Stock futures dip after 5-year highs with data, earnings due

NEW YORK (Reuters) - U.S. stock index futures slipped on Monday after the S&P 500 hit a five-year high and the Dow rose above 14,000 last week as investors waited for factory orders data and another round of corporate earnings.

The benchmark S&P index <.spx> is up more than 6 percent for the year, with nearly half of the gains coming in the session after U.S. legislators successfully sidestepped the "fiscal cliff" of tax increases and spending cuts which threatened to derail the economic recovery.

The gains have left the index roughly 60 points away from its all-time intraday high of 1,576.09.

"We are coming off an economic data hangover from Friday and the market was on a bullish spree. This is an opportunity for investors to take advantage of the bull run," said Andre Bakhos, director of market analytics at Lek Securities in New York.

The Dow's march above 14,000 was the highest October 2007.

"With an early year run of better than 6 percent, investors are already behind in performance and pullbacks should be shallow and well contained, giving the underweighted investors the opportunity to move into equities."

Investors will look to December factory orders data for signs of economic improvement. Economists in a Reuters survey expect a rise of 2.2 percent compared with an unchanged reading in December.

Economic data has pointed to a modest U.S. recovery, but the data has not been strong enough to upset investor expectations the Federal Reserve will continue its stimulus policy that has buoyed stocks.

Earnings are due from a number of companies including Anadarko Petroleum Corp ; Yum! Brands Inc , owner of fast-food chains, and household products company Clorox .

S&P 500 futures fell 4.4 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 30 points, and Nasdaq 100 futures shed 7.75 points.

According to Thomson Reuters data, of the 239 companies in the S&P 500 that have reported earnings through Friday, 68 percent have reported earnings above analyst expectations compared with the 62 percent average since 1994 and the 65 percent average over the past four quarters.

S&P 500 fourth-quarter earnings are expected to rise 3.8 percent, according to the data. That estimate is above the 1.9 percent forecast at the start of earnings season, but well below the 9.9 percent fourth-quarter earnings forecast on October 1.

Japan Airlines Co Ltd said it will talk to Boeing Co about compensation for the grounding of the 787 Dreamliner, adding that the idling of its jets would cost it nearly $8 million from its earnings through to the end of March.

Chevron Corp dipped 0.9 percent to $115.47 in premarket trade after UBS cut its rating on the Dow component to "neutral.

European shares dipped by midday as a near-term risk of a technical sell-off and political uncertainty in the euro zone prompted a bout of profit taking with indexes hovering near multiyear highs. <.eu/>

Asian shares climbed to 18-month highs after U.S. data showed some promise of a credible recovery but not strong enough to threaten the Federal Reserve's easing plans, while momentum also gained on firmer manufacturing data from Europe and China.

(Reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama and Kenneth Barry)

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Attackers kill 33 at police HQ in disputed Iraqi city

KIRKUK, Iraq (Reuters) - At least 33 people were killed in the Iraqi city of Kirkuk on Sunday when a suicide bomber detonated a truck packed with explosives outside a police headquarters and gunmen disguised as officers tried to storm the compound.

The blast was the third major attack in weeks in or near the multiethnic city of Arabs, Kurds and Turkmen, at the heart of a dispute between Iraq's central government and the autonomous Kurdistan region.

Police said the bomber triggered the huge blast near a side entrance to the police building, demolishing part of a government office nearby.

"A suicide bomber driving a vehicle packed with explosives hit the entrance of the headquarters and after the blast gunmen in explosive vests attacked with AK47s and grenades, but the guards killed them," a police official said.

Guards and emergency workers dragged bloodied survivors onto stretchers amid the wreckage of the blast, which left a large crater in the street.

Police said 33 were killed, including 12 employees at the government office. But a health official said only 16 bodies were at a hospital morgue and more than 90 were wounded.

The attack comes as insurgents linked to al Qaeda try to inflame sectarian conflict in Iraq, where a power-sharing government split among Shi'ite majority, Sunni and ethnic Kurds has been in crisis since the last U.S. troops left a year ago.

"TWO-FRONT" CRISIS

Shi'ite Prime Minister Nuri al-Maliki is facing mass protests from Sunni Muslims in western provinces calling for him to step down, complaining of marginalization since the fall of Saddam Hussein.

