By Carlos Guillen

Equity markets continue to demonstrate upside momentum, despite the fact that the gains have been minute. So far today, the Dow Jones Industrial Average is up barely half a percent, but these rather small increments are adding up. For the first three weeks of this year the Dow is up 3.8 percent, the Nasdaq is up 6.7 percent, and the S&P 500 is up 4.2 percent. While it is difficult to pin point the exact reason the market is up today, we believe investors are still encouraged by the possibility that China will loosen up liquidity and by the likelihood that Greece will work out a deal with private investors to accept the planned 50 percent write-down to the existing debt.

Earlier today, news from China in reference to the nation's purchasing managers' index was rather mixed. On the one hand the index showed a very slight improvement, increasing to 48.8 from 48.7, demonstrating an improving direction to the economy. On the other hand, given that the index is still below the 50 level implies that the Chinese economy is still in contraction mode for the third consecutive month. The one thing that is really encouraging for investors, however, is that the result still indicates that the slowing economy boosts the case for the government to further loosen credit controls, making stocks more attractive for the time being.

Switching to the European front, Greek officials and private creditors are meeting for a third day to seek agreement on a debt haircut of 50 percent. So far, the indications are that progress is slowly being made. This is encouraging given that both sides had seized negotiations last Friday the 13th and are now back on the negotiating table. A deal is extremely important at the moment if Greece is to receive the next tranche of the bailout funds it needs to meet its next debt repayment deadline in two months. If Greece were to fail to meet its over €14 billion debt repayment in March, it would be forced to default and likely be evicted from the euro-zone. Greece hopes to reach an agreement with its creditors before a Monday meeting of euro-zone finance ministers, who will be discussing their share of the new bailout for Greece.

Crossing west across the Atlantic, encouraging investors a bit were comments from the National Association of Realtors that said home sales rose 5 percent in December, the third straight monthly increase, more on this below.

At the moment the market is reaching resistance, with significant strength coming from the technology sector as giant players like IBM and Microsoft reported stronger earnings than analysts had expected, overshadowing the miss on earnings estimates by Google, which has the stock down over 8 percent. Nonetheless, Google's operating income increased 18 percent while its revenue jumped 25 percent, perhaps not good enough for analysts, but not indicative of a tumbling economy.

Microsoft Rises from the Ashes as Google Bombs
By David Urani

After a round of big-name tech earnings, I thought it was interesting to compare the difference between Microsoft (MSFT) and Google (GOOG). While their earnings are not 100% comparable, you can see where Microsoft is successfully adapting to some of the current developments in the tech market while Google is struggling. As far as their earnings went, their opposing fortunes were related to different factors. Yet, there have definitely been some clues that in general, Microsoft has its act together while Google does not. Just when you thought Microsoft was done and dusted, falling behind the likes of Google and Apple in all the new tech trends it comes back to prove that maybe it was a sleeping giant that's waking up.

It should have been a hint when Larry Page stepped in to take over for Eric Schmidt last year that something was amiss at Google. Yet on the other side of the coin Steve Ballmer, who many were thinking had overstayed his welcome, may have finally stepped up to deliver.

There's no question that Google is leading the pack on smartphone operating systems, as it even outpaces Apple on uptake. Yet, Google has failed to leverage its massive market share of mobile operating systems into solid profits. In fact, Microsoft's Windows mobile platform is more profitable, which can be attributable to patent awards that it is winning against Google's Android.

Then there's the search business. Some of the shortfall in Google's earnings can be linked to a higher usage of mobile search versus standard PC searches. Once again, Google has done well to win most of the market share in this arena, but the fact is mobile search ads don't yield as much profits as PC ads. Therefore, while ads are growing margins are shrinking. Again, Google has yet to figure out a way to drive significant profit growth out of mobile. On another note related to search, Google recently rolled out some changes which include search results linked to your social network, as well as a number of added widgets on the home page. The new features have initially run into some criticism and it will be interesting to see if users begin to switch to Microsoft's Bing.

Finally there's the intensifying battle for consumers' so-called living room. It's no secret anymore that the major tech Companies want to be involved in television (and overall entertainment). So far, you'd have to say that Microsoft is beating Google on this front. Whereas Google has struggled to sell its Google TV products, which have mostly flopped, Microsoft already enjoys a nice installed base of Xbox users. Microsoft has slowly been evolving the Xbox into an all-around entertainment machine rather than just a video game console. Microsoft's Hardware sales (mostly through Xbox) were up to $4.2 billion from $3.7 billion year over year. In recent months Microsoft has introduced television streaming content, along with existing offerings like Netflix, as the company continues the push to get households to cut their cable cords in favor of internet. We all know Apple will be rolling out some sort of i-TV soon that threatens to change the game and become the next big thing in tech, and right now I think Microsoft has the best chance of taking them on, rather than Google.

Existing Home Sales

More positive news from the housing sector, as 4.61 annual units for December increased by 5% month to month. The result was slightly below the 4.65 million consensus, but not enough to be an issue. The sales gains were spread across all the major regions, with the Northeast and Midwest being particularly strong. Overall, sales were at the highest level since last January.

The supply side is where I thought the report really stood out, as inventory fell by 9.2% month to month to 2.38 million units, or a 6.2 month supply. This is the lowest that months' supply has been since April 2006. Furthermore, the pricing indicators showed a modest increase after having slid for the past five months.