Global Markets Rise as ECB Fails to Blink on Cyprus

Global markets rebound: mainland China up 2.6 percent (biggest jump in two months); European equities are up; and European bond yields are dropping in Italy.

The European Central Bank and the euro zone have not blinked on Cyprus: No sign that they are going to cave in and approve a blanket loan for the country. Cyprus is now pleading with Russia for money. I speculated yesterday that they may be willing to exchange money for board seats on Cypriot banks, but the speculation this morning is even wilder: the possible outright sale of Cyprus Popular Bank to Russian investors, or equity in a Cypriot natural gas business.

1) FedEx reported earnings well below expectations and guidance for the current quarter, and fourth quarter also below expectations ($0.94 to $1.34 a share, versus consensus estimate of $2.07 a share). The company cited weakness in international air freight markets and "accelerating customer preference for lower-yielding international services, lower rate per pound, and weight per shipment."

Bottom line: It seems to be some cost inflation, and not sure whether this is an indication that international traffic is really weaker, or simply that customers are continuing to ship, but trading down to cheaper services. Looks like the latter.

2) Home builder Lennar reported much-better-than-expected earnings (helped by taxes), driven by a 13 percent increase in the average sales price of homes compared to last year. New orders were up 34 percent year-over-year. The company noted all the stars were continuing to align: strong demand, low rates, high affordability, low inventories, and fewer competitors.

The big problem: Stock prices for the builders remain high, along with valuations. Most are trading at twice book value. Wells Fargo notes that Lennar alone is trading at 26 times 2013 consensus.

3) China-based Suntech Power, one of the largest makers of solar panels in the world, is filing for bankruptcy protection in China, citing inability to repay maturing debt. The company had defaulted on $541 million of its bonds due last week. Stockholders are wiped out (it's already a penny stock), and Chinese lenders will likely have priority over international lenders.

Solar panel manufacturers borrowed big to dramatically expand capacity several years ago; the result has been a glut of solar panels and a big drop in prices. A decline in government subsidies has also hurt.

Will the bankruptcy filing helped the industry's overcapacity? If the company simply restructures, and the Chinese government steps in and continues to provide liquidity, it's unlikely it will.

4) IPO Pricing: Model N (symbol "MODN"), which makes business software for life sciences and technology industries, increased the size and price of its initial public offering on the New York Stock Exchange, increasing the number of shares from 6.46 to 6.7 million shares, and pricing at $15.50 a share, above the price talk $12.50 to $14.50 a share.

5) JPMorgan's Thomas Lee took a victory lap on CNBC's "Squawk Box," saying there was a chance of a correction in the next few weeks, possibly in an uptick on jobless claims, and slower consumer spending due to higher gasoline prices, but it was a tepid endorsement. He readily conceded that if something doesn't happen in the next few weeks he would have to give up the idea of a correction happening at all.

Stock and bond ETFs associated with active trading saw heavy volumes and some withdrawals during October's turbulent market conditions, while investors put money into exchange traded funds that are more associated with buy and hold strategies.