales: 342Ke v 355K prior
- (RU) Russia Dec Real Retail Sales M/M: 20.2% v 17.9%e; Y/Y: -3.6% v -5.2%e
- (MX) Mexico Nov Global Economic Indicator: -1.5% v -2.1%e

- Equity indices opened lower for the second consecutive session as European and Asian stock markets weighed on New York. US indices tested their lows in mid morning trading in the wake of the weak Dec new home sales data but losses have been minimal. The housing data missed estimates and fell nearly 8% on a sequential basis (following an 11% m/m decline in November). Yale Economist Robert Shiller warned that house prices could be faltering yet again and suggested the economy may need another stimulus package. The FOMC decision arrives later this afternoon, and while no major changes are expected traders continues to worry about the fate of Chairman Bernanke's pending nomination. The partisan rhetoric continues to heat up on the Hill, where Congressmen are taking swipes at Treasury Secretary Geithner over the AIG bailout. Apple's big product announcement is also scheduled for this afternoon. Treasury prices have remained bid as money continues to find its way to the relative safety of government bonds on both sides of the pond for many of the same reasons. Copper prices dropped to their lowest levels of the year below $3.30 after the Shanghai Composite closed below 3000 for the first time in months.

- Heavy manufacturing Dow components Boeing, Caterpillar and United Technologies offered strong quarterly results this morning. Earnings were ahead of expectations at all three firms, with Boeing well ahead of the Street. On the other hand, full year EPS forecasts at Boeing and Caterpillar both missed expectations, while UTX reiterated a range that lagged analysts' outlook. Boeing warned that its below consensus FY10 EPS reflects the lower revenue and includes some consideration for development program and market risks. CAT said economies in the developed world remain weak and have not rebounded as quickly as developing countries, impacting its earning forecast. Manufacturing names Illinois Tool Works and Stanley Works both missed bottom-line expectations. General Dynamics' revenue for the quarter was a little soft. Shares of BA are up 4% in early trading, while UTX, ITW, SWK and GD are all down 2-4%. CAT is down 8% and heading lower.

- ConocoPhillips and Valero topped expectations, and COP crushed revenue targets. However, the outlook is not bright for integrated oils. Valero warned that there is too much inventory and spare refining capacity in the industry for margins to rebound quickly, while new refining capacity is scheduled to come online this year. Both VLO and COP are trading off following the unexpected build in gasoline inventories announced by the DoE this morning.

- Yahoo met expectations, managing to sustain the quarterly performance seen over the last several quarters. YHOO rose 3% before the bell, but has been losing altitude in early trading. Semi names STMicro and Altera both beat earnings estimates. Altera sought to downplay all the talk of inventories driving demand, noting on the conference call that major customers are telling the company that the increase in demand is not because they are building inventories. Executives said Sees communications chips having a strong 3-5 year growth cycle, but clear visibility beyond one quarter is poor. STMicro said its sales would decline markedly next quarter. ALTR is up 6%, while STM is down 3.5%.

- Healthcare benefits administrator WellPoint offered excellent quarterly results, although its full-year forecast was a little soft. Cardiac device maker St. Jude was largely in line. Shares of STJ and WLP opened in the red and have climbed into positive territory mid morning. Pharma giant Abbott was also more or less in line, while biopharma Gilead crushed expectations. ABT is down 2%, while GILD is up 6%.

- In currency trading, rumors about pending sovereign downgrades in Portugal and Greece are weighing down the euro this morning. EUR/USD turned around and headed back toward the 1.39 handle, which was last seen back in July 2009. There is talk of an Eastern European option barrier at the 1.40 level that is curbing the dollar's upside momentum somewhat, however. Chatter that Greece was trying to get China to buy up to &#8364;25B in bonds made the rounds as well this morning, prompting denials from both the Greek Finance Ministry and the Greek debt agency. Investor George Soros summed up the current situation aptly, noting that the Greek debt problem shows up the shortcomings of Euro Zone structures and the inherent weakness of not having a single Euro Treasury. He later noted that Greek debt could be a good speculative buy.

---

TradeTheNews.com Market Internals update at 12:00pmET

Market Internals update at 12:00pmET
- NYSE volume 460M shares, about 8% below its three-month average; decliners lead advancers by 1.4:1.
- NASDAQ volume 1.01B shares, about 10% above its three-month average; decliners and advancers are about even.
- VIX index +1.0% to just under 25.00

---

TradeTheNews.com Market Internals update at 10:30amET

Market Internals update at 10:30amET
- NYSE volume 250M shares, about even to its three-month average; decliners lead advancers by 2.3:1.
- NASDAQ volume 570M shares, about 15% above its three-month average; decliners lead advancers by 1.1:1.
- VIX index +1.4% to just under 25.00

---

TradeTheNews.com European Market Internals update at 10:30am ET

European Market Internals update at 10:30am ET
- FTSE100 volume 818.8M shares, about 12% higher than its 30 trading day moving average
- DAX30 volume 106.8M shares, about 36% higher than its 30 trading day moving average
- CAC40 volume 94.3M shares, about 18% higher than its 30 trading day moving average

---

TradeTheNews.com European Market Update: WEF begins in Davos; BoE’s Sentance and ECB’s Weber comments stymie the dollar’s upward momentum

European Market Update: WEF begins in Davos; BoE's Sentance and ECB's Weber comments stymie the dollar's upward momentum
*** ECONOMIC DATA ***
- (FI) Finland Jan Business Confidence: -13.0 v -10.0 prior; Consumer Confidence: 14.5 v 14.9e
- (FR) France Jan Consumer Confidence: -29 v -31e; Business Survey: -2 v -14 prior
- (TT) Taiwan Dec Leading Indicator M/M: 0.8% v 0.9% prior; Coincident Index M/M: 2.0% v 1.5 prior
- (SP) Spain Dec Real Retail Sales Y/Y: -0.5% v -4.3% prior; Adj Real retail sales Y/Y: -1.4% V -3.6%e
- (SW) Sweden Dec PPI M/M: 0.2% v 0.3%e; Y/Y: -0.8% v -0.7%e
- (IC) Iceland Sedlabanki lowers interest rates by50bps to 9.50%; Not expected
- (IT) Italy Dec Trade Balance Non-EU: &#8364;1.3B v -&#8364;29M prior
<b>- (GE) German Jan CPI- Saxony M/M: -0.6% v 0.8% prior, Y/Y: 0.7% v 0.8% prior</b>
<b>- (GE) German Jan CPI - Hesse M/M: -0.6% v 0.8% prior, Y/Y: 0.5% v 0.8% prior
- (GE) German Jan CPI - Brandenburg M/M: -0.6% v 0.8% prior, Y/Y: 0.6% v 0.7% prior
- (GE) German Jan CPI - North Rhine- Westphalia: -0.7% v 0.8% prior, Y/Y: 0.8% v 0.8% prior
- (GE) German Jan CPI - Bavaria M/M: -0.7% v 0.9% prior, Y/Y: 0.6% v 1.0% prior</b>
- (RU) Russia Dec Unemployment Rate: 8.2% v 8.3%e
- (SA) South Africa Dec CPI (all items) M/M: 0.3% v 0.4%e; Y/Y: 6.3% v 6.4%e
- (UK) UK Jan CBI Distributive Trade: -8 v +13 prior

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
- European markets may have snapped a four session losing streak on Tuesday, but they look ready to fall off the wagon again this morning. Markets opened to the downside and have made little attempt ( ex DAX) to rally through the session. Negative sentiment followed a disappointing US close in which markets gave back gains and further downward rotation in Asia. Asian themes continue along the same tightening/lending macro path with the Shanghai Composite is giving back the 3,000 handle for the first time since Nov 2, 2009. On this trading, European banks continue to take it on the chin and rotate lower. This movement has been furthered by reports from BBVA [BBVA.SP] that showed loan loss provision continuing their multi-quarter rise. Basic resource and mining firms have followed this China rotation and have also moved lower on the (broadly expected) disappointing double listing of Rusal [486.HK] in Hong Kong and Paris. With nearly every sector trading broadly lower, a individual stand out has been SAP [SAP.GE] which gave full Q4 figures and provided comforting FY10 unit and GM guidance. Markets are looking forward to a busy US session that will include earnings, oil figures, a 5-year note offering and FOMC decision.

- <b>Individual equities:</b> SAP [SAP.GE]: Reports Q4 Net &#8364;727M v &#8364;736Me, Op income &#8364;1.06B v &#8364;1.08Be; Expects growth in 2010 operating margin. BBVA [BBVA.SP]: Reports FY09 Net &#8364;4.2B v &#8364;5.2Be. Tullow [TLW.UK]: To places up to 80.4M (9.995 of shares outstanding) New Ordinary Shares to finance Uganda stake buy. Vedanta [VED.UK]: Reports Q3 Rev $2.1B v $1.3B y/y; Zinc and Lead production at 1.38M tons v 938K y/y. Axa [CS.FR]: CEO: Revenue levels in French Insurance unit +15% y/y in 2009.

- Speakers: The <b>Greece Finance Ministry</b> stated that is categorically denied press reports of &#8364;25B bond sale to China. <b>BoE's Sentence</b> commented that the BoE must be ready to adapt policies to change as the central bank could not rely on goods deflation to hold down UK inflation rate. He noted that the impact of GBP currency was feeding into CPI and that spare capacity might be less than expected. The combination of above-target services inflation and rising import prices persists, it will be difficult for the MPC to keep inflation on target. He noted that the UK should avoid a double-dip recession if global economy growth was healthy/ lastly he noted that the pound was particularly competitive against the Euro. <b>China Banking Regulator CBRC</b> commented that it would ask banks to lend in steady, prudent measures on a quarterly basis. The regulator noted that banks should be strict on property lending while fulfilling reasonable financing needs. It ordered banks to be careful of resurgence in bad loans and added that banks closely monitor lending to property markets and reduce lending to industries with overcapacity. <b>ECB's Weber</b> commented that the Euro-Zone economy would improve during 2010 with GDP growth seen between +0.5% to +1.0% with growth of 1.5% in 2011. He noted that the central bank needed to discuss how to phase out support measures gradually. He added that the economy still required the assistance of an expansive fiscal and monetary policy. He reiterated that Greece had no option and must meet its pledge to conform to budget rules. There were no credibility issues over the euro and talk of Euro-Zone breakup was absurd. ECB would not set euro zone interest rates to suit the bloc's few troubled members and would have to do monetary policy for the union as a whole. He saw no major inflationary risks over the medium-term (in line with ECB view). <b>PBoC Deputy Gov Zhu</b> forecasted 2010 GDP growth in China of 8-9%. He noted that balance growth was more important that this year's rate of growth. The risk for global economy was weak recovery coupled with volatile growth. He did note that a soft landing scenario could come with the support of government stimulus measures. The PBoC would maintain an "accommodative" economic policies. Lastly he did note that the risk of a sovereign debt crisis was real. <b>Hungary Fin Min Oszko</b> commented that the country does not plan to use IMF funds this year. He also pointed out that Hungary would not need to issue any more foreign currency denominated bonds this year

- <b>Currencies</b>: Risk aversion flows continued to aid the dollar and yen pairs into the European session but comments from European central bankers stymied the upward momentum for the time being. Comments from Weber and Sentance helped EUR/USD tested fresh six-month lows at 1.4025 before consolidation to 1.4070 area. GBP/USD was above the 1.62 handle after testing 1.6110 ahead of the European session. The Greek Finance Ministry helped to stem the aversion theme after it categorically deny press reports of &#8364;25B bond sale to China.

- <b>Fixed Income</b>: The Greek 10yr yield spreads widened to fresh highs at Bunds+330bps after the finance ministry denied press reports stating that the company had mandated Goldman Sachs to sell &#8364;25B in debt to China's SAFE. German govt bonds are weaker with yields higher especially in the short end, with flattening attributed to comments from the Bundesbank Pres and ECB member Axel Weber, who addressed the topic of exit strategies with a relatively hawkish bent. Germany sold &#8364;2.5B in 30y bunds with in line results.

- <b>Geo-Political:</b> Political commentators are anxiously awaiting President Obama's first State of the Union address tonight in Washington. Following several political setbacks in special elections in VA, NJ and most recently MA, pundits are looking to hear meassages on health care, spending, jobs, banks and the protracted wars in Iraq and Afghanistan. Election results from Sri Lanka point to a re-election of current Pres Mahinda with approx 60% of the counted votes. His closest rival, former General Rajapaska is seen polling approx 36% of the vote. Both men were former allies and were key players in last year's military defeat of a multi-decade Tamil rebellion. Despite violence during the campaign season, the election has been peaceful with Rajapaska under close military protection. North and South Korea exchanged artillery fire near the two countries disputed western coastal border. The fire from the North has been reported as part of a larger military exercise in the region. Following the first bombardment, North Korean news stated that the military would respond at any time to illegal action in its territory, this commentary was followed by further firing. Escalation of the situation is not widely expected.

- <b>Energy:</b> US API numbers after the close showed a strong draw down in crude and a smaller than expected build in gasoline stocks. Capacity utilization figures continued to disappoint. After confirming approval to purchase energy assets from Heritage [HOIL.UK], UK listed Tullow [TLW.UK] announced a 80.4M share secondary offering to finance the Ugandan acquisition. Tullow stated that it was in talks with both CNOOC and Total regarding JV operations in the region. Oil service firm Smiths International [SII] reported in the early premarket in line with expectations. Figures were down y/y however on continued reduction in activity in US fields.

- Sovereign Ratings: Fitch commented that its negative outlook on Portugal remained intact following the country's budget announcement and Fitch added that a downgrade was more likely than not.

***Looking Ahead ***
- 7:00 (US) MBA Mortgage Applications w/e Jan 22nd: No est v 9.1% prior
- (GE) Jan Preliminary CPI M/M: -0.3%e v 0.8% prior, Y/Y: 1.0%e v 0.9% prior
- (GE) Jan Preliminary CPI EU Harmonized M/M: -0.4%e v 0.9% prior, Y/Y: 1.0%e v 0.8% prior
- <b>10:00 (US) Dec New Home sales: 366Ke v 355K prior; M?M: 3.0%e v -11.35 prior</b>
- 10:00 (US) Fed's Greenlee to speak on commercial real estate
- 10:00 (US) Treasury Sec Geithner testifies to House Oversight committee
- 11:30 (SZ) Swiss President Leuthard speaks at Davos
- 12:00 (CA) Canada to sell 2-year notes
- 13:00 (US) To sell $42B in 5-year notes
- 13:00 (FR) France Dec Jobseekers Net Change: 15.0e v 3.1K prior
- <b>14:15 (US) FOMC interest rate decision: No change in the 0.25% current rate</b>
- <b>15:00 (NZ) New Zealand Central Bank Interest rate decision: No change expected in the official cash rate from the current 2.50% level</b>
- 16:00 (KS) South Korea Feb Business Survey - Manufacturing: No est v 90 prior; Non-Manufacturing: No est v 84 priro
- 16:15 (UK) BOE's Haldane
- <b>(BR) Brazil Central Bank interest rate decision: No change expected in the SELIC target from the current 8.75% level

---

TradeTheNews.com European Market Internals update at 5:00am ET

European Market Internals update at 5:00am ET
- FTSE100 volume 277.9M shares, about 32% higher than its 30 trading day moving average
- DAX30 volume 41.9M shares, about 57% higher than its 30 trading day moving average
- CAC40 volume 34.5M shares, about 27% higher than its 30 trading day moving average

---

TradeTheNews.com Asian Market Update: Strong Q4 CPI in Australia boosts outlook for RBA hike; Japan posts first exports growth since Sept 08 as Yen rises to 9-month high vs EUR

Asian Market Update: Strong Q4 CPI in Australia boosts outlook for RBA hike; Japan posts first exports growth since Sept 08 as Yen rises to 9-month high vs EUR
ECONOMIC DATA
- (JP) JAPAN DEC MERCHANDISE TRADE BALANCE TOTAL: &#165;545B V &#165;610BE; ADJUSTED: &#165;523B V &#165;633BE (highest since Mar 2008)
- (AU) AUSTRALIA Q4 CPI Q/Q: 0.5% V 0.4%E; Y/Y: 2.1% V 2.0%E%; RBA TRIMMED MEAN Q/Q: 0.6% V 0.6%E; Y/Y: 3.2% V 3.2%E
- (AU) AUSTRALIA WESTPAC LEADING INDEX M/M: 1.0% V 0.5% PRIOR
- (KS) SOUTH KOREA DEC CURRENT ACCOUNT: $1.5B V $4.3B PRIOR; GOODS BALANCE: $4.0B V $5.8B PRIOR

SPEAKERS/PRESS
- Asian equity markets traded mainly lower into the close, shrugging mid-session US market strength and improvement in Japanese export component of the trade data, as worries continue to circulate over Chinese policymakers restraining growth in lending and thereby stifling global recovery. Sydney's S&P/ASX was among the biggest losers with a 1.6% catch-up slide following the selloff in the prior session. Nikkei225, Taiex and the Kospi approach session close with a 0.5% decline, while Shanghai is off by 0.3%. With the Fed decision on the docket for the US Wednesday session, front-month S&Ps are up a marginal 0.1% at 1,088.

- Fourth-quarter CPI data from Australia marked the primary economic event of the session, with headline figures topping estimates by a single decimal point and core levels printing in line. The data was seen as a "make-or-break" event for next week's RBA decision, solidifying analyst expectations for a fourth consecutive 25bp hike as overnight swaps showed the likelihood of tightening rising to 75% from around 65%. PM Rudd spoke after the CPI release, warning that interest rates may increase. Several analyst reports also suggested confirmation of RBA tightening by the data, including BofA/Merrill Lynch, who said the CPI is "just enough" above consensus to confirm the hike. Australia's Treasurer Swan maintained his dovish stance, stating that Q4 CPI shows inflation remains low with the economy operating below capacity.

- Over in Japan, merchandise trade balance was below estimates but showed sharply higher y/y levels of import and export activity. Most notably, exports rose 12.1% y/y - the first increase since Sept 2008, highest rate of growth since Oct 2007. Commenting on the inflection in exports, Japan chief economist at Barclays saideconomic growth is likely to accelerate towards the end of this year, reducing the possibility of the BoJ taking further easing measures." Separately, BOJ Monthly Report reiterated the upbeat sentiment expressed at its decision yesterday, noting that housing investment has stopped falling, economy is picking up , and the rate of CPI decline would moderate. BOJ Gov Shirakawa said it was critical that the central bank helps economy overcome deflation. Also in Japan, PM Hatoyama refused to acknowledge that Japan is in deflationary spiral but urged greater focus on stimulating demand, while Fin Min Kan called bond sales of &#165;53T for FY09 "abnormal".

- Several press reports from China further weighed on overall investor sentiment. China Securities Journal said some of the banks engaged in particularly aggressive lending in early January may have been ordered to call some of those loans back. Ministry of Industry and Information Technology warned that rapid industry growth in China is a challenge, estimating that 2010 GDP growth may actually decline to 8% from 8.7% y/y. On the upside, another China Securities Journal report saw January power usage rising 30% y/y - a record pace of growth on a monthly basis.

- On the geopolitical front, North and South Korea exchanged artillery fire in the West Coast "no sail zone", with escalation coming after recent accusation by the North that the South "declared war" with the statement that it would launch preemptive action if it thought to be in danger. Taiwan some some brief strength mid-day after press reports that the Sec-Gen of Taiwan Straits Exchange Foundation saw the govt upbeat about a trade agreement with China after yesterday's preliminary talks.

EQUITIES
- In individual shares, Toyota traded sharply lower after suspending sales of certain vehicles as part of a recall for sticking accelerator pedal, announced on January 21, 2010. Japanese press also said the company union decided not to ask for wage increase for the first time in 5 years during annual negotiations. In other press reports, NTT DoCoMo was seen reporting 9-month op profit of &#165;700B (&#165;747B y/y). Among companies reporting earnings, NEC Electronics posted 9-month Net loss &#165;54.1B v &#165;21.0B y/y on Rev &#165;339B v &#165;465B y/y.

- Outside the Nikkei, S&P revises its outlook on Hyundai Motor to Stable from Negative and LG Electronics follwed its disappointing FY results with Q4 Op loss KRW140B v profit KRW235Be on Rev KRW7.1T v KRW7.2Te. In Sydney, Woolworth reported 1H Rev A$27.2B v A$27.5Be, while CSR again rejected an attempt by China-based Bright Food to buy its sugar division for A$1.5B.

CURRENCIES/FIXED INCOME/COMMODITIES
- In currencies, risk-aversrion related bids on USD and JPY resurfaced for much of the session. EUR/USD and GBP/USD fell to 1.4050 and 1.6110. In commodity FX, AUD was firmer after better than expected CPI but fell back below 0.90 late in the day. Ahead of tomorrow's RBNZ rate decision, Kiwi dollar approached one month low around 0.70 and USD/CAD advanced above 1.0650. JPY outperformed across the board, as USD/JPY fell to one month low near 89.20 and EUR/JPY made new 9-month lows below 125.50.

- Most commodities have moved off of the session's best levels as Chinese equities have remained volatile on concerns about the outlook for domestic bank lending. Crude oil prices have pared their earlier gains and are currently trading near $74.50/bbl. Earlier today, API disclosed that weekly US crude and gasoline inventories were lower than expected (API PETROLEUM INVENTORIES: CRUDE: -2.22M V +1.5ME; GASOLINE: +915K V +1ME; DISTILLATE: -1.98M V -1.8ME). Later today, the US Department of Energy will release its weekly inventories data. Spot Gold has eased below $1100/oz, as traders await the upcoming Federal Reserve policy statement for further direction. In corporate earnings Australian coal producer Coal and Allied noted that its FY09 net profit declined by more than 25% y/y, while sales dropped 13% y/y. Going forward, Coal and Allied expects that there will be strong demand for thermal coal and semi-soft coking coal. The company was also positive on the outlook for industry prices.

---

TradeTheNews.com Market Internals update at 3:30pmET

Market Internals update at 3:30pmET
- NYSE volume 815M shares, about 2% below its three-month average; decliners lead advancers by 1.6:1.
- NASDAQ volume 1.95B shares, about 13% above its three-month average; decliners lead advancers by 1.5:1.
- VIX index -8.5% to just below 23.50

---

TradeTheNews.com Market Internals update at 2:00pmET

Market Internals update at 2:00pmET
- NYSE volume 615M shares, about 4% below its three-month average; advancers lead decliners by 1.3:1.
- NASDAQ volume 1.48B shares, about 11% above its three-month average; advancers lead decliners by 1.1:1.
- VIX index -10% to just below 23.00

---

TradeTheNews.com Market Internals update at 12:00pmET

Market Internals update at 12:00pmET
- NYSE volume 440M shares, about 11% below its three-month average; decliners lead advancers by 1.1:1.
- NASDAQ volume 1.02B shares, about 10% above its three-month average; decliners lead advancers by 1.2:1.
- VIX index -7.25% to just over 23.50

---