In the north, the premier is also caught in a tense standoff with the country's autonomous Kurdish enclave over control of oil wealth and land along the so-called "disputed territories" where both regions claim control.

Kirkuk, 170 km (100 miles) north of the capital, is at the heart of the dispute. Last year Baghdad and the Kurdistan regional government sent rival forces to towns close to the disputed territories.

Several armed groups are active in Kirkuk, and Sunni Islamist insurgents linked to al Qaeda often attack security forces in an attempt to undermine Maliki's government and stoke sectarian tensions.

Al Qaeda's local wing, Islamic State of Iraq, though weakened after years of war with American troops, has benefited from the inflow of Sunni Islamists and arms into Syria where Sunni rebels are fighting President Bashar al-Assad.

Suicide bomb attacks are the hallmark of the Iraqi al Qaeda wing, and the group claimed responsibility for a suicide bombing that killed a Sunni lawmaker last month in Falluja.

But Kirkuk has also been home to the Naqshbandi army or JRTN, one of several insurgent groups made up of former soldiers and members of Saddam's outlawed Baath party.

Iraqi Arabs, Kurdistan's government and Kirkuk's minority Turkmen all lay claim to the city, known to some as the "Jerusalem of the Kurds" - a reference to its historically disputed status.

Last month a suicide bomber disguised as a mourner killed at least 26 at a funeral at a Shi'ite mosque in the nearby city of Tuz Khurmato, and days earlier a suicide bomber driving a truck killed 25 in an attack on a political party office in Kirkuk.

The level of violence in Iraq is lower than at the height of sectarian slaughter in 2006-2007, when tens of thousands died. But more than 4,400 people were killed last year in attacks and bombings, the first increase in deaths in three years.

(Additional reporting by Omar Mohammed in Kirkuk and Ahmed Rasheed in Baghdad; Writing by Patrick Markey; Editing by Andrew Roche)

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China May (or May Not) Be Behind the Twitter Hack

You may not have heard, but roughly 250,000 Twitter accounts may have been compromised by hackers. There’s a theory that — if you read between the lines — Twitter is implying the Chinese are to blame for compromising their security. 

RELATED: The Chinese Want to Know Why Their News Is on Twitter and They Aren’t

Twitter revealed that roughly a quarter million accounts may have been compromised by hackers in a blog post Friday evening. (A classic Friday evening news dump if there ever was one; they got a $ 10 billion valuation the same day.) 

RELATED: A Punk Prince, Women in the Military, a New Tennis Controversy

Bandits might have made away with “usernames, email addresses, session tokens and encrypted/salted versions of passwords – for approximately 250,000 users.” They think. A Twitter representative stressed to the Verge that they’re still investigating; there’s a chance we’re all safe. 

RELATED: World Languages Mapped by Twitter

But was China behind it all?! That’s an emerging theory. We don’t know who was behind it. Twitter doesn’t say directly. None of the usual suspects have claimed ownership of the attack. (Yet.)

RELATED: The Good, the Bad, and the Fuzzy of Twitter’s New Censorship Rules

But Twitter mentions the New York Times and Wall Street Journal hacks in their opening paragraph, apropos of nothing, really. It could mean the company was just trying to show they’re not alone in being targeted — look at these bullies picking on these other kids, too. Or it could mean they’re subtly implying China is behind it all. 

RELATED: Did the Berlin Wall’s Fall Save China?

The last paragraph in Twitter’s statement is where the theory really gets its legs. Emphasis ours: 

This attack was not the work of amateurs, and we do not believe it was an isolated incident. The attackers were extremely sophisticated, and we believe other companies and organizations have also been recently similarly attacked. For that reason we felt that it was important to publicize this attack while we still gather information, and we are helping government and federal law enforcement in their effort to find and prosecute these attackers to make the Internet safer for all users. 

So, did they do it? These sophisticated hackers who targeted other companies and organizations sure sounds like they’re implying it was China.

Was it China in the basement with the Cheetos and Red Bull and impressive coding skill? We don’t know for sure, but we’re definitely looking for any and every clue we can find. 

