MORNING COFFEE

China Keeps Censoring. China is calling Google's (GOOG) bluff, and has shown no signs of altering its censorship policy despite Google's threat to pull out of the country. U.S. government officials have been wary of taking sides because of concerns the case could further damage already-tense U.S.-China relations, and tech rivals, despite some ongoing concerns about doing business in China, have failed to follow Google’s lead.

Foreclosures Hit Record High.  More than 2.8 million homeowners received a foreclosure notice in 2009, representing one in 45 households and setting a new record.  2009 saw +21% more foreclosures than there were in 2008, and more than double those from 2007. Despite the jump in foreclosures, home repossessions rose just +1.1% from 2008.

California Downgraded.  S&P downgraded California to A-minus with a negative outlook, as the state continues to face a multibillion-dollar budget gap and federal help seems increasingly unlikely. It now costs more to insure California municipal debt against default than to insure bonds issued by Kazakhstan.

Debt To Cause Dollar Crisis.  Having completed a two-year study, the Committee on the Fiscal Future of the United States is warning that a dollar crisis is likely unless the government raises taxes or cuts spending to drastically rein in its debt.

Economic data to be released today include: Initial claims (Consensus 436K), Continuing claims (Consensus 4750K), Retail sales (Consensus 0.5%), Retail sales ex-auto (Consensus 0.3%), Export prices ex-ag (Consensus NA), Export prices ex-oil (Consensus NA).

Sealy (ZZ) reported earnings of $0.02 which beat estimates by $0.01 on revenue of $332M +2% vs. $309 million.

Intel (INTC) is scheduled to report earnings after the close today.  Wall Street estimates are for the company to report earnings of $0.03 per share.

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   Futures: Dow flat. S&P -0.05%. Nasdaq -0.2%. Crude +0.2% to $79.81. Gold +0.2% to $1,138.50.

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   Asia, Nikkei +1.6% to 10,908. Hang Seng -0.15% to 21,717. Shanghai+1.35% to 3,216. BSE +0.4% to 17,585.

·  Europe at midday, London +0.4%. Paris +0.3%. Frankfurt +0.4%.