Wednesday continues a busy earnings week, while data streams out of Asia and Europe. Nonetheless it will be a relatively quiet day, as Groupon, Time Warner, and Visa report. There are no major economic reports scheduled for release in the U.S., although mortgage applications will be announced.

Here’s what you need to know.

• Japan starts the day off early with bank lending at 6:50 p.m. EST on Tuesday evening. Bank lending is seen expanding by 0.6 percent in January from year-ago levels.
• At midnight EST, the Pacific nation remains in the light when economic outlook is released. The Eco Watchers survey, which measure both outlook and present conditions, is expected to show improvement across both metrics. Outlook is seen moving 90 basis points higher to 45.5. A reading above 50 indicates optimism. 
• Announcements move to Europe at 1:45 a.m. EST, when Switzerland releases unemployment data. The seasonally adjusted reading is forecast to remain at 3.1 percent.
• At 2:00 a.m. German exports will be released, with expectations for the headline number to decline 1.0 percent after a 2.5 percent gain in November. Imports are seen expanding by 0.8 percent in December.
• French Business sentiment is forecast to remain flat at 96 for January. The Bank of France will make the announcement at 2:30 a.m. EST. 
• Industrial production figures will be released for Spain and Turkey at 3:00 a.m. EST. Spain’s output is seen 5.7 percent below year-ago levels, while Turkey sees a 2.8 percent increase from its December 2010 reading.
• Also at 3:00 a.m., the Czech Republic will announce unemployment. The jobless rate is forecast to increase to 9.1 percent in January from an 8.6 reading in the preceding period.
• Chile’s Consumer Price Index will be released at 6:00 a.m. EST. Economists polled by Bloomberg expect CPI to increase 0.2 percent month-on-month in January, following a 0.6 percent jump in December. Brazilian CPI will follow later in the day.
• The only major U.S. announcement on the docket is MBA mortgage applications, which will be released at 7:00 a.m. EST. Mortgage applications last fell by 2.9 percent when data was announced.
• Closing out the day are early data releases in Asia and the Pacific, which could impact after-hours trading in the U.S. At 4:00 p.m. EST, South Korean PPI is scheduled for release, with New Zealand unemployment following at 4:45 p.m. EST. The jobless rate is seen declining 10 basis points to 6.5 percent in fourth quarter of 2011. 

U.S. corporates reporting quarterly results on Wednesday include names like Groupon, Time Warner, and Visa. Below, a roundup of tomorrow’s big announcers.

Virgin Media (VMED): $0.15
Time Warner (TWX): $0.87
Cognizant Technology Solutions (CTSH): $0.77
Moody’s (MCO): $0.49
Reynolds American (RAI): $0.69
Madison Square Garden (MSG): $0.24
CVS Caremark (CVS): $0.89
Sprint Nextel (S): -$0.38
Ralph Lauren (RL): $1.67
IntercontinentalExchange (ICE): $1.69
Computer Sciences (CSC): $0.58
News Corp (NWSA): $0.34
Fidelity National Financial (FNF): $0.19
Cisco Systems (CSCO): $0.43
O’Reilly Automotive (ORLY): $0.85
Plains All American Pipeline (PAA): $1.50
Whole Foods Market (WFM): $0.60
Visa (V): $1.45
Prudential Financial (PRU): $1.76
Fifth Street Finance (FSC): $0.28
TripAdvisor (TRIP): $0.24
Wyndham Worldwide (WYN): $0.44
Level 3 Communications (LVLT): -$1.09
Groupon (GRPN): $0.03

Consensus estimates provided by Bloomberg. 

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See Also:

• Here Are The Key Market Moving Events For Monday, February 6, 2012
• Here Are The Key Market Moving Events For Tuesday, February 7, 2012
• Here Are The Key Market Moving Events For Friday, February 3, 2012

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Ramit Sethi is a New York Times best-selling author and creator of one of our favorite personal finance sites, I Will Teach You to Be Rich. In his weekly video Q&A, Ramit answers common questions about personal finance, careers, and more. This week: What’s the best approach for paying down debt while also investing your money?

Chris from San Francisco asks: “I’m 30, my student debt amount is just below the amount of my annual salary (5.375% interest). Should I be trying to eliminate this debt at all costs or continuing to save for retirement, emergency, living life and pay off debt equally?”

There are three potential answers to this question:

• The mathematical answer is to put your money where it will have the biggest impact. If your debt interest rate is lower than what interest rate you can expect from investing, pay the minimum on the debt each month and invest the rate.
• The emotional answer is that for many people, they hate having debt of any kind, so even if they’re paying off low-interest debt, it still makes sense for them.
• The hybrid approach is to split the difference: Pay off some of the debt and invest some. A nice compromise.

