Wednesday, September 15, 2010

Today's Headlines


Bloomberg:

  • Portugal's Borrowing Costs Rise, Demand Declines at Sale of 12-Month Bills. Portugal’s borrowing costs increased at an auction of 750 million euros ($974 million) of 12-month bills, the country’s debt agency said. The securities due Sept. 23, 2011, were issued at an average yield of 3.369 percent, the IGCP said. That compares with 2.756 percent at a previous auction of the bills on Sept. 1. Investors bid for 1.6 times the amount offered, compared with a bid-to-cover ratio of 2.1 in the Sept. 1 sale.
  • Manufacturing in New York Expanded at Slower Pace. Manufacturing in the New York region expanded at a slower pace than forecast in September, signaling that factory managers remain concerned about a slowdown in U.S. economic growth. The Federal Reserve Bank of New York’s general economic index fell to 4.1 this month, the lowest reading since July 2009, from 7.1 in August. The factory executives’ future outlook dimmed to the lowest level since July 2009. The gauge measuring the outlook six months from now fell to 31.3 from 35.7.
  • Production in U.S. Cooled in August as Automakers Scaled Back. Production in the U.S. cooled in August as automakers scaled back following a surge in output the prior month. Industrial production increased 0.2 percent last month after rising 0.6 percent in July, figures from the Federal Reserve showed today. Factory output climbed 0.5 percent excluding autos, the most since May.
  • Sovereign Swaps Trades Rise on Bets EU to Compromise on Rules. Credit-default swap investors are building positions on sovereign debt as European Union regulators resist calls by lawmakers to ban some trades. The amount of swaps bought and sold on 15 nations from Greece to Germany rose to $134.5 billion Sept. 10, according to the Depository Trust & Clearing Corp., from $124.6 billion on June 4. The amount of outstanding contracts on Germany has climbed 14 percent since May to $15.3 billion, while contracts on Italy have jumped 11 percent to $26 billion, DTCC data show. The $134.5 billion of protection bought on the 15 nations includes contracts on the Markit iTraxx SovX Western Europe Index. Investors bought or sold swaps contracts covering a net $7.04 billion of Greek sovereign debt as of Sept. 10, according to DTCC, which runs a central registry that captures most trades. That figure, which is the maximum amount on the line if Greece defaults, compares with at least $321 billion of the country’s outstanding debt, Bloomberg data show.
  • Crude Oil Futures Drop as U.S. Says Enbridge Line to Be Allowed to Restart. Crude oil fell for a second day after a federal official said Enbridge Energy Partners LP will be allowed to restart a pipeline supplying Canadian crude to the U.S. Midwest. “With the pipeline coming back on line by the end of the week there’s no reason to worry about supply,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The Japanese yen intervention is also pushing oil lower because the oil market has been tied to the dollar.” Crude oil for October delivery fell $1.50, or 2 percent, to $75.30 a barrel at 11:21 a.m. on the New York Mercantile Exchange. Prices are down 5.1 percent this year. Total fuel demand fell 1 percent to 19.5 million barrels in the week ended Sept. 10. Gasoline consumption tumbled 2.6 percent to 9.02 million barrels a day, the lowest level since March.
  • 'Death Spiral' Awaits State-Worker Pensions as Illinois Leads Underfunding. U.S. state pensions such as Illinois, Kansas and New Jersey are in a “death spiral,” with assets at many insufficient to cover benefits, payouts consuming a growing portion of resources and costs rising twice as fast as investment gains. Less than half the 50 state retirement systems had assets to pay for 80 percent of promised benefits in their 2009 fiscal years, according to data compiled for the Bloomberg Cities and Debt Briefing in New York today. Two years earlier, only 19 missed the mark. Illinois covered just 50.6 percent of benefits last year, the lowest so-called funded ratio, which actuaries say shouldn’t be less than 80 percent.
  • U.S. Home Prices Face 3-Year Drop as Inventory Surge Looms. The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market. Shadow inventory -- the supply of homes in default or foreclosure that may be offered for sale -- is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody’s Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. Those properties are in addition to houses that are vacant or that may soon be put on the market by owners. “Whether it’s the sidelined, shadow or current inventory, the issue is there’s more supply than demand,” said Oliver Chang, a U.S. housing strategist with Morgan Stanley in San Francisco. “Once you reach a bottom, it will take three or four years for prices to begin to rise 1 or 2 percent a year.”
  • Congress Seeks Fannie, Freddie Exit as Banks Eat Sour Loans. U.S. lawmakers will grapple today with how to end the bailout of Fannie Mae and Freddie Mac after two years and almost $150 billion, and who pays the bill for bad loans made during the housing boom. Regulators who seized control of the two mortgage lenders in 2008 are under pressure to stem losses for taxpayers and recoup money from banks that sold faulty loans to Fannie Mae and Freddie Mac -- all without hindering the housing market’s recovery.
  • China said to Consider 15% Capital Ratio for Biggest Lenders. China’s banking regulator may require the nation’s biggest lenders to boost their capital adequacy ratios to as high as 15 percent by the end of 2012, a person with knowledge of the matter said. The regulator is drafting a plan that would call for Tier 1 capital of 8 percent, with the overall ratio set at 10 percent, the person said. The plan would add a buffer of up to 4 percent to protect against economic fluctuations, plus a further 1 percent for “systemically important” banks, the person said.
  • French, Germans See Euro as 'Bad Thing' Amid Crisis, Poll Shows. Majorities across Europe view the euro as a “bad thing” in the wake of the sovereign debt crisis that rattled the continent, a survey showed. Fifty-five percent of Europeans voiced negative sentiments about the currency, led by a 60 percent disapproval rate in France and 53 percent in Germany, according to a poll released today by the German Marshall Fund of the United States and the Italian foundation Compagnia di San Paolo.
  • Greece May Miss Revenue Target, Sell Diaspora Bond, Papaconstantinou Says. Greece will likely miss its target for increasing government revenue this year and plans to sell debt to Greeks living outside the country, as it tries to cut the European Union’s second-biggest budget deficit, Finance Minister George Papaconstantinou said.
  • Goldman(GS) Sued Over Alleged Gender Bias as Claimants Seek Class-Action Case. Goldman Sachs Group Inc. was sued by three former female employees who claim they faced discrimination in pay and fewer opportunities for promotion than men at the firm. “The violations of its female employees’ rights are systemic, are based upon companywide policies and practices, and are the result of unchecked gender bias that pervades Goldman Sachs’s corporate culture,” the women said today in a complaint in federal court in Manhattan.

