Broad Market Tone: - Advance/Decline Line: Higher
- Sector Performance: Mixed
- Volume: Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst: - VIX 17.55 -4.41%
- ISE Sentiment Index 130.0 +62.50%
- Total Put/Call .79 -20.20%
- NYSE Arms 1.43 +8.73%
Credit Investor Angst:- North American Investment Grade CDS Index 99.78 -.25%
- European Financial Sector CDS Index 254.92 +2.1%
- Western Europe Sovereign Debt CDS Index 282.44 +.23%
- Emerging Market CDS Index 265.39 -1.29%
- 2-Year Swap Spread 30.25 +.5 basis point
- TED Spread 40.0 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -47.50 +.25 basis point
Economic Gauges:- 3-Month T-Bill Yield .07% unch.
- Yield Curve 169.0 unch.
- China Import Iron Ore Spot $148.40/Metric Tonne -.07%
- Citi US Economic Surprise Index 5.0 -.3 point
- 10-Year TIPS Spread 2.25 +4 basis points
Overseas Futures: - Nikkei Futures: Indicating a +33 open in Japan
- DAX Futures: Indicating -21 open in Germany
Portfolio:
- Slightly Higher: On gains in my Medical, Biotech and Retail sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
- Market Exposure: 50% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish, as the S&P 500 trades slightly higher, back to its 50-day moving-average, despite rising Eurozone debt angst, less financial/tech sector optimism, rising energy prices, weakness in some key market leaders, rising global growth fears and less US economic optimism. On the positive side, Oil Tanker, Software, Biotech, Drug, Construction, Homebuilding, REIT and Road & Rails shares are especially strong, rising more than +.75%. Small-caps are outperforming. Copper is rising +1.7% and Lumber is gaining +.8%. Major European indices are rising around +.75%, led by a +1.9% gain in Spain. However, Spanish equities are still -2.9% lower on the week and down -17.8% ytd. The Bloomberg European Bank/Financial Services Index is rising +1.1%. The Portugal sovereign cds is down -4.95% to 1,066.78 bps and the Brazil sovereign cds is down -2.4% to 126.90 bps. On the negative side, Coal, Computer, Semi, Disk Drive and I-Banking
shares are under notable pressure, falling more than -1.0%. Tech and financial shares have traded poorly throughout the day. Cyclicals are underperforming. Oil is rising +1.1%. The 10-year yield is unch. at 1.96%. Major Asian indices were mostly lower overnight, led down by a -1.5% decline in Taiwan. The Germany sovereign cds is gaining +4.7% to 86.66 bps(
+26% in 6 days), the Spain sovereign cds is gaining +1.1% to 503.0 bps, the Belgium sovereign cds is rising +2.4% to 264.99 bps, the Italy sovereign cds is gaining +1.7% to 463.81 bps, the China sovereign cds is rising +1.7% to 113.05 bps and the Japan sovereign cds is up +2.4% to 95.0 bps.
US Rail Traffic continues to soften.
The Philly Fed ADS Real-Time Business Conditions Index continues to trend lower from its late-December peak despite investor perceptions that the US economy is accelerating.
Moreover, the Citi US Economic Surprise Index has fallen back to mid-Oct. levels. Lumber is -8.0% since its Dec. 29th high despite the better US economic data, improving sentiment towards homebuilders and the broad equity rally. Moreover, the weekly MBA Home Purchase Applications Index has been around the same level since May 2010 despite expectations for a strong spring home selling season. The Baltic Dry Index has plunged around -55.0% from its Oct. 14th high and is now down around -40.0% ytd. China Iron Ore Spot has plunged -18.0% since Sept. 7th of last year. Shanghai Copper Inventories are right near a new record and have risen +702.0% ytd.
China's March copper imports fell -4.6% on the month.
Singapore Electronics exports decelerated to a gain of +2.8% in March from a +23.3% gain in February. Semis/Disk Drives are under notable pressure, despite the jump in (MSFT). The recent weak/erratic technical action in shares of (AAPL), a market-leader and the largest company in the world, remains a concern. Long AAPL. Bonds still trade too well. There remains a fairly high level of complacency regarding the rapidly deteriorating situation in Europe, in my opinion. The ongoing significant rise in German cds remains a red flag. I doubt the results of the French election over the weekend will result in near-term market weakness. However, a Hollande victory will likely be viewed as a large market negative over the intermediate-term as the debt crisis intensifies. For the recent equity advance to regain traction, I would expect to see further European credit gauge improvement, a further subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade modestly lower into the close from current levels on rising Eurozone debt angst, less US economic optimism, weakness in some key market leaders, rising energy prices, rising global growth fears and less tech/financial sector optimism.
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