Japan's Trade Balance in December again came in as deficit, while the Adjusted Current Account Total grew. The Yen weakened following the release moving back toward the 77 handle.

• Trade Balance - Survey:-135B   Actual:-145B   Prior:-585B
• Current Acct Total - Survey:340B   Actual:303B   Prior:138B
• Adj. Current Acct Total - Survey:625B   Actual:752B   Prior:480B

The mentality of the market is that this is right.  Central bank gives banks money at 1% or less and they buy Italian Bonds and earn the spread. The danger with such mentality is it promotes bubbles and takes the element of risk out of the equation.  People buy because it is risk free. Much the same way house buying was risk free.

The US, UK, ECB flood banks with money, they buy bonds, interest rates come down and they hope for a recovery to happen.  What if it does not (i.e.,the equivalent of  house prices not going up)?  What happens if they spur on a massive recovery and they have to unwind the trillions of dollars on their balance sheets and ignite inflation in the process which is out of control?  What happens if the money goes into commodities and leads to multiple bubbles?

When too much money is sloshing around it encourages bad behavior.  The focus is not on risk but solely on reward. Focus should be on risk first, then reward.

The EURUSD is moving closer and closer to the 9 day high at the 1.3226 level.   Traders who are long will likely sell against the level but a move above should not be faded.  The price has been in a 201 pip trading range for the last 9 days of trading.

The price has been buoyed by the apparent agreement within the Greek coalition. This will free up 130 billion tranche from the EU/IMF which will allow for the interest payment due in March.  Support at eh 1.3176-84 level now.

Says:

• Labor market has ‘improved modestly'
• Senate remarks same as Feb 2nd house testimony
• Interest rates to stay low through 2014
• Calls pace of recovery ‘frustratingly slow'
• Fed expects inflation to ‘remain subdued'
• Fiscal policy must be put on ‘sustainable path'
• ‘Long way to go' before job market running normally

IBD/TIPP Economic Optimism:     Survey: 48.6      Actual:  49.4     Prior: 47.5

JOLTs Job Openings:  Survey: 3250  Actual: 3376   Prior: 3161     Revised: 3118

Canada Building Permits:    Survey:  1.0%     Actual: 11.1%        Prior:  -3.6%     Revised:  -2.6%

• SNB ready to take further measures if needed.
• Further escalation of Euro crisis is "main risk".
• Swiss economy to cool "considerably" in 2012.
• SNB "more than ever" committed to defending cap.
• Policy has been absolutely credible to markets.
• Franc remains "very strong".
• CHF should weaken "over time".
• "Downside risks" prevail.
• Can't allow Franc to appreciate further.

EUR/CHF was relatively unaffected by the release.