Wall Street Journal:
  • Obstacle to Deficit Cutting: A Nation on Entitlements. Efforts to tame America's ballooning budget deficit could soon confront a daunting reality: Nearly half of all Americans live in a household in which someone receives government benefits, more than at any time in history. At the same time, the fraction of American households not paying federal income taxes has also grown—to an estimated 45% in 2010, from 39% five years ago, according to the Tax Policy Center, a nonpartisan research organization.
CNBC:
  • Turmoil Facing Trillion Dollar Commercial Paper Market. Two years after the fall of Lehman Brothers shook the world’s markets, the once-popular commercial paper market remains a shadow of its former self. The amount of outstanding commercial paper, a particularly cheap form of short-term funding, stands at $1 trillion today, according to Federal Reserve data—down from its $2.2 trillion peak in August of 2007.
  • Retirement on Hold: American Workers $6 Trillion Short. A new study obtained by CNBC says Americans are $6.6 trillion short of what they need to retire.
Business Insider:
New York Times:
  • Credit Suisse to Take Stake in York Capital. Credit Suisse agreed Tuesday to buy a minority stake in the hedge fund York Capital Management for $425 million. The bank, Switzerland’s second largest after UBS, will acquire a one-third stake in York, which manages about $14 billion in assets, according to people with direct knowledge of the deal who were not authorized to speak publicly.
Reason.com:
LA Times:
  • Rizzo Obscured True Salary. Former Bell City Manager Robert Rizzo went to considerable lengths to keep his huge salary secret, including actions that could invalidate his contracts and potentially require him to repay money he received, some experts believe. According to records and interviews, the city of Bell and Rizzo himself represented his salary as being significantly lower than it was. When one councilman asked Rizzo about his salary last year, the city manager gave him a sum that was less than half the approximately $700,000 Rizzo was actually earning at the time.
  • Attorney General Jerry Brown Sues Eight Top Bell Officials. State Atty. Gen. Jerry Brown on Wednesday sued eight top Bell officials and council members, alleging fraud, civil conspiracy and waste of public funds in the first legal action related to the city's salary scandal. Brown demanded that the officials return hundreds of thousands of dollars in unwarranted salaries. He also said he would expand his probe into public salaries in general and called for specific legislative action to reform salary and pension action. He also announced that he would serve subpoenas on the city of Vernon, which has also come under scrutiny for giving city officials excessive salaries.
Miami Herald:
  • Miami Home Sellers Cut Prices By $123.8 Million in August. Nearly one in five home sellers in the city of Miami reduced prices in August, according to a report released Wednesday by real estate search firm Trulia.com. The average reduction was 10 percent, according to the report, which tracked the nation's 50 largest cities. Miami recorded a total of $123.8 million in home price reductions in August, the report found. Nationally, price reductions have increased for three months in a row, totaling 26 percent of all properties for sale. Home sellers have slashed prices by more than $29 billion since July, Trulia found. The average reduction nationally was 10 percent, or $33,892, in August.
HedgeFundBlogger:
  • Hedge Fund Leverage Increases. The Bank of America Merrill Lynch (BAML) fund managers’ survey has found that hedge funds have increased the amount of leverage used. At the same time, managers responded to the survey with a low appetite for risk despite a full year of great returns and a mixed year in 2010. The September edition of the survey found hedge funds had raised their gearing levels from 1.16 in August to 1.39, the highest level since March 2008. However average cash balances rose marginally to 4% from 3.8% in August and more respondents were overweight cash in September compared to the previous month as risk aversion increased. Hedge funds also raised their weighted net long exposure during the moth, from 22% to 26%.
Reuters:
  • Europe Cools Towards Obama: Poll. President Barack Obama's popularity remains high in Europe but has fallen in the past year as doubts emerge about some of his foreign policies, an opinion poll published on Wednesday showed. The annual Transatlantic Trends survey, conducted during June in 11 European Union countries, Turkey and the United States, found that while Obama remained more popular than his predecessor George W. Bush, there were concerns about the line he had taken on issues such as Iran and its nuclear program. Most of the Europeans surveyed said they wanted the United States to exert strong leadership in world affairs, but fewer than half approved of how he was managing relations with Iran or how he was going about stabilizing Afghanistan.
  • USTR Files 2 New WTO Complaints Versus China. The U.S. Trade Representative's office said on Wednesday it has filed two new cases against China at the World Trade Organization for alleged violations of global trade rules.
Telegraph:
Kathimerini:
  • IMF officials assisting Greece with tax collection methods are struggling to make headway. The team of officials have detected problems such as inefficiencies in tax collection as well as in implementing changes in tax administration and management of spending. Progress halts when the team departs from Greece.
Spiegel:
  • Germany's former Finance Minister Peer Steinbrueck said Greece "won't get back on its feet again" unless the government agrees to restructure the country's debt. "It would be a big mistake to keep delaying the inevitable in deference to some banks at the expense of taxpayers," Steinbrueck said.