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Busy Philipps Feels No Pressure to Bounce Back After Baby

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Busy Philipps may be willing to dish out style advice to fellow expectant mamas — but she’s not about to start breaking out the postpartum weight loss lectures.

Currently pregnant with her second child, the Cougar Town star admits that while her celebrity status opens her up for public scrutiny, she’s not planning a big bounceback after baby.

“Like most things in this business, I think that you have to do what’s right for you and you can’t be too concerned about what some magazine is going to write about you,” Philipps, 33, tells HuffPost Celebrity.

“We’re in a business where a lot of people are blessed with pretty incredible bodies, that they work hard for or comes naturally, and not everybody has the same body.”

According to Philipps, staying healthy is priority during pregnancy and women “should be given a break” when it comes to packing on the extra pounds — especially by those dubious doctors!

“It’s interesting when people make comments about celebrities’ weight gain or lack of weight gain as if they’re a medical professional that’s treating that celebrity,” she notes. “Like, ‘This doctor does not treat Jessica Simpson, but thinks her weight is unhealthy.’ If you don’t treat her, then how do you know?”

After the arrival of daughter Birdie Leigh, now 4, the actress took her time regaining her post-baby bod — a journey, she says, lasted almost a year — preferring to instead instill a positive attitude (and approach) in her little girl.

“I wanted to be healthy for her and have a healthy body image so that she hopefully grows up to see that her self worth isn’t defined by how thin she is,” Philipps explains.

“Thrilled to be expecting another baby with husband Marc Silverstein, Philipps wasn’t sure if expanding their tight-knit trio was even in the cards for the couple. No one, however, was more ecstatic over the news than the big sister-to-be, whose wish is finally coming true.

“My daughter is very excited … it’s actually something that she has asked for for quite some time,” she says. “My husband and I were on the fence about whether or not we were going to add to our family, but now that we’re on our road, we’re really excited.”

– Anya Leon

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"Great Rotation"- A Wall Street fairy tale?

NEW YORK (Reuters) - Wall Street's current jubilant narrative is that a rush into stocks by small investors has sparked a "great rotation" out of bonds and into equities that will power the bull market to new heights.

That sounds good, but there's a snag: The evidence for this is a few weeks of bullish fund flows that are hardly unusual for January.

Late-stage bull markets are typically marked by an influx of small investors coming late to the party - such as when your waiter starts giving you stock tips. For that to happen you need a good story. The "great rotation," with its monumental tone, is the perfect narrative to make you feel like you're missing out.

Even if something approaching a "great rotation" has begun, it is not necessarily bullish for markets. Those who think they are coming early to the party may actually be arriving late.

Investors pumped $20.7 billion into stocks in the first four weeks of the year, the strongest four-week run since April 2000, according to Lipper. But that pales in comparison with the $410 billion yanked from those funds since the start of 2008.

"I'm not sure you want to take a couple of weeks and extrapolate it into whatever trend you want," said Tobias Levkovich, chief U.S. equity strategist at Citigroup. "We have had instances where equity flows have picked up in the last two, three, four years when markets have picked up. They've generally not been signals of a continuation of that trend."

The S&P 500 rose 5 percent in January, its best month since October 2011 and its best January since 1997, driving speculation that retail investors were flooding back into the stock market.

Heading into another busy week of earnings, the equity market is knocking on the door of all-time highs due to positive sentiment in stocks, and that can't be ignored entirely. The Standard & Poor's 500 Index <.spx> ended the week about 4 percent from an all-time high touched in October 2007.

Next week will bring results from insurers Allstate and The Hartford , as well as from Walt Disney , Coca-Cola Enterprises and Visa .

But a comparison of flows in January, a seasonal strong month for the stock market, shows that this January, while strong, is not that unusual. In January 2011 investors moved $23.9 billion into stock funds and $28.6 billion in 2006, but neither foreshadowed massive inflows the rest of that year. Furthermore, in 2006 the market gained more than 13 percent while in 2011 it was flat.

Strong inflows in January can happen for a number of reasons. There were a lot of special dividends issued in December that need reinvesting, and some of the funds raised in December tax-selling also find their way back into the market.

