We start the week with S&P 500 just off its historic highs. With bank earnings season largely over, the main focus will turn to tech stocks today.
1)China's gross domestic product (GDP) growth was reasonably firm at 7.7 percent, though down from 7.8 percent in the fourth quarter. Retail sales for December were up 13.6 percent year over year, slightly below November but still solid. Industrial output was up 9.7 percent, down from up 10 percent in November.
The Shanghai Index was up 0.9 percent, largely because the People's Bank of China (PBOC) injected much-needed reserves into the monetary system, pushing interest rates down. Another sign of speculative trading in China: 7 of the 8 new IPOs had their first-day trading halted after climbing over 45% today.
2) Lenovo is up 2.7 percent in Hong Kong on word that it is in talks to acquire IBM's low-end x86 server hardware business. This is an excellent illustration of how the global tech food chain is working. IBM sold its PC business to Lenovo in 2005 when the margins got too thin. Now Lenovo is looking to diversify from its operations away from the PC business.
It's not because Lenovo has failed in the hardware business; by all accounts, it has done a fine job and even expanded margins. But PC sales are plunging worldwide. Selling low-end servers comes with the prospects of providing services to those customers (including maintenance), which might generate even better margins.
For its part, IBM is continuing with its strategy to shed low-margin businesses: first PCs, then printers.
One thing not clear is whether Lenovo will just buy the hardware, or will also buy the services that IBM currently sells to customers of its low end servers. That could complicate getting approval for the deal from U.S. regulators, since Lenovo is a Chinese company: much will depend on whether regulators rule that the company is selling technology critical to national security.
Lenovo is also making headway into the smartphone business, which it launched in 2010.
This isn't the first go-round on these negotiations; they were both in discussions almost a year ago, but the talks broke down over price, with Lenovo reportedly putting a valuation of $2.5 billion on the business.
IBM earnings after the close are important. They've missed the last couple times, and are probably primed for a "beat", as one trader noted to me.
—By CNBC's Bob Pisani