Valor Economico:
  • Brazil may use its sovereign fund to buy dollars and stem the appreciation of the real. The central bank is also considering selling reverse currency swaps as another way to curb the real's gain.
China Business News:
  • The adjustment on China's property market will last two to three years, citing Ma Jiantang, the head of the National Bureau of Statistics.
Caixin Online:
  • China's banking regulator is considering imposing a bad loan coverage ratio of 250%, compared with 150% currently, citing an executive at China Construction Bank Corp.
International Business Times:
  • The Jobs Crisis: Did Stimulus Fail to Create 'Effective Demand'? Unemployment fears have refused to go away despite huge global efforts to prop up growth through policy measures, says the discussion paper presented at the Oslo conference this week. The brainstorming session held jointly by the ILO and the IMF raises questions about the efficacy of the expansionary policies in generating jobs, and points out that time is ripe to consider policies focused on labor markets and income distribution to supplement fiscal and monetary policies. According to ILO figures, over 210 million people across the globe are estimated to be unemployed at the moment, an increase of more than 30 million since 2007. Joblessness poses the gravest threat in the advanced economies. And among the advanced countries it's the United States, the epicenter of the Great Recession, which has been hit the hardest. The U.S. now has the highest increase in the number of unemployed: an increase of 7.5 million unemployed people since 2007. Long-term unemployment in the U.S. is nearing levels not seen since the Great Depression and nearly one out of every six workers is either unemployed or underemployed. The unemployment rate has increased by 3 percentage points in advanced countries since 2007 while it was considerably less - 0.25 percentage points - in emerging markets.

