North American Investment Grade CDS Index 81.80 -1.39%
European Financial Sector CDS Index 126.50 bps -12.76%
Western Europe Sovereign Debt CDS Index 175.17 bps -2.05%
Emerging Market CDS Index 198.45 -1.53%
2-Year Swap Spread 22.0 -1 bp
TED Spread 15.0 unch.
Economic Gauges:
3-Month T-Bill Yield .15% unch.
Yield Curve 281.0 -1 bp
China Import Iron Ore Spot $185.0/Metric Tonne -.38%
Citi US Economic Surprise Index +35.70 -2.9 points
10-Year TIPS Spread 2.18% unch.
Overseas Futures:
Nikkei Futures: Indicating +55 open in Japan
DAX Futures: Indicating +14 open in Germany
Portfolio:
Higher: On gains in my Ag, Tech, Biotech and Medical long positions
Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges and some of my (EEM) short
Market Exposure: Moved to 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades higher, despite recent equity gains, terrorism fears, worries over emerging markets inflation and financial sector weakness. On the positive side, Airline, Homebuilding, Construction, Biotech, Computer Services, Disk Drive, Semi, Computer, Alt Energy and Coal shares are especially strong, rising more than 1.0% today. Small-Cap and Cyclical shares are outperforming. Tech stocks are trading much better today. Copper is rising +.51%, Lumber is jumping another +2.74% and the 10-year yield is stable at 3.4%. The Spain sovereign cds is declining -3.76% to 255.62 bps, the Belgium cds is falling -5.64% to 170.12 and the Italy sovereign cds is falling -3.30% to 180.0 bps. The Western Europe Sovereign CDS Index is now -43 bps off its record high set on January 11. Moreover, the European Investment Grade CDS Index is dropping -4.54% to 77.92 bps, which is also a large positive. On the negative side, HMO, Medical Equipment, Bank, Oil Tanker and Defense shares are down on the day. (XLF) has underperformed substantially throughout the day. Ireland's sovereign cds is gaining +2.31% to 609.15 bps. Rough Rice futures are up another +1.9%. Thailand's benchmark equity index fell -4.3% overnight on rising inflation fears and is breaking down technically. Southeast Asian equities, in general, trade very poorly. The DJIA continues to hold up very well and is making another new multi-year high today. It is noteworthy that the (XLI) is seeing 792% above normal put volume today. After Friday's technical breakdown, the 10-Year TIPS spread is unch. today despite the global stock rally, a rise in the euro, surging food prices and rising economic optimism. As well, gold continues to trade poorly. I continue to believe that investors are becoming increasingly concerned by the possibility of economic hard landings in some key emerging markets. I expect US stocks to trade mixed-to-lower into the close from current levels on emerging market inflation fears, profit taking, financial sector pessimism and more shorting.
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