Afternoon Review

· Equity Levels: SP500 up 13.86pts to 1089.37 at 12:05PM. The Nasdaq is also up 23 pts to 2206.50. The Russell is up over 5 pts to 616 this morning.

· Equities out of the gate on a strong note today; Catalysts for the move higher: 1) M&A activity (SPG/General Growth and TRA/Yara were the big notable deals); 2) earnings received well (inc. Barclays, which had strong #s this morning in London, esp. from its BarCap division, but also out of MRK, GPC and Q in the US; DRI also had an upside preannouncement); 3) eco #s coming in better (the ZEW in Germany this morning and the Empire Survey from the US); 4) the Euro is finally bouncing, giving a strong bid to all things commodity-related today. On a technical basis, we traded north of 1081 on the sp500 (cash) and now people are watching to see if we can close north of 1090 (which is the 20day MA; we haven’t closed north of this level since Jan 20). Above 1090 looms the 50day MA at 1108. Stocks are drifting towards their highs of the day (so far) as Europe closes, a pattern we have seen over the last ~1-2 weeks (when Europe closes and the headlines around Greece and other sovereigns pass, US stocks seem to feel more comfortable rallying).

· Color from the desk – the tone to trading continues to be better; the heavy vanilla selling of earlier in Feb abated last week and that is carrying over into today. Buyers, which started to nibble late last week, present again today, esp. in some of the higher-beta groups. Still a lack of sellers (both shorts and vanillas) that is helping most although buyers def. more comfortable adding to long exposure. Note that while stocks have a nice bid today, corp credit is weaker (IG is slightly wider and HY is flattish).

· Equity Sectors – across the board rally today. Financials, tech, industrials, discretionary, energy, utilities, materials, and telecoms are all up >1%. Commodity-linked stocks among the best performing in the market (esp. steel stocks, which are higher on back of the weaker dollar and an AKS price hike). Tech is seeing buyers again ahead of a big Wed night of earnings (we get HPQ, AMAT, ADI, NTAP, and NVDA all Wed night); SOX is leading tech higher (SOX is up close to 2%). Financials trading inline w/the tape, led higher by asset managers, money center banks, and credit cards (COF master-trust came in better than expected). Health care and staples, both relative “safe havens”, are underperforming, although each of up 0.8% (within staples, KFT is off 2% post earnings, and WLP is leading HC lower after the co canceled its analyst meeting).

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