10 Things You Need To Know Before The Opening Bell

Good morning. Here's what you need to know.

Fuel cell stocks going crazy in pre-market trading. Fuel cell stocks continue their surge this morning in pre-market trading following FuelCell Energy's announcement of quarterly earnings results. The company's loss of $0.06 per share was slightly worse than expected, but it reported revenues of $44.4 million, topping analysts' $43.4 million consensus estimate. FCEL is trading up over 18% on the news.

Small business optimism tumbles. NFIB's Small Business Optimism Index fell to 91.4 in February from 94.1 in January. The consensus forecast of market economists predicted a smaller moderation to 93.8. "Small business optimism continues its winter hibernation with the latest Index dropping 2.7 points to 91.4, a reading that historically has been associated with recessions and periods of sub-par growth," said Bill Dunkelberg, chief economist at NFIB, in a press release. "The one highlight in the January survey, a surge in hiring plans, was crushed in February by the continued onslaught of a wintry recovery now in its 5th year."

Markets are quiet. S&P 500 and U.S. Treasury futures are pointing to an unchanged open. Gold is up a bit, trading around $1348 an ounce. The German DAX and the Italian FTSE MIB are up, but most other European indices are in the red. Overnight, the Japanese Nikkei 225 rose 0.7% and Chinese indices eked out gains.

Nothing from the BoJ. The Bank of Japan elected to refrain from introducing any new policy measures at the conclusion of its latest meeting on monetary policy, as expected, and the U.S. dollar is unchanged against the Japanese yen this morning. "The assessments of the economy in the statement were marginally changed, upgrading those on the fixed investments and the industrial productions slightly while downgrading the one on the exports," says Osamu Takashima, a strategist at Citi. "All in all, the positive tone in the assessments is unchanged, which justifies the Bank's conservative stance toward additional measures. Our economists in Tokyo see a 80% possibility of the next action at the June or July meetings while also seeing a 20% risk at the April meeting, after the consumption tax hike."

Mobile price wars. In an interview with Charlie Rose, SoftBank tycoon Masayoshi Son said he wanted to buy T-Mobile's U.S. unit and engage in a price war with wireless carriers AT&T and Verizon. SoftBank already owns a controlling stake in Sprint. "If I can have the real fight, I go in a more massive price war," said Son. "I want to be number one. So if we are number three, and if we have enough chance, I want to be number one. So I would go to price competition, very much aggressively."

German surpluses. Germany recorded a 16.2 billion euro current account surplus in January, down from December's 21.1 billion euro surplus but above consensus estimates of a 15.3 billion euro surplus. German exports rose 2.2% and imports rose 4.1% - both above expectations - narrowing Germany's trade surplus to 17.2 billion euros from 18.3 billion euros.

Final read on Italian GDP. Revised data released today revealed that Italian GDP rose 0.1% on a work-day adjusted basis in the fourth quarter of 2013, in line with previous official and market estimates. Year-over-year GDP growth, however, was revised down to -0.9% from -0.8%.

Muted U.K. industrial production. U.K. industrial production rose 0.1% from the previous month in January, marking a slowdown from December's 0.5% pace of expansion and missing estimates for a 0.2% gain. The year-over-year rate of industrial output growth was 2.9%, also slightly below consensus estimates. "The floods are thought to have distorted the data, but the take away is that the U.K. is still enjoying relatively robust economic activity," says Marc Chandler, global head of currency strategy at Brown Brothers Harriman. "Several BoE officials testify before the parliament, but their general stance is known, and barring a surprise, is unlikely to change the market's direction."

Second-tier U.S. economic data. There are no major releases on the U.S. economic data calendar today. However, the U.S. Bureau of Labor Statistics will release the results of the latest Job Openings and Labor Turnover Survey - a favorite metric of new Fed chair Janet Yellen's - at 10 AM ET. January wholesale inventories data are also out at 10 AM.

Mid-month supply calendar begins. The U.S. Treasury will auction $30 billion of 3-year notes today at 1 PM ET. "With some short covering around/after the stronger-than-expected U.S. jobs number, positioning should be cleaner, and given supply-related concession, the UST market may get biased lower in this relatively data-light week," say Nomura interest rate strategists. "Given all but one of the 3-year auctions since last July have come through the 1 PM mark, we expect this auction to go well, especially given lingering geopolitical uncertainties."