During the height of the tech bubble in 2000, when retail investors were really embracing stocks, a staggering $42.7 billion flowed into equities in January of that year, double the amount that flowed in this January. That didn't end well, as stocks peaked in March of that year before dropping over the next two-plus years.

MOM AND POP STILL WARY

Arguing against a 'great rotation' is not necessarily a bearish argument against stocks. The stock market has done well since the crisis. Despite the huge outflows, the S&P 500 has risen more than 120 percent since March 2009 on a slowly improving economy and corporate earnings.

This earnings season, a majority of S&P 500 companies are beating earnings forecast. That's also the case for revenue, which is a departure from the previous two reporting periods where less than 50 percent of companies beat revenue expectations, according to Thomson Reuters data.

Meanwhile, those on the front lines say mom and pop investors are still wary of equities after the financial crisis.

"A lot of people I talk to are very reluctant to make an emotional commitment to the stock market and regardless of income activity in January, I think that's still the case," said David Joy, chief market strategist at Columbia Management Advisors in Boston, where he helps oversee $571 billion.

Joy, speaking from a conference in Phoenix, says most of the people asking him about the "great rotation" are fund management industry insiders who are interested in the extra business a flood of stock investors would bring.

He also pointed out that flows into bond funds were positive in the month of January, hardly an indication of a rotation.

Citi's Levkovich also argues that bond investors are unlikely to give up a 30-year rally in bonds so quickly. He said stocks only began to see consistent outflows 26 months after the tech bubble burst in March 2000. By that reading it could be another year before a serious rotation begins.

On top of that, substantial flows continue to make their way into bonds, even if it isn't low-yielding government debt. January 2013 was the second best January on record for the issuance of U.S. high-grade debt, with $111.725 billion issued during the month, according to International Finance Review.

Bill Gross, who runs the $285 billion Pimco Total Return Fund, the world's largest bond fund, commented on Twitter on Thursday that "January flows at Pimco show few signs of bond/stock rotation," adding that cash and money markets may be the source of inflows into stocks.

Indeed, the evidence suggests some of the money that went into stock funds in January came from money markets after a period in December when investors, worried about the budget uncertainty in Washington, started parking money in late 2012.

Data from iMoneyNet shows investors placed $123 billion in money market funds in the last two months of the year. In two weeks in January investors withdrew $31.45 billion of that, the most since March 2012. But later in the month money actually started flowing back.

(Additional reporting by Caroline Valetkevitch; Editing by Kenneth Barry)

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Spain's Rajoy says corruption allegations are false

MADRID (Reuters) - Spanish Prime Minister Mariano Rajoy strongly denied on Saturday allegations in the media that he and other leaders of his centre-right People's Party had for years received payments out of a secret slush fund.

"I need only two words: it's false," Rajoy said in a televised address after an extraordinary meeting of party leaders to discuss the allegations.

Rajoy welcomed a full investigation into the affair and said that the party would be fully transparent and that he would publish on the internet all of his tax declarations to clear up the scandal.

Last week El Pais newspaper published extracts from what it said were ledgers maintained by party treasurers to register cash contributions from business leaders that were then distributed to party leaders.

"It is not true that we (in this party) received cash that we hid from tax officials," Rajoy said in the brief speech. He did not take questions from the media.

Dozens of police in riot gear guarded PP headquarters in central Madrid on Saturday, cutting off neighboring streets. A small gathering of demonstrators shouted "resign" outside the building after several hundred people protested there on Thursday and Friday nights.

The growing scandal over alleged cash payments to People's Party leaders from a slush fund fed by construction industry executives has damaged Rajoy's credibility during a profound economic crisis in Spain.

Both right-leaning El Mundo newspaper and left-leaning El Pais have reported details of the scandal, citing sources within the PP and copies of the alleged secret accounts kept by party treasurers.

Rajoy, 57, has asked Spaniards for sacrifices as he slashes spending to trim a dangerously high public deficit that last year threatened to bankrupt the state and force him to seek a humiliating international bailout.

His popularity has plummeted during his 13 months in office as his austerity measures aggravate a deep recession and 26 percent unemployment.

The PP has an absolute majority in Parliament and so far the party has not shown signs of a split that would allow opponents to carry a vote of no confidence.

The PP has already said it will commission an external audit of its accounts.

The anti-corruption prosecutor's office said on Friday it is investigating the alleged payments. If the prosecutor finds evidence of a crime he will make a report to Spain's High Court, which will then decide whether it opens a judicial investigation, the first step to a possible criminal trial.

(Additional reporting by Iciar Reinlein and Rodrigo de Miguel; Writing by Fiona Ortiz)

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Netflix CEO fights for the right to post company milestones on Facebook

It may not seem like the most pressing matter in an era of massive financial scandals, but the Securities and Exchange Commission has decided to go after Netflix (NFLX) CEO Reed Hastings for posting information about Netflix company milestones on his Facebook (FB) page. According to Bloomberg, the SEC believes that Hastings’ Facebook post, which announced that Netflix users had watched more than 1 billion hours of content over the company’s streaming service, may have violated regulations requiring that such information must be disclosed “through a press release on a widely disseminated news or wire service, or by ‘any other non-exclusionary method’ that provides broad public access.” 

[More from BGR: BlackBerry doesn’t need to catch up with Android and iOS overnight, it needs to live to fight another day]

But despite being served with a Wells Notice for the post late last year, Bloomberg reports Hastings isn’t backing down from his belief that he has the right to share this kind of company information over Facebook.

[More from BGR: New leak details two more unannounced HTC smartphones]

“I wasn’t setting out to set an example,” Hastings told Bloomberg this week. “I was sharing something to these 200,000 people [who follow his Facebook feed]. I’m not going to back down and say it’s inappropriate. I think it’s perfectly fine. Sometimes you’re just the example that triggers the debate.”

Bloomberg notes that after the SEC sent a Wells Notice to Hastings, there have been “calls for the SEC to broaden its rules to allow social media such as Facebook and Twitter to be used to communicate to investors.”

This article was originally published on BGR.com

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Jenna Miscavige Hill Pens Revealing Scientology Book

02/01/2013 at 08:00 PM EST

Jenna Miscavige and her uncle David inset

Michael Murphree; Inset: Polaris

What was it like to grow up inside Sea Org, the Church of Scientology's most elite body?

In her memoir Beyond Belief, excerpted exclusively below, Jenna Miscavige Hill describes her experiences at the Ranch, a San Jacinto, Calif., boarding school for children of Scientology execs. The niece of church head David Miscavige, she was raised away from her parents, then worked within Sea Org until leaving Scientology in 2005.

Now living near San Diego, married to Dallas Hill and mom to their children Archie, 3, and Winnie, 10 months, she's telling her story, she says, to increase awareness about Scientology: "I realize every day how lucky I am to have gotten out." (When asked to comment on the book's portrayal of its members, the church stated they had not read the book but that "any allegations of neglect are blatantly false.")

Jenna's parents, Ron and Blythe Miscavige, high-ranking members of Sea Org, sent both Jenna and her older brother Justin to the Ranch. There, at age 7, in accordance with Scientologists' belief that they are "Thetans," or immortal spirits, Jenna signed a billion-year contract.

I tried to write my name in my best cursive, the way I'd been learning. I had goose bumps. Just like that, I committed my soul to a billion years of servitude to the Church of Scientology.

Sea Org was run like the Navy: Members wore uniforms and managed all aspects of the church. Married members couldn't have kids; those who already did sent them to be raised communally.

A Sea Org member was required to be on duty for at least 14 hours a day, seven days a week, with a break for an hour of 'family time.' I was too young to understand that seeing your parents only one hour a day was highly unusual.

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New rules aim to get rid of junk foods in schools

WASHINGTON (AP) — Most candy, high-calorie drinks and greasy meals could soon be on a food blacklist in the nation's schools.

For the first time, the government is proposing broad new standards to make sure all foods sold in schools are more healthful.

Under the new rules the Agriculture Department proposed Friday, foods like fatty chips, snack cakes, nachos and mozzarella sticks would be taken out of lunch lines and vending machines. In their place would be foods like baked chips, trail mix, diet sodas, lower-calorie sports drinks and low-fat hamburgers.

The rules, required under a child nutrition law passed by Congress in 2010, are part of the government's effort to combat childhood obesity. While many schools already have improved their lunch menus and vending machine choices, others still are selling high-fat, high-calorie foods.

Under the proposal, the Agriculture Department would set fat, calorie, sugar and sodium limits on almost all foods sold in schools. Current standards already regulate the nutritional content of school breakfasts and lunches that are subsidized by the federal government, but most lunchrooms also have "a la carte" lines that sell other foods. Food sold through vending machines and in other ways outside the lunchroom has never before been federally regulated.

"Parents and teachers work hard to instill healthy eating habits in our kids, and these efforts should be supported when kids walk through the schoolhouse door," Agriculture Secretary Tom Vilsack said.

Most snacks sold in school would have to have less than 200 calories. Elementary and middle schools could sell only water, low-fat milk or 100 percent fruit or vegetable juice. High schools could sell some sports drinks, diet sodas and iced teas, but the calories would be limited. Drinks would be limited to 12-ounce portions in middle schools and to 8-ounce portions in elementary schools.

The standards will cover vending machines, the "a la carte" lunch lines, snack bars and any other foods regularly sold around school. They would not apply to in-school fundraisers or bake sales, though states have the power to regulate them. The new guidelines also would not apply to after-school concessions at school games or theater events, goodies brought from home for classroom celebrations, or anything students bring for their own personal consumption.

The new rules are the latest in a long list of changes designed to make foods served in schools more healthful and accessible. Nutritional guidelines for the subsidized lunches were revised last year and put in place last fall. The 2010 child nutrition law also provided more money for schools to serve free and reduced-cost lunches and required more meals to be served to hungry kids.

Sen. Tom Harkin, D-Iowa, has been working for two decades to take junk foods out of schools. He calls the availability of unhealthful foods around campus a "loophole" that undermines the taxpayer money that helps pay for the healthier subsidized lunches.

"USDA's proposed nutrition standards are a critical step in closing that loophole and in ensuring that our schools are places that nurture not just the minds of American children but their bodies as well," Harkin said.

Last year's rules faced criticism from some conservatives, including some Republicans in Congress, who said the government shouldn't be telling kids what to eat. Mindful of that backlash, the Agriculture Department exempted in-school fundraisers from federal regulation and proposed different options for some parts of the rule, including the calorie limits for drinks in high schools, which would be limited to either 60 calories or 75 calories in a 12-ounce portion.

The department also has shown a willingness to work with schools to resolve complaints that some new requirements are hard to meet. Last year, for example, the government relaxed some limits on meats and grains in subsidized lunches after school nutritionists said they weren't working.

Schools, the food industry, interest groups and other critics or supporters of the new proposal will have 60 days to comment and suggest changes. A final rule could be in place as soon as the 2014 school year.

Margo Wootan, a nutrition lobbyist for the Center for Science in the Public Interest, said surveys by her organization show that most parents want changes in the lunchroom.

"Parents aren't going to have to worry that kids are using their lunch money to buy candy bars and a Gatorade instead of a healthy school lunch," she said.

The food industry has been onboard with many of the changes, and several companies worked with Congress on the child nutrition law two years ago. Major beverage companies have already agreed to take the most caloric sodas out of schools. But those same companies, including Coca-Cola and PepsiCo, also sell many of the non-soda options, like sports drinks, and have lobbied to keep them in vending machines.

A spokeswoman for the American Beverage Association, which represents the soda companies, says they already have greatly reduced the number of calories that kids are consuming at school by pulling out the high-calorie sodas.

___

Follow Mary Clare Jalonick on Twitter at http://twitter.com/mcjalonick

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"Great Rotation"- A Wall Street fairy tale?

NEW YORK (Reuters) - Wall Street's current jubilant narrative is that a rush into stocks by small investors has sparked a "great rotation" out of bonds and into equities that will power the bull market to new heights.

That sounds good, but there's a snag: The evidence for this is a few weeks of bullish fund flows that are hardly unusual for January.

Late-stage bull markets are typically marked by an influx of small investors coming late to the party - such as when your waiter starts giving you stock tips. For that to happen you need a good story. The "great rotation," with its monumental tone, is the perfect narrative to make you feel like you're missing out.

