North American Investment Grade CDS Index 110.52 bps +1.86%
European Financial Sector CDS Index 134.11 bps +2.74%
Western Europe Sovereign Debt CDS Index 158.66 bps +1.71%
Emerging Market CDS Index 225.10 bps -.19%
2-Year Swap Spread 16.0 -2 bps
TED Spread 15.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .14% +1 bp
Yield Curve 203.0 -6 bps
China Import Iron Ore Spot $139.50/Metric Tonne unch.
Citi US Economic Surprise Index -11.70 -4.6 points.
10-Year TIPS Spread 1.82% +2 bps
Overseas Futures:
Nikkei Futures: Indicating -5 open in Japan
DAX Futures: Indicating -8 open in Germany
Portfolio:
Slightly Lower: On losses in my Tech and Ag long positions
Disclosed Trades: None
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite recent sharp equity gains, sovereign debt worries and more weak economic data. On the positive side, Retail, Semi, Gold and Steel shares are especially strong, rising 1.0%+. Growth stocks are outperforming value shares again. On the negative side, REIT, Wireless, Ag and Coal shares are under pressure, falling more than .75%. Small-caps are underperforming. (XLF) is also a bit heavy. Weekly retail sales rose +2.6% this week, which is the slowest pace since the week of May 4. Lumber is down another -2.97% today. The Euro Financial Sector CDS Index is up again today and is very near a technical breakout, which is a major negative. The Portugal sovereign cds is rising +4.10% to 435.0 bps and is close to a new record high. The Ireland sovereign cds is continuing its recent parabolic move higher, rising another +1.30% to a record of 485.10 bps and the Spain sovereign cds is gaining +2.29% to 234.29 bps. Furthermore, key credit default swap indices continue to move higher, even as equities trend higher, which is also a large negative. I still believe equity investors will continue to ignore these worrisome moves until they start to negatively impact the euro currency. Oil continues to trade poorly given recent equity and euro strength. The 10-year yield is down another -6 bps to 2.46% and is close to its 52-week low at 2.41%. The Shanghai Composite closed slightly below its 50-day moving average again last night and continues to trade poorly. The knee-jerk selling in (AAPL) shares on false rumors could be another red flag for the broad market. Investors continue to ignore most negative news items, which could be related to end-of-the-quarter positioning, but remains a large market positive for now. I expect US stocks to trade mixed-to-lower into the close from current levels on rising sovereign debt angst, profit-taking, more shorting, China concerns and increasing financial sector pessimism.
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