Many people scoff at the emotional or hybrid solutions, not understanding that personal finance is about more than simple math. But it’s clear that psychology and emotions play a huge role in money. If they didn’t, we’d all spend less than we earned and construct a perfect asset allocation.

If you feel strongly about the mathematical or emotional answer, your answer is clear. For everyone else—which turns out to be most of my readers—I suggest a hybrid approach.

One more thing: Surprisingly, the most important step isn’t finding the optimal balance between paying off debt and investing. It’s automating your money so you don’t have to think about either. Six months from now, you’ll be shocked at how much you’ve paid off and invested.

Ramit Sethi is a New York Times best-selling author who writes about personal finance, psychology, and careers. Learn the word-for-word scripts to negotiate your salary, lower your cable fees, and earn more money at http://www.iwillteachyoutoberich.com/.

Real quick: Here’s why a recession seems unfathomable right now.

With each bullet point we highlight the key word.

1. Consumer credit is booming.

2. Housing starts are on the rise.

3. Vehicle sales are on the rise.

4. Jobs growth is accelerating.

So you’ve got: cars, jobs, houses, credit.

‘Nuff said.

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• Paul Krugman Makes The Bull Case For The Economy In One Simple Paragraph
• ISM SERVICES REPORT CRUSHES EXPECTATIONS AT 56.8
• December Factory Orders MISS Expectations, Growing 1.1%

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Another day of slow news. U.S. economic data looked positive but negotiations to save Greece continue to drag on.

First, the scoreboard:

Dow: 12,878 pts., +33.07, +0.26%

S&P 500: 1,347 pts., +2.72, +0.20%

NASDAQ: 2,904 pts., +2.09, +0.07%

Now for today’s top stories:

• European markets closed mixed as negotiations dragged on over the terms of the second Greek bailout. The DAX ended down -0.16 percent while the CAC 40 closed up +0.18 percent. The euro hit a 2012 high against the dollar.

• Greek politicians struggled to strike a deal on new austerity measures that the troika has demanded in exchange for the next round of bailout funds. Reports that a draft was nearing approval led to optimism early, however that feeling faded as news surfaced that leaders would meet again tomorrow because they had not yet penned a resolution. Greek PM Lucas Papademos also met with financial sector representatives led by Charles Dallara today to discuss private sector involvement in the bailout.

• U.S. economic data beat expectations across the board today. Most importantly, consumer credit crushed expectations, expanding by $19 billion in December. Analysts only expected an expansion of $7 billion. JOLT job openings also beat consensus, jumping from 3.12 million to 3.38 million in December. Economic sentiment also improved to 49.4 in January from 47.5—almost a positive outlook.

• The 9th Circuit Court struck down Prop 8—a California law which banned gay marriage. The decision did not lift the stay on gay marriages that is currently in place. Journalists are already speculating that the legal battle over the law will continue in the Supreme Court.

• Coca-Cola beat earnings expectations, with EPS coming in at $0.79 versus estimates of $0.77 for the fourth quarter. That was based on significant emerging market growth, with volumes growing 20 percent in India. The brand itself saw growth of 5 percent for the year and 3 percent for the quarter.

• Walt Disney Co. beat earnings expectations but missed revenue estimates, reporting just after the bell. EPS came in at $0.80 versus estimates of $0.70, and revenue amounted to just $10.78 billion in comparison to estimates of $11.19 billion for the first quarter. The company saw a 16 percent drop in studio entertainment revenue in the quarter.

• Right before the close, Scott Thompson was named as the new CEO of Yahoo, and Chairman Roy Bostock will not stand for re-election. Four board members will step down, and two new members have been named to replace them.

• CITI’S BUITER—There’s A 50 Percent Chance Of A Greek Exit From The Eurozone And Here’s How It Would Happen >

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• STOCKS SURGE WHILE EVERYONE WAITS FOR FACEBOOK: Here’s What You Need To Know
• RALLY PAUSES AHEAD OF FRIDAY’S BIG JOBS REPORT: Here’s What You Need To Know
• Rally Builds Amid Signs Of European And Chinese Growth

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Hedge fund manager and writer Doug Kass just sent out a blast titled SELL EVERYTHING.

Why?

Because Roubini is bullish.

From CNBC:

The perennially negative Nouriel Roubini – nicknamed Dr Doom for his usually critical views – is turning bullish. You read that right, Roubini is betting on additional stock market gains.