Even if something approaching a "great rotation" has begun, it is not necessarily bullish for markets. Those who think they are coming early to the party may actually be arriving late.

Investors pumped $20.7 billion into stocks in the first four weeks of the year, the strongest four-week run since April 2000, according to Lipper. But that pales in comparison with the $410 billion yanked from those funds since the start of 2008.

"I'm not sure you want to take a couple of weeks and extrapolate it into whatever trend you want," said Tobias Levkovich, chief U.S. equity strategist at Citigroup. "We have had instances where equity flows have picked up in the last two, three, four years when markets have picked up. They've generally not been signals of a continuation of that trend."

The S&P 500 rose 5 percent in January, its best month since October 2011 and its best January since 1997, driving speculation that retail investors were flooding back into the stock market.

Heading into another busy week of earnings, the equity market is knocking on the door of all-time highs due to positive sentiment in stocks, and that can't be ignored entirely. The Standard & Poor's 500 Index <.spx> ended the week about 4 percent from an all-time high touched in October 2007.

Next week will bring results from insurers Allstate and The Hartford , as well as from Walt Disney , Coca-Cola Enterprises and Visa .

But a comparison of flows in January, a seasonal strong month for the stock market, shows that this January, while strong, is not that unusual. In January 2011 investors moved $23.9 billion into stock funds and $28.6 billion in 2006, but neither foreshadowed massive inflows the rest of that year. Furthermore, in 2006 the market gained more than 13 percent while in 2011 it was flat.

Strong inflows in January can happen for a number of reasons. There were a lot of special dividends issued in December that need reinvesting, and some of the funds raised in December tax-selling also find their way back into the market.

During the height of the tech bubble in 2000, when retail investors were really embracing stocks, a staggering $42.7 billion flowed into equities in January of that year, double the amount that flowed in this January. That didn't end well, as stocks peaked in March of that year before dropping over the next two-plus years.

MOM AND POP STILL WARY

Arguing against a 'great rotation' is not necessarily a bearish argument against stocks. The stock market has done well since the crisis. Despite the huge outflows, the S&P 500 has risen more than 120 percent since March 2009 on a slowly improving economy and corporate earnings.

This earnings season, a majority of S&P 500 companies are beating earnings forecast. That's also the case for revenue, which is a departure from the previous two reporting periods where less than 50 percent of companies beat revenue expectations, according to Thomson Reuters data.

Meanwhile, those on the front lines say mom and pop investors are still wary of equities after the financial crisis.

"A lot of people I talk to are very reluctant to make an emotional commitment to the stock market and regardless of income activity in January, I think that's still the case," said David Joy, chief market strategist at Columbia Management Advisors in Boston, where he helps oversee $571 billion.

Joy, speaking from a conference in Phoenix, says most of the people asking him about the "great rotation" are fund management industry insiders who are interested in the extra business a flood of stock investors would bring.

He also pointed out that flows into bond funds were positive in the month of January, hardly an indication of a rotation.

Citi's Levkovich also argues that bond investors are unlikely to give up a 30-year rally in bonds so quickly. He said stocks only began to see consistent outflows 26 months after the tech bubble burst in March 2000. By that reading it could be another year before a serious rotation begins.

On top of that, substantial flows continue to make their way into bonds, even if it isn't low-yielding government debt. January 2013 was the second best January on record for the issuance of U.S. high-grade debt, with $111.725 billion issued during the month, according to International Finance Review.

Bill Gross, who runs the $285 billion Pimco Total Return Fund, the world's largest bond fund, commented on Twitter on Thursday that "January flows at Pimco show few signs of bond/stock rotation," adding that cash and money markets may be the source of inflows into stocks.

Indeed, the evidence suggests some of the money that went into stock funds in January came from money markets after a period in December when investors, worried about the budget uncertainty in Washington, started parking money in late 2012.

Data from iMoneyNet shows investors placed $123 billion in money market funds in the last two months of the year. In two weeks in January investors withdrew $31.45 billion of that, the most since March 2012. But later in the month money actually started flowing back.

(Additional reporting by Caroline Valetkevitch; Editing by Kenneth Barry)

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