Stocks Slightly Lower into Final Hour on Growing Global Growth Worries, Rising Food Prices, Emerging Markets Inflation Fears, Eurozone Debt Concerns

Broad Market Tone:

• Advance/Decline Line: About Even
  
• Sector Performance: Mixed
  
• Volume: About Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.88 -2.3%
  
• ISE Sentiment Index 56.0 -32.53%
  
• Total Put/Call 1.07 -5.31%
  
• NYSE Arms .79 -82.40%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 93.10 +2.70%
  
• European Financial Sector CDS Index 113.25 +3.53%
  
• Western Europe Sovereign Debt CDS Index 196.58 -.17%
  
• Emerging Market CDS Index 217.85 +.35%
  
• 2-Year Swap Spread 20.0 +1 bp
  
• TED Spread 22.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .04% unch.
  
• Yield Curve 257.0 +5 bps
  
• China Import Iron Ore Spot $168.80/Metric Tonne unch.
  
• Citi US Economic Surprise Index -90.90 +.4 point
  
• 10-Year TIPS Spread 2.25% +4 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +20 open in Japan
• DAX Futures: Indicating +34 open in Germany

Portfolio:

• Slightly Higher: On gains in my Tech and Biotech sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added back (IWM)/(QQQ) hedges
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades near session highs, despite global growth concerns, rising food prices, more weak US economic data and emerging market inflation fears. On the positive side, Education, Airline, Road & Rail, Steel and Oil Service shares are especially strong, rising more than +1.0%. Cyclical shares are outperforming. Tech shares are also relatively strong. (XLF) is trading well today despite more negative financial sector news. The 10-year yield is bouncing +9 bps to 3.03%, which is also a positive. On the negative side, Tobacco, Retail, Medical Equipment, Paper, Coal and Telecom shares are under mild pressure, falling more than -.50%. (IYR) has underperformed again throughout the day. Copper is falling -.17%, oil is rising +.5% and lumber is falling -1.9%. Moreover, the UBS-Bloomberg Ag Spot Index is surging +2.1% and is very close to breaking out of its recent downtrend, which increases the odds of hard landings in key emerging markets. The US price for a gallon of gas is unch. today at $3.78/gallon. It is up .64/gallon in less than 4 months. The Japan sovereign cds is rising +1.05% to 87.0, the Brazil sovereign cds is gaining +1.85% to 106.76 bps and the California Muni cds is gaining +4.98% to 124.62 bps. Eurozone cds are not confirming recent euro currency strength, which is likely the result of very poor US economic data and US debt limit worries. US stocks continue to display exceptional resiliency in the face of mounting headwinds. A worse-than-expected jobs report tomorrow is likely priced in at this point, however the eurozone debt situation remains a large concern and traders are intensely focused on movements in the euro currency. I expect US stocks to trade mixed-to-lower into the close from current levels on global growth worries, eurozone debt concerns, emerging markets inflation fears, rising food prices and more shorting.