“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:

Get inside information from the president and you will probably lose half your money. If you get it from the chairman of the board, you will lose all of your money. Jim Rogers

1. DoJ reverses on Web gambling — the Justice Department has reversed its long-standing opposition to many forms of online gambling, a potential boon to states that view online gambling as a good way to raise tax revenue.
2. Italian borrowing costs fall — Italy sold €9B worth of 6-month bills at 3.251%, a huge improvement from 6.504% on November 25. The ten-year yield dipped back below 7%, and was around 6.78%.
3. China unveils new list of Investment Likes and Dislikes — China no longer wants foreign-funded automobile factories or polysilicon plants, but would welcome overseas investment in hospitals and financial leasing firms, according to updated inward investment guidelines.
4. Mosaic cuts production — Mosaic (MOS) will cut its quarterly finished phosphate production by up to 250,0000 tons, or ~10%, until the end of March as excess supply weighs on market prices. “The current spot prices in this market do not reflect our outlook for the business, nor do we think they are sustainable,” CEO Jim Prokopanko said.
5. China Contraction in Manufacturing for the Second Month — China’s manufacturing (EC11CHPM) contracted for a second month in December as Europe’s debt crisis cut export demand, fueling speculation that the central bank may cut lenders’ reserve requirements within days.
A purchasing managers’ index was at 48.7 in December from 47.7 in November, according to HSBC Holdings Plc and Markit Economics. A reading below 50 indicates a contraction.
6. Bank of America (BAC) Posts Worst Showing in Dow Average — The 59 percent decline in 2011 erased almost $80 billion of shareholder value at Charlotte, North Carolina- based Bank of America. It’s the firm’s largest drop since a 66 percent plunge in 2008, when a U.S. bailout staved off a collapse.

The week ahead — Economic data from Econoday.com:

“A loss never bothers me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does damage to the pocketbook and to the soul” — Jesse Livermore

1. North Korean dictator Kim Jong Il dies
2. Money runs from EU and China — the capital flight out of the eurozone continues, with investors turning to forex, real estate and investments overseas to protect themselves in the event of a eurozone break-up or a series of bank failures. Unsurprisingly, the trend is more pronounced in Greece, Portugal and Italy. In China, capital flowed out in November for the second month in a row – the first back-to-back decline in over a decade.
3. EU misses fundraising target— the EU announced it had raised €150B (less than €200B hoped) from member states to lend to the IMF to lend back to needy member states.
4. Greece’s Creditors Resist Push for More Losses — according to Bloomberg, Greece’s creditors are resisting IMF pressure to take bigger losses on their holdings.
5. Congress approved payroll tax cut extension — the House passed a two-month extension to the payroll tax cut after House Republicans caved into pressure to drop their opposition to the bill, which has already been passed in the Senate.
6. COF under scrutiny for improper debt-collection practices — the Wall Street Journal has shined a light on Capital One’s (COF) little-known debt-collection practices, saying the company has been accused of pursuing 15,500 “erroneous claims” to recover loans that have already been discharged in bankruptcy cases.
7. Interview with Art Cashen (UBS) Recap of 2011 & Outlook for 2012 — courtesy of CNBC.

The week ahead — Economic data from Econoday.com:

“Millions saw the apple fall, but Newton was the one who asked why.” — Bernard Baruch

1. EU Banks Saddled with a Tangle Web of Loans — according to WSJ, Dozens of banks across Europe have sold large quantities of insurance to other banks and investors that protects against the risk of ailing countries defaulting on their debts. Banks in the region have sold €178B ($238B) worth of CDSs on GIIPS bonds to each other and tried to hedge this by buying €169B worth. At least 38 banks have sold the instruments, with Deutsche Bank (DB) selling €37.4B and buying €34.5B.
2. Barron Posts 2012 Favorite Stocks Pick — click here to see the full list.
3. EU Banks face €350bn Basel III shortfall — A new study by Boston Consulting Group found that European banks will have to raise nearly €200bn in new capital or cut their balance sheets by nearly 20%, to achieve the tougher new Basel III banking reform rules that start taking effect in 2013.
4. Italian yields hit another record high in bond auction — Italy experienced more woe at a bond auction as investors put to rest any hopes that the eurozone’s fiscal union pact will calm the markets. Yields rose to a fresh euro-era high of 6.47% in a sale of €3B of five-year bonds, surpassing the previous record of 6.29% that Italy paid last month.
5. FOMC Policy Unchange — the FOMC maintained its benchmark rate at 0%-0.25% and continued its twist policy by extending the average maturity of holdings.
6. House OKs payroll tax cut — House lawmakers voted along party lines to approve a payroll tax-cut package that includes a provision for the Keystone XL pipeline which is opposed by the White House, and all but guarantees the bill will be vetoed. The Republican bill, which now goes to the Senate, also extends unemployment benefits and prevents cuts in Medicare payments to doctors.
7. Congress Reached Deal to Fund Government, Opening Door to Extending Payroll Tax Cuts — Republican and Democratic leaders returned to the bargaining table and struck a deal on a $1 trillion spending bill to keep the government operating.

The week ahead — Economic data from Econoday.com:

“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it. “Warren Buffett

1. Italian PM unveil €30B austerity package — Mario Monti unveiled a €30B ($40.3B) austerity package of tax hikes and spending cuts. The measures also contain steps to fight tax evasion, including a ban on cash transactions of above €1,000. The hope is that the reforms will create a balanced budget in 2013. Italian bond yields have fallen sharply to 6.16% after package was proposed.
2. S&P 500 High-Yielders — courtesy from the Bespoke Investment Group, below is a list of the 39 S&P 500 stocks that currently yield more than 4% and are also down less than 10% year to date.

