“The worst trades are generally when people freeze and start to pray and hope rather than take some action” — Robert Mnuchin

1. Europe agrees to second Greek bailout — European finance ministers and other top European officials said they stand ready to provide up to 130 billion euros ($171.9 billion) of extra financial aid to Greece until 2014. The Eurogroup said they had the “expectation that the International Monetary Fund will make a significant contribution” to the new Greek aid program.
2. Oil climbs as Iran Stops Selling Oil to U.K., France — Iran said it had stopped selling crude to British and French companies, in retaliation for the EU’s import ban.
3. Fitch Downgrades Greece, Says Default ‘Highly Likely’ — AP reported that Fitch ratings agency says it has downgraded Greece further into junk status, from ‘CCC’ to ‘C’ following the announcement of the details of the country’s debt swap deal with private creditors. The agency said the downgrade indicated “that default is highly likely in the near term.”
4. Moody’s reviewing thousands of U.S. muni obligations — Moody’s Investors Service is sweeping a magnifying glass over thousands of U.S. municipal sector obligations that are linked to 26 banks currently under review for possible credit rating downgrades.
5. Tensions grow over Iran — the IAEA says it failed to win access to Iran’s suspected nuclear-related military base during two days of talks. Meanwhile, Iran said it would consider preemptive action if it felt threatened, underscoring the real possibility of a military conflict in a region holding half the world’s oil reserves.
6. Payroll-tax cuts extended — President Obama signed the payroll tax bill into law, which will extend payroll-tax cuts through the end of 2012, prolong extended unemployment benefits, and prevent a cut in pay for doctors who treat Medicare patients.

The week ahead — Economic data from Econoday.com:

“Securities pricing is, in every sense a psychological phenomenon that arises from the interaction of human beings with fear. Why not Greed and Fear as the equation is usually stated? Because Greed is simply Fear of not having enough”. — John Bollinger

1. Moody Downgraded 6 European Countries — Spain gets the worst of fresh Moody’s cuts. Triple-A France, Britain, Austria outlooks cut to negative. Moody’s also cut debt ratings on Italy and Portugal by one notch, along with Slovakia, Slovenia and Malta.
2. Euro Zone Economy Shrinks — The euro zone economy shrank at the end of 2011 and will flirt with a mild recession under the weight of the sovereign debt crisis, but strength in France and resilience in Germany may keep it above water. Economic output in the 17-nation currency area fell 0.3 percent in the fourth quarter from the third.
3. Greece battles to salvage bailout package — Greece’s leaders battled to salvage a new 130-billion-euro ($170 billion) EU/IMF bailout. But with mistrust of Athens high, several EU sources told Reuters that finance officials in the 17-state currency union were studying whether it was possible to delay part or all of the rescue deal while still avoiding a disorderly default.
4. Moody’s Warns Downgrade on Major Banks — Moody’s warned it may cut the credit ratings of 17 global and 114 European financial institutions in another sign the impact of the euro zone government debt crisis is spreading throughout the global financial system.
5. Foreclosure Filings Fall 19% In January — Mortgage default notices rose by over 20% on year in several states in January, including Connecticut, Massachusetts and Florida, indicating that the 2011 freeze in repossessions – which was due to the robo-signings scandal – is beginning to thaw.
6. Swiss police seize $6 trillion in fake U.S. bonds — Swiss authorities, at the request of Italian prosecutors, seized $6 trillion in fake U.S. bonds from three safety deposit boxes in Zurich, the BBC reported. The BBC noted that the seized bonds amounted to almost half the U.S. debt.

The week ahead — Economic data from Econoday.com:

“The worse a situation becomes the less it takes to turn it around, the bigger the upside.” — George Soros.

1. German Industrial Production Unexpectedly Fell in December — Production fell 2.9 percent from November, when it stagnated, the Economy Ministry in Berlin reported.
2. Greece to Lay Off 15,000 Public-Sector Workers — according to WSJ, Greece has agreed to lay off 15,000 public-sector workers by the end of 2012, a government minister said Monday, as international pressure mounts on Athens to accept austerity measures needed to secure major new debt agreements.
3. Farmers Plan Biggest Crops Since 1984 — U.S. farmers will plant the most acres in a generation this year, led by the biggest corn crop since World War II, taking advantage of the highest agricultural prices in at least four decades. Drought damage in Brazil and Argentina will probably spur the USDA to cut its global and U.S. grain-supply forecasts for the current season on Feb. 9.
4. Greek bailout hopes rise amid ECB concession — European Central Bank reportedly agreed to exchange Greek government bonds at less than face value in an effort to further reduce the nation’s debt load.
5. Santorum sweeps to shock victories in three states — Rick Santorum has caused an upset in the GOP nomination race by surprisingly winning Colorado, Minnesota and Missouri, although none of the contests will result directly in the awarding of delegates.
6. Amazon and Viacom close to Web video deal — according to Reuter, Viacom, which owns TV shows and movies from MTV Networks, Nickelodeon and Paramount Studios, would be the latest of several partners Amazon has made deals with for its Prime Instant Video service. So far, major studios such as CBS Corp, Time Warner Inc’s Warner Bros, News Corp’s Fox, Sony Corp, Comcast Corp’s NBC Universal and Walt Disney Co have licensed programming to the retailer.
7. Banks and States Reached $26 Bil. Settlements — After more than a year of negotiations, the biggest banks, states and federal authorities announced the largest housing settlement ever — for more than $26 billion — over foreclosure practices that is expected to offer relief to more than one million U.S. homeowners. The settlement is with five big banks: Bank of America Corp (BAC), J.P. Morgan Chase & Co(JPM), Citigroup Inc. (C), Wells Fargo & Co.(WFC) and Ally Financial Inc., the company formerly known as GMAC.

The week ahead — Economic data from Econoday.com:

“The market is better at predicting the news than the news in predicting the market” — Gerald Loeb.

1. Mitt Romney Wins Florida’s Republican presidential primary — Romney rolled to an impressive triumph in Florida, winning 46 percent of the vote to Gingrich’s 32 percent in a key battleground state. The next contest in the state-by-state battle for the Republican nomination to face Obama, a Democrat, in the November 6 U.S. election is in Nevada. That is followed on Tuesday by caucuses in Colorado and Minnesota and a primary in Missouri.
2. California Faces Cash Shortfall by March on Low Receipts, Controller Says — according to Bloomberg news, California (STOCA1)’s cash may be exhausted by March as tax collections trail budgeted amounts, Controller John Chiang said in a letter to lawmakers.
3. Obama seeks to revive housing market with refinancing plan — President Obama is expected to lay out today a fresh attempt to revive the housing market by letting millions of homeowners refinance their mortgages with lower-interest federally insured loans.
4. Spain sees good demand in $6 billion bond sale — Spain raised euro4.56 billion ($6 billion) Thursday in a bond auction that showed strong investor demand and a drop in the country’s borrowing rates; It sold euro2.5 billion in three-year bonds at an average yield of 2.9 percent, down from 3.4 percent in the last such auction on Jan. 17. Demand was 1.6 times the amount on offer, less than the 1.8 oversubscription rate seen last month.
5. U.S. adds 243,000 jobs in January ‘big surprise’ — Jobless rate falls to 8.3%; November, December — gains revised higher; U.S. companies hired the most workers in nine months and the nation’s unemployment rate fell to the lowest level in nearly three years, according to the government’s employment report for January.
6. U.S. factory orders up 1.1% in December — Factory orders rose 1.1% in December, the Commerce Department reported Friday. Economists polled by MarketWatch had expected a 1.4% rise. But the report was bolstered by an upward revision to November, where orders were revised to a 2.2% increase from an initially reported 1.8% rise.
7. Senate votes to ban insider trading in Congress — the Senate voted 96-3 to pass the Stop Trading On Congressional Knowledge Act, or Stock Act, which will ban legislators from trading shares based on insider information they pick up on Capitol Hill.

The week ahead — Economic data from Econoday.com:

“In my experience, selling a put is much safer than buying a stock” — Kyle Rosen (Boston Capital Mgmt)

1. EU bans Iranian oil, Tehran responds with threats — EU governments agreed to an immediate ban on all new Iranian oil imports and transportation contracts, and sanctions against the country’s central bank, as the bloc looks to up the ante against Iran’s nuclear program. Also, the U.S., U.K. and France sent six warships through the Strait of Hormuz, which Iran has threatened with closure in response to the increased international measures.
2. Obama urges taxing the rich, reining in Wall Street — Obama unleashed a partisan attack over taxes and vowed no return to “the days when Wall Street was allowed to play by its own set of rules.” based on his State of the Union address. He called for a minimum 30% tax rate on those earning at least $1M and promised fresh investigations into the mortgage crisis. Obama’s other proposals included a minimum rate on companies’ overseas profits, a tax credit for firms moving jobs back home, and help for homeowners to get mortgage relief.
3. Rates To Stay Low Longer — the Fed said rates will remain near zero until at least late 2014, extending the timeline from mid-2013.
4. Creditors accept lower rate on Greek debt — according to the latest report from Dow Jones Newswires, Private-sector lenders are ready to accept a coupon rate of less than 4% on new Greek bonds that will be issued in a voluntary debt swap.

The week ahead — Economic data from Econoday.com: