I apologize up front for some of the short answers today.  It was both my sister and girlfriend’s birthdays and I wanted to get something down.

Highlights
The markets were again on Greece watch throughout the day. I didn't sleep at all last night waiting to put on an FX position in the EUR/USD. The plan was, and still is, to purchase the Euro on a deal or to short the Euro on a default. Now tread carefully as a "default" is in the cards in both situations, the terms of the deal are going to be important. Favorable terms include very little collateral damage to financial institutions and steps toward less sovereignty in terms of aligning fiscal and monetary policy of the union. Unfortunately, the Greeks managed to push the deadline back once again, thus I will probably lack sleep once again. They did, at least what was "reported", make great strides to hammering out preliminary terms. MITK, my pick (Jim Edwards did the dirty work) from February 3rd, roared over 22% on 151% revenue growth and 90% gross margins. I would take profits on this position and keep a small position moving forward. Currently, I don't feel the valuation justifies the position although I still feel strongly about the company. The 10 year was auctioned today and had mixed to poor results as the yield increased to 2.02% with a 3.05 bid to cover in comparison to a 3.11 average over the last four auctions. This aligns well with my short futures of both the 30 year and 10 year and selling naked calls far out of the money on top.

Equities
The equity markets were flat to slightly up with the S&P up 0.22%, and the DOW up 5 points. In after market headlines, Diamond Foods plunged 41% on news that the company had misrepresented its financial statements. The company reported that it is replacing both its CFO and CEO and restating 2 years of past financial data. Should be interesting to hear how this plays out. If the company can manage, this may be a gem to pick up at a massive discount. Other movers were Apple (AAPL) hitting a $476.68, an all time high, OPEN sold off 12% due to slower growth. Cisco (CSCO) beat earnings and trickled up 1.1%. Sprint (S) beat revenue, but posted another loss due to the iPhone compressing gross margins, deepening the firms concerns moving forward. Groupon posted worse than expected earnings of $.02 (missing by $.01) and sold off 16% in the after hours. Visa (V) was up over 3% in the After Hours as it reported better than expected use driven by an increase in card use. Caesers (CZR) IPO'ed today and from an outsider it seemed to be a great stock to buy. Actually, it was a great stock to buy with a 71% gain. However, the company only floated 1.8 million shares. They are still on deck to issue an additional 120 million+ shares in the coming months making this as close to market manipulation as possible. I am actually not sure how they are managing to get away with this except that I think the people buying have no idea. Interesting results are that the company had $2.25 billion in revenue and a LOSS of $164 million. I would short this stock in about 6 months as supply floods the markets. I am still a believer in the bull moving forward.

Rates and FX
The JPY is currently sitting at 77.20/$ and I continue to believe the Yen will sell off.  The AUD is still a currency I am targeting to strengthen to 1.10 as the country continues to export massive amounts of natural resources.  The 30 year yield finished the day at 3.15.  CNBC posted an article on the 10 year auction - http://www.cnbc.com/id/46301729 which yielded 2.02% and a bid to cover of 3.05 compared to 3.11 showing less demand than expected. The Fed was in full force today and bought $1.8 billion in bonds in its “Operation Twist”. 

Other good news on the rates side showed that the index for mortgage purchase application came in at 7.5% vs. a projected drop of 2.9%.  This is pro bullish housing.

Tomorrow
Jobless claims are on the ticker for tomorrow.  Traders will be glued to this number as it is probably the most relevant.  The treasury is also issuing a 30 year bond auction tomorrow. On the commodities side, the EIA is releasing their regular natural gas report. Of course Greece is the headline to look out for.

Stock Picks
Long ARW – Arrow Electronics is a value play.  The company specializes in technology more specifically competitive services and supply chain management.  Their primary line of business has very tight margins and they compete with the likes of Avnet.  However, Arrow has acquired a ton of small high growth service companies, companies that are generating much greater margins and growth than Arrow currently has.  The company trades at 8x trailing and a 5.8 EV/EBITDA multiple.  I feel this is a classic LBO pick as the company has the ability to manipulate their cash flows to best benefit themselves.

Short GRPN – Groupon showed today that the company cannot both grow revenue and even somewhat profitable.  I feel that the business of discounting is just too competitive and easy to enter.  They trade at some $15 billion market cap but hardly make any money and I don’t see how they can grow enough to justify the multiple or create the proper margins.  Ask Amazon.com how that business is going for them…