3. S&P Warns on 15 EU Nations — Standard & Poor’s issued a negative outlook on 15 EU countries, including AAA rated German and France citing market stress and rising risks of a blocwide recession.
4. Jeremy Grantham Chief Investment Strategist of GMO Investment shares his outlooks in his latest quarterly letter.
5. ECB cuts key rate to 1% — The European Central Bank cut its key lending rate, as expected, by a quarter point to 1% in the face of a looming recession, while investors awaited word from Mario Draghi on other measures aimed at addressing the euro zone’s sovereign debt crisis.
6. S&P may downgrade E.U.’s triple-A rating — Standard & Poor’s Ratings placed the European Union’s triple-A rating on CreditWatch with negative implications, a sign that the rating could be downgraded soon.
7. EU group agrees on fiscal pact without U.K — according to the Telegraph, 23 EU nations agreed to tighten their fiscal coordination, with EU countries also agreeing that central banks would loan the IMF €200B ($267B) to lend to distressed members. However, the U.K. wielded its veto to prevent a new treaty after not receiving protection for its financial sector, and warned that the new bloc would not be able to use EU resources.

The week ahead — Economic data from Econoday.com:

Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it. Warren Buffett

1. Fitch Keeps U.S. AAA Rating — Fitch rated the U.S. at AAA, but added that the absence of a deficit-cutting agreement by 2013 and the further deterioration of the economic and fiscal situation likely would mean a downgrade.
2. Italy 3-yr auction yield jumps to record 7.89 pct — according to Reuter, the yield on a new three-year BTP soared to euro lifetime high of 7.89 percent at the closely watched auction which allowed Rome to raise 7.5 billion euros. Only a month ago, Italy had paid a 4.93 yield to sell three-year paper.
3. Central Banks Take Action to Rescue Financial Markets — a global consortium of central banks agreed to lower interest rates in temporary U.S. dollar liquidity swaps – an exchange between central banks used to maintain currency liquidity – effective Dec. 5. The joint action, led by the Federal Reserve, the banks of England, Canada, Japan, as well as the Swiss National Bank and the European Central Bank, is an attempt to “ease strains on financial markets” and “mitigate the effects of such strains on the supply of credit to both households and businesses,” the Fed said in a statement.
4. S&P downgrades global banks — S&P lowered the rating on 37 of the largest financial institutions in the world, including almost all major U.S. banks, with Bank of America (BAC), Citigroup (C), Morgan Stanley (MS) and Goldman Sachs (GS).
5. China factory sector contracts for first time in nearly 3 years — according to Reuter, China’s factory sector shrank in November in the face of weakening demand both at home and abroad. China’s official PMI dropped to 49 in November from 50.4 in October

The week ahead — Economic data from Econoday.com:

“The secret to business is to know something that nobody else knows.” — Aristotle Onassis

1. Fitch warns on U.S. outlook following debt-talks failure — the Congressional supercommittee confirmed it wouldn’t be able to agree to a deal to make $1.2T in budget savings. The announcement prompted Fitch to reiterate its warning that such a failure would probably lead to “a revision of the (U.S.’s) rating Outlook to Negative,” although a downgrade is less likely.
2. Moody’s warns on French rating outlook — Moody’s warned France last Monday that a sustained rise in its debt yields coupled with weakening economic growth could harm its ratings outlook, fuelling concern the euro zone’s second largest economy might lose its coveted AAA status.
3. Lawmakers abandon deficit-cutting effort — according to Reuter, the Supercommittee abandoned their high-profile effort to rein in the country’s ballooning debt in a sign that Washington likely will not be able to resolve a dispute over taxes and spending until 2013.
4. Eurozone debt crisis hits Germany in disastrous bond auction — an auction of German government bonds technically failed, underlining fears that Europe’s long-running sovereign debt crisis now threatens the core of the euro zone.
5. Fitch: French rating at risk if crisis worsens — Fitch Ratings said that France’s triple-A credit rating would be at risk if a further intensification of the euro-zone crisis resulted in a much sharper economic downturn in France and a material increase in the risk of contingent liabilities.
6. Manufacturing contracts in Europe and China — data showed that the eurozone’s manufacturing PMI fell to 46.4 in November from 47.1 in October. Markit said the data suggests that the eurozone is contracting at 0.6% in Q4 2011. “Malaise has spread from the periphery to the core, with Germany stagnating and France contracting by around 0.5%,” Markit said. China’s PMI was just as gloomy, falling to 48 in November from 51 in October.
7. Fed targets large banks with stress-test according to the Fed, new bank stress tests in which lenders will be forced to model a severe eurozone recession – a 6.9% decline in real GDP – and a skying domestic unemployment rate. In addition, the six largest U.S. banks will need to estimate losses “stemming from a hypothetical global market shock,” similar to that of late autumn 2008.
8. S&P warns of Japan Downgrade — Standard & Poor’s said Japanese Prime Minister Yoshihiko Noda’s administration hasn’t made progress in tackling the public debt burden, an indication it may be preparing to lower the nation’s sovereign grade.
9. S&P Downgrades Belgium — S&P cut Belgium’s sovereign rating to AA from AA+, citing broader financial market pressures.

The week ahead — Economic data from Econoday.com: