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What's New, 1/29/12

What's new: Greece PSI "soon",Euro bnks rpt this wk. Mon Italy 5/10-yr auctions,Euro summit;Tue FL Rmny 97% Intrade;Wed ISM 54.5,China PMI ~50,Facebk file;Thu retail;Fri employ 170k. Lst wk: 4Q GDP 2.8% smll miss. Italy 10-yr 5.9%. Jblss 4 wk ma 377.5k fall. Fed low thru late 2014. AAPL huge beat,rev +73%. UK 4Q GDP miss -0.2;Euro PMI beat 50.4 from 48.3,bottmd Oct;French bnk rtngs cut.

Mkts drivers: QQQ at bull mkt high. US 4Q earn good nuf,only 59% beat reduced est so far,along with ECB LTRO;Fed zero rates;US econ beats;China soft land;mod value;for rotate to "risk on" beta cyclcls. Shrug off Grc;2012 Euro debt sales ok;Italy rates down;US mm's buy euro bnk paper. Will pm's chase low volu rally;em break rs dwntrnd;hdg funds obstruct Greece PSI?

Indexes (1/27): SPX 1316 ytd +4.7%,mtrl +11,fncl 9,indu 8,IT 7,dscr 6. ACWI 6.0%,ACWX 6,EEM 12,BKF 15,China 5,EFA 6,Eur 5. ETF ytd TAN 28,EPI 23,XBI 17,EWZ 15,RSX 15,XME 14,ITB 14,EWG 13. 10-yr US 1.9,Italy 5.9,euro 1.32,oil 100,gold 1737. Rmny GOP 88%,Obama Pres 54.

Mkts frcsts: 4Q earn +6%,slowest 9/09,cut 19% last 3 mth. US gdp 1Q 2.2,2Q 2.3. 2012 SPX ~1350,+7% 2011,eps $105,p/e 12.9x. 2012 glbl grwth slow to ~3%,US 2.4%,2013 2.8,Eur -0.5%,weaker euro helps,China 8.5%. US frcsts rise,srprs indxs peak,intl fall.

Mkts assmptns: More glbl easing & delever,glbl tbtf intact;ECB LTRO/SMP monetiztn;Eur muddles thru;US mrgns stay high;oil not >> $100. Grc prob "orderly" dflt;Port risk;12/9 fscl pact survives;euro drifts lwr. US decple;bnks well cap;corp strong bs;employ imprv;cnsmr rslnt;hsng bottm;QE3 < 50%. China soft lands;prprty prices now -5-15% don't collps;more RRR cuts soon;ldrshp chng smooth;Weibo impact. CEE hghst em risk.

Asset alloc: What wght em,cyclcls? Low glbl valu create upside risk? Falling VIX chance to hedge Euro dwnside risk? Slow glbl econ good for corp credit risk? High correltns btwn/within asset classes falling?

This post is also on my LinkedIn profile in "Summary." Left click on charts below to enlarge. For an explanation of relative strength of EEM shown in these two charts, please see my Jan 20 post.