North American Investment Grade CDS Index 120.81 bps -1.0%
European Financial Sector CDS Index 137.85 bps -3.65%
Western Europe Sovereign Debt CDS Index 150.0 bps -1.2%
Emerging Market CDS Index 272.10 bps -1.3%
2-Year Swap Spread 36.0 -1 bp
TED Spread 37.0 unch.
Economic Gauges:
3-Month T-Bill Yield .16% unch.
Yield Curve 232.0 -4 bps
China Import Iron Ore Spot $128.0/Metric Tonne -3.18%
Citi US Economic Surprise Index -21.10 -1.2 points
10-Year TIPS Spread 1.72% -5 bps
Overseas Futures:
Nikkei Futures: Indicating -3 open in Japan
DAX Futures: Indicating -36 open in Germany
Portfolio:
Slightly Lower: On losses in my Biotech and Retail long positions
Disclosed Trades: Added to my (IWM)/(QQQQ) hedges, added to my (EEM) short
Market Exposure: Moved to 50% Net Long
BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 reverses morning gains and trades at session lows, despite a bounce in the euro, the market's oversold state, falling sovereign debt angst and a rally in overseas shares. On the positive side, Software and Coal stocks are relatively strong, rising 1.0%+. Copper is rising another +1.56% despite this morning's poor economic data, which is a positive. As well, the Spain sovereign cds is falling another -3.0% to 255.16 bps. On the negative side, REIT, Road & Rail, Restaurant, Hospital, Biotech, Drisk Drive, Paper, Gold and Oil Tanker shares are under meaningful pressure, falling 1.50%+. Small-cap and Cyclical stocks are underperforming. (IYR) has been heavy throughout the day, falling -2.4%, which is a large negative. Moreover, the Transports are very weak again today, falling another -1.4% to the lowest level since February. Despite improvements in some gauges of European credit angst, three-month euro Libor is rising another +1.3 basis points today to another multi-month high of 74.0 bps. The decline in the 10-year TIPS spread and the fall in the 10-year yield are also unwelcome at this point and indicate deflation worries continue to rise despite today's overseas stock rally and recent bounce in the euro. China Iron Ore Spot prices have now declined over -30% since April. Lumber looks like it is rolling over again, falling -4.5% today. Based on some of the investor angst gauges I follow, it appears too many may be positioned for the bounce higher I had expected, which is also a negative. I expect US stocks to trade mixed-to-lower into the close from current levels on technical selling, more shorting, rising economic fear and increasing real estate sector pessimism.
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