Bear Radar


Style Underperformer:

  • Large-Cap Value (+.02%)
Sector Underperformers:
  • 1) Coal -1.0% 2) Homebuilding -.74% 3) Energy -.50%
Stocks Falling on Unusual Volume:
  • TTM, TWC, UIL, CREE, RDWR, MDAS, PWER, BOKF, LOGM, ASMI, LUFK, CTSH, AVGO, GOLD, TROW, TRLG, AU, IRM and BSI
Stocks With Unusual Put Option Activity:
  • 1) YHOO 2) ABK 3) DYN 4) FDO 5) PFE
Stocks With Most Negative News Mentions:
  • 1) JPM 2) SCHW 3) EEP 4) VLO 5) KCG

Bull Radar


Style Outperformer:

  • Large-Cap Growth (+.09%)
Sector Outperformers:
  • 1) Oil Tankers +1.25% 2) Hospitals +1.07% 3) Medical Equipment +.81%
Stocks Rising on Unusual Volume:
  • MCK, CVD, ABC, SVNT, SINA, TNDM, DISCA, RVBD, DGIT, ARG, PLL, MA, GNI and AMN
Stocks With Unusual Call Option Activity:
  • 1) MDT 2) UA 3) AU 4) VMED 5) EOG
Stocks With Most Positive News Mentions:
  • 1) KFT 2) MA 3) AAPL 4) CSCO 5) INTC

Tuesday, September 14, 2010

Wednesday Watch


Evening Headlines

Bloomberg:

  • Japan Intervenes First Time Since 2004 to Rein in Yen. Japan intervened in the foreign- exchange market for the first time since 2004 after a surge in the yen to the strongest against the dollar in 15 years threatened to stunt the nation’s economic recovery. Finance Minister Yoshihiko Noda confirmed the intervention, speaking to reporters today in Tokyo. Noda said that Japan had contacted other nations about the step, without specifically saying that today’s measure was taken unilaterally.
  • Feinberg May Ease Test for BP(BP) Spill Claims Distant From Coast. Kenneth Feinberg, responsible for compensating victims of the BP Plc’s Gulf of Mexico oil spill, is encouraging restaurants and hotel owners to apply, even if their businesses aren’t within a few miles of the coast. “I would propose that those who believe they have a valid claim, who have been harmed as a result of the spill, wherever they are located without regard to proximity, fill out a claim,” Feinberg said today at a meeting of the Florida Restaurant and Lodging Association in Orlando.
  • IMF Meeetings Should Target Double-Dip Risk: Mohamed A. El-Erian. Many topics are being teed up for next month’s annual meetings of the International Monetary Fund and World Bank in Washington, a gathering that will draw about 190 country representatives. There is a substantial risk of disappointment, one that would be detrimental to the welfare of billions around the world over time. This risk can and should be minimized. To do so, the natural inclination for complexity must urgently be replaced by focused simplicity. This can be achieved by placing just one question on the agenda: Why are economic policies in industrial countries proving so frustratingly ineffective? Already, there are too many examples of policy outcomes that have fallen well short of expectations. In the U.S. alone, just look at the high unemployment rate that persists in the face of unprecedented fiscal stimulus and the extended use of unconventional monetary policy. Witness the de-risking of household investment portfolios as individuals sell equities in favor of cash and bonds. Consider the massive cash balances being hoarded by large companies and banks. Normally, cash burns a hole in the pockets of Americans, especially when the Federal Reserve is aggressively using low interest rates to push us all to assume more risk. Not today.
  • Oil Falls For Second Day as Inventories Rise, Enbridge Begins Pipe Repairs. Oil fell for a second day after an industry report showed U.S. crude stockpiles rose and as Enbridge Energy Partners LP said it expected to finish welding a replacement section into a pipeline that was shut last week. Futures dropped after the American Petroleum Institute said inventories increased by 3.33 million barrels last week. Crews worked to attach a section on Enbridge’s Line 6A, which transports 670,000 barrels a day from Canada to U.S. refineries. The October contract lost as much as 60 cents, or 0.8 percent, to $76.20 a barrel in electronic trading on the New York Mercantile Exchange, and was at $76.46 at 11:03 a.m. Sydney time.
  • Gold Futures Surge to a Record on Haven Demand as Stocks, Bonds Languish. Gold futures rose to a record $1,276.50 an ounce on demand for a haven against turmoil in the global economy and financial markets. The precious metal, heading for the 10th straight annual gain, has offered a hedge against gyrations in the dollar and the euro amid sovereign-debt woes.
  • MasterCard's(MA) Board of Directors Approves $1 Billion Share-Buyback Program.
  • Gasoline Shipments to U.S. Slide as Profit Margin Vanishes: Energy Markets. Bookings of tankers to ship European gasoline across the Atlantic fell in August as profit margin from the trade dropped to the lowest level in a year. Traders and oil companies chartered 21 vessels to transport the auto fuel to the U.S. Atlantic Coast from Europe last month, down from 24 in July and 30 in June, according to data compiled by Bloomberg and Clarkson Research Services Ltd., a unit of the world’s biggest shipbroker. The decrease occurred as U.S. gasoline inventories were 15 percent above the five-year average in the week ending Sept. 3, Energy Department data show.
  • OPEC Won't Change Output Quotas Even as Demand Recovers, Pastor Says. The Organization of Petroleum Exporting Countries doesn’t plan to change output quotas at its next meeting amid the recovery of world oil demand after the recession, OPEC President Wilson Pastor said. The group is scheduled to meet next on Oct. 14 in Vienna. OPEC may meet again in Quito in December, said Pastor, who is also Ecuador’s Minister of Non-Renewable Natural Resources. Prices will likely remain stable in 2011, he said, without giving additional details.
  • Morgan Stanely(MS) Sued by China Development Industrial Bank Over CDO Losses. Morgan Stanley was sued by Taipei- based China Development Industrial Bank for fraud to recover losses from an investment tied to residential mortgage-backed securities. The Taiwanese bank claims Morgan Stanley made an investment linked to U.S. subprime mortgage bonds in mid-2006 and, after learning of problems with it, “dumped those losses” on CDIB in April 2007. The complaint, filed in New York state Supreme Court on July 15, was made public yesterday by CDIB’s lawyers.