“We’re a believer; we’re celebrating. We think the rally has legs,” explains Gina Sanchez, Roubini’s director of equity and allocation strategy.

You’ve been warned.

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• Apple Might Lose A $1.6 Billion Lawsuit For Using The Word ‘iPad’
• A Huge New Call On Housing That You Must Pay Attention To
• DAVID STOCKMAN: It’s True, The BLS Data Is Made Up

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It’s hard to think that the economy is going into any kind of recession with numbers like these. For the second straight month we just got a HUGE number on consumer credit

Cnosumer credit expanded by $19 billion in December. That’s far more than the $7 billion that was expected by economists.

Revolving consumer credit (credit cards) grew by $4.1 billion sequentially, and is basically flat from last year again (up barely).

One more point on this: A lot of people think that US consumer have too much debt, and that a big number here is “bad” and we could imagine that being true. But if we’re talking about cycles, and whether the economy is in rebound or recession mode, re-expanding credit is OBVIOUSLY what you want to see.

Read the full announcement here.

This chart from Reuters’ Soctty Barber basically tells it all.

———–

It’s a very slow week economic data-wise, but this is the biggie…

Consumer credit for December comes out at 3:00 PM ET.

Analysts expect $7 billion worth of new credit for the month. That’s down from $20.3 billion in the month before.

Remember, last month REVOLVING consumer credit registered flat year over year growth for the first time since the bust.

We’ll have the number here LIVE.

Here’s that revolving consumer credichart from last month.

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• Apple Might Lose A $1.6 Billion Lawsuit For Using The Word ‘iPad’
• A Huge New Call On Housing That You Must Pay Attention To
• DAVID STOCKMAN: It’s True, The BLS Data Is Made Up

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Groupon reports Q4 earnings after the close tomorrow.

Analysts at Morgan Stanley are expecting relatively good news: revenues above estimates, constrained marketing spending, and better than estimated EBITDA.

Morgan Stanley’s analysts think the stock is fairly priced as it currently is.

The gossip is that hedge fund managers with millions to bet don’t feel the same way.

VC Chris Dixon just tweeted that a hedge fund manager he knows looked into shorting Groupon stock ahead of tomorrow’s earnings, but backed off when he found out the interest rate on borrowing Groupon stock was a whopping 40%.

That is super high. It’s an indication that a lot of money has already been bet on Groupon’s stock ticking downward in the days ahead. 

(That doesn’t mean it’s more likely to dip, of course. Sometimes “the crowd” is very wrong.)

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• LivingSocial Lost $558 Million In 2011
• Apple Might Lose A $1.6 Billion Lawsuit For Using The Word ‘iPad’
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Markets have appeared enchanted by reports coming out of Greece recently that Greek politicians are about to approve a new round of austerity measures and happily ignorant of the fact that negotiations about private sector involvement are still dragging on.

But even if the Greek government were suddenly to reach agreements with both the troika and its private creditors, it appears unlikely that both deals will actually be worth anything.

That’s primarily based on the fact that the debt swap deal officials agree to with the private sector will likely never be implemented, particularly if the European Central Bank doesn’t join in on sharing losses. As it stands participation in the plan will have to be “voluntary” in order not to provoke a credit event.

However, investors will fight tooth and nail not to bear the full brunt of the 70 to 75 percent losses they will likely take under the agreement if they can’t collect on the insurance contracts (credit default swaps) they purchased to hedge against the possibility of a Greek default. Thus there are two probable outcomes:

• EU leaders forcibly prevent a credit event, potentially with a special account for Greece that would essentially would allow Greece to feign the appearance of paying off maturing debts without actually paying them off. In this scenario, the private sector would take a big hit and credit default swaps would not be paid out. This would ruin the CDS industry (at least in Europe) and foster deep distrust for EU leaders.
• EU leaders accept a credit event and let Greece default in a disorderly fashion. This essentially negates the deal that’s happening right now. Theoretically, a disorderly default would result in a deeper cleansing of Greece’s debt burden so the country would not necessarily need all the austerity measures the troika is forcing upon it. However, the consequences of CDS payouts are somewhat vague and its impact could be far-reaching, despite the industry’s small size.

There doesn’t really appear to be a compromise between these two options. True, the ECB could also take a haircut as part of the selective default mentioned in the first scenario, however Greece’s debt burden would still probably be unsustainable even if the central bank took losses.

Even if Greek leaders stomach more austerity and put the country in place to receive much-needed bailout funding, there appears to be no way the debt swap deal will go according to plan.

