Broad Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Volume: Above Average
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- VIX 35.25 -9.87%
- ISE Sentiment Index 124.0 +47.62%
- Total Put/Call 1.01 -.98%
- NYSE Arms .85 +185.71%
Credit Investor Angst:
- North American Investment Grade CDS Index 114.55 -3.78%
- European Financial Sector CDS Index 209.94 -5.11%
- Western Europe Sovereign Debt CDS Index 295.17 -1.01%
- Emerging Market CDS Index 275.25 -6.20%
- 2-Year Swap Spread 26.0 +2 bps
- TED Spread 28.0 +1 bp
Economic Gauges:
- 3-Month T-Bill Yield .01% -1 bp
- Yield Curve 205.0 -5 bps
- China Import Iron Ore Spot $175.90/Metric Tonne -.11%
- Citi US Economic Surprise Index -79.10 -.3 points
- 10-Year TIPS Spread 2.23% -3 bps
Overseas Futures:
- Nikkei Futures: Indicating +92 open in Japan
- DAX Futures: Indicating +7 open in Germany
Portfolio:
- Higher: On gains in my Biotech, Medical, Retail and Tech sector longs
- Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short and then added them back
- Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is just mildly bullish, as the S&P 500 is well off session highs despite sharp gains in European equities, less eurozone debt angst and recent equity losses. On the positive side, Steel, Computer, Medical Equipment, Biotech and HMO shares are especially strong, rising more than +1.5% on the day. Gold is falling -.63% and oil is down -.33%. European equity indices put in strong showings again today, rising another 3-4%. The France sovereign cds is down -6.46% to 154.50 bps, the Italy sovereign cds is down -2.43% to 359.33 bps, the Germany sovereign cds is dropping -8.49% to 79.42 bps, the UK sovereign cds is dropping -8.44% to 80.25 bps and the Belgium sovereign cds is down -9.06% to 241.0 bps. Moreover, the European Investment Grade CDS Index is down -3.9% to 128.93 bps. On the negative side, Education, Gaming, I-Banking, Bank and Oil Tanker shares are are under pressure, falling more than 1.0%.
(XLF) has traded poorly throughout the day. The 10-year yield is dropping -9 bps to 2.25%, despite today's equity rally. Copper is down -.33%, Lumber is down -1.45% and the UBS-Bloomberg Ag Spot Index is up +.33%. Rice is still near a multi-year high, soaring +27.0% in about 6 weeks. The US price for a gallon of gas is falling -.01/gallon today to $3.61/gallon. It is up .47/gallon in about 6 months. The China sovereign cds is rising another +2.13% to 112.0 bps. The China sovereign cds is up +25.13% in 5 days. The China Development Bank Corp. cds has soared +68 bps in 6 days to 230.0 bps. The Asia Pacific Sovereign CDS Index is rising +11.5 bps today to 151.30, which is a new record high. Despite large equity gains in Europe and the US yesterday, Korean stocks fell -1.33% and are down -12.6% ytd. As well, Indian shares fell -1.3% and are now down 17.9% ytd. Russia stocks did not participate in today's rally and are down -9.8% ytd. The large drop in a number of key Eurozone cds is a big positive. However, key emerging market cds continue to rise substantially. It is hard to gauge how much of today's equity rally in Europe was just related to short-covering. Germany must put its entire economy at significant risk to save the euro and it is not clear at all that they are willing to proceed down that path. I expect US stocks to trade mixed-to-lower into the close from current levels on financial sector pessimism, emerging markets inflation fears, profit-taking and more shorting.
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