Wall Street Journal:
  • Boeing(BA) Likely To Lose Ruling. Trade panel expected to find U.S. company received illegal subsidies.
  • US Health Insurers Say Getting Tough in Hospital Talks. Some of the nation's largest health insurers say they're getting tougher in price negotiations with hospitals and are using their clients as leverage, as health plans and employers try to restrain medical costs. Employers are warming to the idea of narrow provider networks as a way to save money, which is helping in contract talks with hospitals, health insurers say. In some cases, managed-care clients want to become directly involved in hospital negotiations.
  • Richmond Fed's Lacker Wants High Threshold for More Fed Action. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, sees modest growth in 2011, little change in inflation and little to spur the Fed to take new actions to support the economy. “The economy is facing very real impediments to growth and there is little monetary policy can do about that,” Mr. Lacker said in an interview with The Wall Street Journal late last week. “So I think our expectations for real growth and for the rate at which unemployment comes down ought to be very modest right now.
  • Retailers Turn to Gadgets. Best Buy(BBY), Others Stock Up on Handhelds for Holidays as TVs, PCs Lose Luster.
  • Christine O'Donnell Wins Delaware Primary. Her Victory Marks Big Win for Tea-Party Movement.
  • Union Power and the Christie Effect. After decades of expanding political clout, organized labor is finding voters increasingly unreceptive to its high-tax message.
  • Glenn Beck, Progressives and Me. The TV host has a point when he says a limitless view of state power is un-American.
CNBC:
IBD:
Business Insider:
CNNMoney.com:
TechCrunch:
LA Times:
  • Southern California Home Sales Slide in August. Sales volume falls 2.1% and the median sale price drops 2.4% from July. Fading government stimulus and waning buyer enthusiasm caused Southern California's housing market to soften in August — but not as badly as earlier in the summer.
Rasmussen Reports:
Politico:
  • Health Care Challenge Moves Forward. A federal judge said Tuesday he is likely to let 20 states proceed with at least a portion of their lawsuit challenging the heart of the Democrats’ health care overhaul. U.S. District Judge Roger Vinson scheduled oral arguments to begin Dec. 16 in Pensacola, Fla., but did not say which parts of the lawsuit he will approve. Vinson said he plans to issue a complete ruling by Oct. 14.
  • Henry Waxman: Democrats Would Push Climate Legislation in 2011. The campaign to pass climate legislation will continue on Capitol Hill in 2011 – if Democrats are still in charge, that is. That’s the word Tuesday from a top House Democrat who led the charge over the last two years to pass a major cap-and-trade bill.
Reuters:
Financial Times:
  • Swaps Rules Leave Insurers in Limbo. Insurers are facing uncertainty created by sweeping definitions in the Wall Street reform act, which leave open the possibility that their products will be covered by the new swaps regime. The Commodity Futures Trading Commission has the power to use the ambiguity of wording in the Dodd-Frank financial reform act to extend its reach to financial products that share some of the characteristics of derivatives, lawyers have said. Gregory Mocek, former director of enforcement at the CFTC, said the very wide definition of swaps – derivatives in which two counterparties exchange benefits – in the legislation left it “unclear as to how insurance will be covered”.
Telegraph:
The Guardian:
  • Real IRA Says It Will Target UK Bankers. Banks and bankers are now potential targets for the Real IRA, leaders of the dissident republican terror group have warned in an exclusive interview with the Guardian. Despite having only 100 activists they also said that targets in England remained a high priority.
The Globe and Mail:
  • Sovereign Debt Bears Prowl Hedge Fund Summit. Sovereign debt fears were daily front page news a few months ago, but have faded into the general background noise of worry. Not so at the World Alternative Investment Summit Canada, the annual Niagara Falls gathering of the hedge fund industry. Here, some high profile people with a lot of experience in the debt world are warning investors in the audience to keep their focus on sovereign debt because the problems of countries not being able to pay their debts are not going away.
Jidosha Japanese:
  • Toyota expects 66% drop in October-December car sales.
Evening Recommendations
Citigroup:
  • Rated (IR) Sell, target $33.
  • Rated (CBE) Buy, target $53.
  • Rated (TYC) Buy, target $46.
  • Rated (CR) Sell, target $35.
  • Rated (CSL) Sell, target $29.
  • Rated (DHR) Buy, target $47.
  • Rated (WCC) Buy, target $41.
  • Rated (GE) Buy, target $19.
  • Rated (ITW) Buy, target $52.
Night Trading
  • Asian equity indices are -.25% to +1.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 119.0 +5.0 basis points.
  • Asia Pacific Sovereign CDS Index 113.25 +3.25 basis points.
  • S&P 500 futures +.11%.
  • NASDAQ 100 futures +.20%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (DBRN)/.49
  • (AIR)/.30
Economic Releases
8:30 am EST
  • The Import Price Index for August is estimated to rise +.3% versus a +.2% gain in July.
  • Empire Manufacturing for September is estimated to rise to 8.0 versus a reading of 7.1 in August.
9:15 am EST
  • Industrial Production for August is estimated to rise +.2% versus a +1.0% gain in July.
  • Capacity Utilization for August is estimated to rise to 75.0% versus 74.8% in July.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,500,000 barrels versus a -1,853,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -625,000 barrels versus a -243,000 barrel decline the prior week. Distillate inventories are expected to rise by +650,000 barrels versus a -388,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.55% versus a +1.20% gain the prior week.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Chicago Fed Mortgage Hearing, weekly MBA Mortgage Applications report, (KFT) Analyst Day, (MA) Investment Community Meeting, Wedbush Clean Tech Conference, Barclays Energy/Power Conference, CSFB Chemicals Conference, Goldman Sachs Retail Conference, ThinkEquity's Growth Conference, Stifel Nicolaus Healthcare Conference, Morgan Keegan Industrial/Transport Conference, Deutsche Bank Tech Conference, BofA Merrill Media/Communications/Entertainment Conference, Keybanc Basic Materials Conference and the (BRCD) Analyst Meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Higher into Final Hour on Tech/Retail Sector Optimism, Buyout Speculation, Short-Covering