Thus any Greek “agreement” is ultimately worthless.

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See Also:

• SURPRISE, SURPRISE: It Appears Greece Still Doesn’t Have A Draft Of A Deal
• CITI’S BUITER: There’s A 50% Chance Of A Greek Exit From The Eurozone And Here’s How It Would Happen
• LIVE: Negotiations And Crisis In Greece

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Below is an awesome chart from Credit Suisse’s global investment yearbook.

It shows the firm’s proprietary Global Risk Appetite Index (GRAI) going back to the early 80s.

When it’s high: People are in a state of euphoria and have a huge appetite for risk. When it’s low: Sheer panic, and no risk appetite.

CS doesn’t reveal the exact secret sauce, but it explains it like this:

CS GRAI is the slope of a cross-sectional, weighted, linear regression of a 6-month excess return measure (y-axis) on 12-month price variability (x-axis). This regression is estimated daily using rolling windows of data.

Currently, the returns of 64 country-based assets are used in the calculation. The constituents are broad equity and government bond indexes from developed countries and many of the more important and accessible emerging markets. These assets form a relatively continuous spectrum of risk from safer G3 bond indexes to riskier EM or pe- ripheral European equity indexes. However, their positions along the risk spectrum do shift over time, but the 12-month calculation period ensures this is more gradual than the changes in return measures.

A weighting scheme is applied in the regression based upon the market capitalization and GDP of the countries of the respective assets. Thus the bond and equity indexes from the USA have a greater impact than those of Belgium.

The average observed value of CS GRAI has been around 1, and 1 1⁄2 standard deviations is approximately 4. For convenience we call periods when the CS GRAI is abnormally high (above 5) “euphoria” and abnormally low periods (below minus 3) “panic.”

Anyway, here’s the chart. Perhaps the most surprising thing is that their sentiment measure registered a deeper level of panic last year during the Euro meltdown than during the US financial crisis. That goes a long way in explaining the torrid rally despite the lack of progress in solving anything.

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• STOCKS EXPLODE HIGHER ON AWESOME NEWS: Here’s What You Need To Know
• Dow Jumps To A 4-Year High, Nasdaq Surges To An 11-Year High
• Hey! Look What’s Getting Close To A 4-Year High

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This editorial is part of our GREAT DEBATE feature ‘What Resource Do We Most Need For Our Future?‘

The current American dependence on oil — foreign and domestic — is staggering: we consume roughly 20 million barrels of the stuff every day, in order to run our cars and heat our homes. 

Click here to see how oil became our primary source of energy >

Though oil has been used for thousands of years — from soaking the arrows of the Persian military to treating George Washington’s frostbite during the Revolutionary War — it had little commercial value in the United States outside of powering kerosene lamps until the mid-1800s. 

But when the Pennsylvania Rock Oil Company of New York struck oil 70 meters down in Titusville, an incredibly valuable American commodity was born.

Today, America must deal with the growing conundrum of whether to commit fully to oil as the nation’s life blood. Though trillions of barrels of oil are ready to be harvested domestically today, we can only use this resource for so long — or we will find ourselves without a viable solution to turn to in the coming centuries. 

Nearly 40% of America’s energy comes from oil, with fossil fuels in general making up 85% of our energy. Transportation is the biggest consumer of petroleum — 71 percent of our oil goes towards powering cars, buses and other public transport.

Source: RITA

But it wasn’t always this way: from the the Model T to furnaces, new inventions powered America’s use of oil until it surpassed coal as the country’s main form of energy in 1950.

The first oil recession occurred with the unveiling of Thomas Edison’s incandescent light bulb, which killed the need for petroleum lamps.

But inventions like Henry Ford’s automobile (which utilized gasoline, a heretofore unused byproduct of petroleum refining) and oil-burning furnaces helped oil become the country’s main energy source. Innovations like the interstate highway system only increased oil’s importance.

Furthermore, wars like World War I and II greatly increased the need — and prices — of oil in the United States.

This increasing reliance on oil was made possible by vast reserves in places like Texas, California and Alaska — but proven oil reserves began falling in 1970, and domestic production fell with it. And as domestic production declined, foreign imports of oil rose dramatically.

Source: EIA

See the rest of the story at Business Insider

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See Also:

• Energy And Natural Resource Interests Dumped Almost $1 Billion On Washington In Two Years
• Forget Oil, Forget Gas, COAL Is Absolutely Blowing Up In America
• THE GREAT DEBATE: What Resource Do We Most Need For Our Future?