Broad Market Tone: - Advance/Decline Line: Lower
- Sector Performance: Most Sectors Declining
- Volume: Above Average
- Market Leading Stocks: Outperforming
Equity Investor Angst: - VIX 23.68 -6.22%
- ISE Sentiment Index 90.0 -23.08%
- Total Put/Call 1.09 -9.92%
- NYSE Arms 2.01 +68.82
Credit Investor Angst:- North American Investment Grade CDS Index 95.53 +.05%
- European Financial Sector CDS Index 162.36 +7.65%
- Western Europe Sovereign Debt CDS Index 286.83 +.82%
- Emerging Market CDS Index 212.87 -.02%
- 2-Year Swap Spread 22.0 -1 bp
- TED Spread 19.0 +1 bps
Economic Gauges:- 3-Month T-Bill Yield .07% -1 bp
- Yield Curve 237.0 -6 bps
- China Import Iron Ore Spot $176.10/Metric Tonne +.34%
- Citi US Economic Surprise Index -92.60 -1.2 points
- 10-Year TIPS Spread 2.42% -1 bp
Overseas Futures: - Nikkei Futures: Indicating -150 open in Japan
- DAX Futures: Indicating +27 open in Germany
Portfolio:
- Slightly Lower: On losses in my Technology, Medical and Biotech sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and then covered some of them
- Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is slightly bearish as the S&P 500 is still hovering just above its 200-day moving average on rising eurozone debt angst, US debt ceiling concerns, more poor US economic data, emerging market inflation fears and global growth worries. On the positive side, Utility, Ag, Telecom and Gaming shares are slightly higher on the day. Oil is falling -.77%. (XLF) has held up well throughout the day. Cyclicals are also relatively firm, despite poor economic data.
The US sovereign cds is plunging -15.94% to 53.95 bps, which is a big positive. On the negative side, HMO, Hospital, Education, Biotech, Medical, Networking, Steel, Oil Tankers, Coal, Drug, Software and Defense shares are under significant pressure, falling more than -1.50%. Healthcare-related shares are substantially underperforming.
The HMO and Hospital Indices are both falling -17% from their 52-week highs. The Networking Sub-Index is down -25.0% from its April 27th high. The UBS-Bloomberg Ag Spot Index is rising +.45%, Lumber is dropping -4.02% and Copper is down -1.6%. Lumber is now back near its June 16th 52-week low. Rice is rising +.8% today and is still near a multi-year high, soaring about +26.0% in less than 1 month. The US price for a gallon of gas is unch. today at $3.71/gallon. It is up .57/gallon in less than 5 months. The Italy sovereign cds is jumping +5.73% to 328.0 bps, the France sovereign cds is rising +2.28% to 124.83 bps, the Spain sovereign cds is surging +5.47% to 382.85 bps, the Belgium sovereign cds is rising +2.54% to 204.33 bps and the Ireland sovereign cds is rising +3.09% to 814.20 bps. The Italy sovereign cds has soared +114 bps in 7 days. The Spain and France sovereign cds are making new record highs today. Italy is right near an all-time high. The Eurozone Financial Sector CDS Index is very close to record highs, as well. The Shanghai Composite rose just slightly last night despite sharp gain in other Asian indices. French(-2.3%), Italian(-3.87%), Spanish(-3.24%) and German(-2.86%) stocks put in key reversals lower today on volume and finished at session lows. Italian stocks are now down -12.1% ytd. I still suspect that a larger portion of recent US stock losses are the result of ongoing European debt concerns, lowered forward earnings guidance and emerging market growth/inflation worries than most investors perceive. I still expect stocks to see a surge higher on any US debt deal resolution, however gains may prove unsustainable unless other still developing headwinds subside very soon. The action in European equities and cds today is a huge concern. US stocks held up much better today than I would have expected as a result of US debt deal optimism. I expect US stocks to trade mixed-to-higher into the close from current levels on US debt deal optimism, short-covering, bargain-hunting and technical buying.
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