Broad Market Tone:

  • Advance/Decline Line: About Even
  • Sector Performance: Most Sectors Rising
  • Volume: About Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 21.08 -.57%
  • ISE Sentiment Index 148.0 +33.33%
  • Total Put/Call .88 +10.0%
  • NYSE Arms .98 +91.16%
Credit Investor Angst:
  • North American Investment Grade CDS Index 103.19 bps +1.03%
  • European Financial Sector CDS Index 107.50 bps +.60%
  • Western Europe Sovereign Debt CDS Index 152.79 bps +2.42%
  • Emerging Market CDS Index 243.75 bps +.56%
  • 2-Year Swap Spread 18.0 -2 bps
  • TED Spread 15.0 -1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .14% +1 bp
  • Yield Curve 217.0 -4 bps
  • China Import Iron Ore Spot $139.20/Metric Tonne -.07%
  • Citi US Economic Surprise Index -9.60 +5.9 points
  • 10-Year TIPS Spread 1.78% -6 bps
Overseas Futures:
  • Nikkei Futures: Indicating +1 open in Japan
  • DAX Futures: Indicating +6 open in Germany
Portfolio:
  • Higher: On gains in my Tech, Retail and Medical long positions
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 builds modestly on recent gains and remains slightly above its 200-day moving average. On the positive side, Airline, Retail, Drug, Gold, Semi, Disk Drive, Networking, Alt Energy, Computer and Medical shares are especially strong, rising 1.0%+. Tech shares are outperforming. The S&P GSCI Ag Spot Index is rising another +.82%. Weekly retail sales rose +2.9% this week versus a +3.0% increase the prior week. The European Investment Grade CDS Index is falling another -1.83% to 95.17 bps. Moreover, the Greece sovereign cds is dropping -.72% to 900.33 bps and the UK sovereign cds is falling -7.47% to 65.77 bps. On the negative side, Education, Bank and Oil Service shares are under pressure, falling more than 1.0%. (XLF) has been a bit heavy throughout the day, but isn't giving back too much of yesterday's gain. The 10-Year Yield is falling -9 bps to 2.66%, which is negative. Gold is breaking out to a new record high. Shanghai copper inventories are up +18.32% over the last 5 days. The Spain sovereign cds is rising +4.79% to 230.47 bps, the Portugal sovereign cds is rising +3.87% to 332.33 bps and the Ireland sovereign cds is gaining +4.74% to 379.36 bps. The Citi European Economic Surprise Index is down -24.10 points today to +79.90. This index is down from a reading of +117.20 about 2 weeks ago. The S&P 500 remains near a critical technical level. I am still closely monitoring my technical gauges for any signs of developing weakness, given the trading range we have be trapped in for some time and some developing red flags. I expect US stocks to trade mixed-to-higher into the close from current levels on tech/retail sector optimism, short-covering, buyout speculation and technical buying.