North American Investment Grade CDS Index 99.16 bps +1.23%
European Financial Sector CDS Index 113.40 bps -.03%
Western Europe Sovereign Debt CDS Index 149.83 bps -1.43%
Emerging Market CDS Index 202.02 bps -1.21%
2-Year Swap Spread 17.0 unch.
TED Spread 17.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .11% unch.
Yield Curve 203.0 +1 bp
China Import Iron Ore Spot $144.10/Metric Tonne +.07%
Citi US Economic Surprise Index .80 +1.3 points.
10-Year TIPS Spread 1.92% -2 bps
Overseas Futures:
Nikkei Futures: Indicating -29 open in Japan
DAX Futures: Indicating +6 open in Germany
Portfolio:
Slightly Higher: On gains in my Tech and Biotech long positions
Disclosed Trades: Added to my (SXCI) long, took profits in another long
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades slightly lower despite better economic data and better action in the tech sector. On the positive side, HMO, Disk Drive, Computer, Software and Alt Energy shares are especially strong, rising 1.0%+. Small-caps are outperforming. (IYR) has traded relatively well throughout the day. The S&P GSCI Ag Spot index is surging, rising +1.96%. Gold put in a reversal today and is down -.8%. The Spain sovereign cds is falling -1.05% to 227.96 bps and the Portugal cds is declining -1.07% to 401.42 bps. On the negative side, Education, Paper, Steel and Gold shares are under meaningful pressure, falling more than 1.5%. Copper is declining -2.22% and the 10-year yield is flat despite the drop in jobless claims. The Greece sovereign cds is rising +1.23% to 768.90 bps. Investor angst is fairly elevated today given the mixed performance in the major averages, which is a big positive ahead of tomorrow's jobs report. (ADBE) is soaring +7.66% on (MSFT) buyout speculation, which is also a broad market positive. The bears were once again unable to gain traction on a significant morning reversal lower in stocks. I would characterize today's overall action as another healthy consolidation day after recent gains. A poor jobs report tomorrow would likely initially result in equity weakness, however QE-2 odds would jump again, which could boost stocks later in the day. A positive report may have the same result as QE-2 odds would fall substantially, which could initially hurt stocks. However, by day's end a positive number would likely be viewed favorably by investors. I continue to believe that, while investors seem to cheer rising QE-2 expectations short-term, any substantial QE-2 would be a huge long-term negative for stocks and the economy. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less economic fear, falling sovereign debt angst, technical buying, buyout speculation and tax policy/election optimism.
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