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Below is a Q&A with Russ Certo, head of rates at Brean Capital.

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BUSINESS INSIDER: What is one big story in the bond market that no one seems to be talking about?

RUSS CERTO: In a relative sense, I suspect the market is critically gauging the prospective quantity, scope, and timing of tapering of the Federal Reserve's asset purchases. However, I think there could be ultimately significantly more meaning and value in fully and accurately anticipating the more vexing challenges and relevance of fine-tuning its forward guidance. Aspects related to the scope of the taper are likely to be technical. Forward guidance evolution will likely have a more qualitative relevance to markets. A focus on the latter and the evolution of the ultimate Fed message will have impacts not only on global equity, foreign exchange, commodity and interest rate and credit valuations, but also on volatility in these markets.

BI: How are investors approaching the current yield spread between U.S. Treasuries and German Bunds, which just hit a fresh 8-year high?

RC: There is good reason to believe that there are significant capital inflows into European sovereign bonds from the Pacific Rim recently. In fact, not only have the underlying bonds rallied, but the euro is making a 2-year high at the moment as diversified reserves globally are making their way back to euroland for a variety of direct foreign investment purposes. Some monies may also be diversifying as the Federal Reserve has embarked upon a tapering of asset purchases, a tacit indication of confidence in the underlying economy and/or removal of extreme crisis-era monetary policy measures. Both interest rates and currency values also reflect a disconnect of market expectations, and many investors globally were likely underweighted both complexes.

BI: The February nonfarm payrolls report revealed signs of acceleration in wage growth. Meanwhile, food prices are surging. Is the TIPS market respecting the risks of increased inflation?

RC: I acknowledge your observation, which I have called "a tale of two markets." The TIPS market has been stubborn in reflecting some of the volatility which we have seen in other commodity and capital markets. For a quick tally, coffee has surged by 78% this year, cattle prices are making all-time highs, lean hogs are up 25% in the year to date, and this has extended to sugar, corn, soybeans, cotton, and even orange juice - something we pointed out in the softs a few commentaries back. I'm sure more than a few have been looking at their natural gas bills, as the futures are up 15% in the year to date, or even gas prices at the pump (over $4 a gallon in the United States). Precious metals have also percolated and are seeing significant real demand globally versus more financial market position liquidation. Trading any of these is not for the faint of heart, and there does seem to be a disconnect - or decoupling - between the nominal performance of TIPS versus general risk assets and those represented by the inflation complex.

BI: To the extent that weather distortions are still weighing on yields, when do you think the market will start to move past that?

RC: I think the market HAS, to some extent, shrugged off bad weather effects, as interest rates increased by near 20 basis points last week, partially as an interpretation of economic data, ex-weather effects. Historically, weather effects which have adversely impacted demand side activity and consumption have proven to ultimately spur pent-up demand. I can't wait until spring myself - or next year's or quarter's comparison to a bevy of economic statistics adversely impacted by wintry weather. As a glaring example, Janet Yellen even gave lip service to these "transitional" impacts, and the most recent Federal Reserve Beige Book tally of economic activity cited weather 119 separate times.

BI: Which developments in global financial markets would you flag as most concerning for the bond market right now?

RC: All markets are going to have to accurately, as always, interpret the incrementalism and "tea leaves" of central bank policy changes. Some have introduced the concept of "owning the tails" - or tail risk of markets - in case of a material surprise relative to expectations in either dovish or hawkish expressions from the central bank community, or real demand shocks, or meaningful acceleration in economic fundamentals. There is some empirical analysis which would suggest moderate gains in domestic equity markets again this year to follow last year's outsized gains. I suppose that if the real economy weans itself off of enormous amounts of fiscal and monetary stimulus and returns to real economic allocation of resources that the economy and markets can handle the passing of the policy baton. Allowing businesspersons to make real decisions without being encumbered with the uncertainty of policy distortions can be a powerful metric to deploy all the cash sitting on the sidelines. Growth for the right reasons. However, markets will have to balance record amounts of margin credit, historically tight credit spreads, and elevated valuations of most risk assets globally. Transitioning from artificial imbalances to real activity is the very thin line that policymakers and markets will have to walk.