Initial Jobless Claims for last week are estimated to rise to 455K versus 452K the prior week.
Continuing Claims are estimated to fall to 4430K versus 4441K prior.
Upcoming Splits
None of note
Other Potential Market Movers
None of note
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and commodity shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
North American Investment Grade CDS Index 94.72 bps +1.28%
European Financial Sector CDS Index 94.0 bps +3.45%
Western Europe Sovereign Debt CDS Index 142.50 bps +2.89%
Emerging Market CDS Index 207.48 bps +1.15%
2-Year Swap Spread 16.0 -1 bp
TED Spread 16.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .13% +1 bp
Yield Curve 231.0 +6 bps
China Import Iron Ore Spot $149.80/Metric Tonne -.07%
Citi US Economic Surprise Index -1.70 +2 points
10-Year TIPS Spread 2.16% -3 bps
Overseas Futures:
Nikkei Futures: Indicating +3 open in Japan
DAX Futures: Indicating +30 open in Germany
Portfolio:
Slightly Lower: On losses in my Medical and Retail long positions
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades just modestly lower despite today's headwinds. On the positive side, Paper, Internet, Software, Computer, Semi, Disk Drive, Computer Service, Bank, I-Banking, Biotech, Education and Airline shares are all higher on the day. "Growth" shares are outperforming "value" shares again. The SOX Index is jumping +2.87% and looks poised to break out of its 6 month trading range, which is a major positive. The XAL Index is hitting another 52-week high today. (XLF) has traded well today considering (IYR) weakness and pessimism towards bank shares. Lumber is rising +1.62% despite overall commodity weakness. The 10-year yield is rising +8 bps to 2.72%. There is an unusual number of stocks rising on volume today given the losses in the major averages. The Libor-OIS, TED and 2-Year swap spreads are down despite today's jump in sovereign debt angst. On the negative side, Restaurant, Road & Rail, Gold and Construction shares are under pressure, falling more than 1.5%. The Greece sovereign cds is jumping +12.25% to 765.78 bps, the Ireland sovereign cds is rising +3.55% to 438.48 bps, the China sovereign cds is rising +5.42% to 58.70 bps and the Portugal sovereign cds is gaining +3.59% to 347.56 bps. The Emerging Markets Sovereign CDS Index is rising +4.66% to 190.98 bps. While today's sovereign cds jumps are concerning, it is too early to anticipate another meaningful move higher is underway. The broad market continues to consolidate recent gains on below average volume, which is healthy. The bears still show no ability to gain meaningful traction despite today's potential downside catalysts. Action in the shares of (BRCM) and (FFIV) should give the tech bears pause. I expect US stocks to trade modestly higher into the close from current levels on tax policy/election optimism, less economic fear, tech sector optimism, short-covering, buyout speculation, less financial sector pessimism and earnings optimism.
Greek Bonds Tumble as Government Says Tax Revenue Falling Short. Portuguese and Greek bonds led so- called peripheral European markets lower after the failure of Portugal’s budget talks and tax-revenue shortfalls in Greece reignited concerns countries may struggle to cut their deficits. Greek bonds fell by the most in more than four months. Finance Minister George Papaconstantinou said a shortage in tax intake is hampering government efforts to reduce its national debt. German government bonds slid as a report showed consumer prices rose in October, making it more likely the European Central Bank will keep removing stimulus measures even as smaller economies in the region lag behind.
China Commodities Decline on Concern Regulators to Tighten Trading Rules. Commodities in China snapped a rally, led by rice, zinc, soybean oil and rubber, on growing concerns that security regulators may tighten trading rules to curb excessive speculation. The Zhengzhou Commodity Exchange, China’s first such bourse, yesterday increased the margin requirement for rice, rapeseed oil, wheat and sugar trading to 8 percent from 3 percent or 4 percent, a statement on its website said yesterday. The exchange will track “abnormal” trade and recommend investigation by watchdogs, a separate statement dated Oct. 25 said.
Bin Laden Warns France Over Backing of U.S., Ban on Veils. Osama bin Laden, the Saudi-born leader of al-Qaeda, warned France that its security is at risk if it continued to support U.S. policies toward Muslim-majority countries and prevent Muslim women from wearing veils. “The equation is simple and easy: As you kill you shall be killed, as you take hostages you shall be taken hostage, and as you infringe on our security we shall infringe on your security,” said the man who tops a U.S. most wanted list of fugitives, in a recording aired by Al Jazeera television today.
Petrobras(PBR) Opens New Oil 'Frontier' With Deepwater Find in Northern Brazil. Petroleo Brasileiro SA, Brazil’s state-controlled oil company, said it opened a “new exploration frontier” off the country’s northern coast after finding signs of light oil at a deepwater well. Petrobras found “large accumulations” of oil in its Barra well in the Sergipe-Alagoas Basin, the Rio de Janeiro-based company said in a regulatory filing today. The discovery at a depth of 2,341 meters (7,680 feet) of water has larger volumes of oil than the Guaricema and Dourado fields in shallower waters of the same basin, Petrobras said. “Wherever they’re going, discoveries highlight more potential, especially offshore,” said Robbert Van Batenburg, head of equities research at Louis Capital Markets in New York.
Wall Street Journal:
SanDisk(SNDK) Poised for Flash Dance. Apple(AAPL) unveiled last week its first complete product line of laptops relying entirely on flash chips for storing data. Lighter and thinner than traditional hard-disk-drive storage, and offering faster start-up times, so-called Nand flash has long been used in digital cameras and portable memory cards. More recently, it has turned up in smartphones, e-readers and tablet computers like Apple's iPad.
Japan Banks Face Worries Over Lending Turmoil. Tumult in the local consumer-finance industry is putting Japanese banking titans Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. under scrutiny as investors worry over their exposure to other lenders' losses.
Greek Default Costs Soar. The cost of insuring Greek government debt against the risk of default jumped Wednesday, underscoring investor concerns about the heavily indebted country less than two weeks ahead of a key national election. The annual cost of insuring $10 million of Greek debt for five years jumped $73,000 to $754,000 as investors continued to react to comments made earlier in the week. The cost of insurance, as measured by credit default swaps, had risen $14,000 on Tuesday.
FBI Arrests Man in D.C. Subway Plot. Federal agents arrested Wednesday a Pakistani-American man who allegedly helped case potential targets for bombings of Washington's Metrorail subway system in an apparent sting operation. The purported plot was set up by the Federal Bureau of Investigation, but the suspect, Farooque Ahmed, 34 years old, of Ashburn, Va., believed it was an al Qaeda bombing conspiracy, according to a grand-jury indictment in Virginia's eastern district.
QE2 Trashing Trifecta: Peter Orszag Joins Gross and Grantham. The president's own former advisor, and now very much outspoken critic, Peter Orszag has joined the cool kids by releasing the following scathing oped in the NYT, whose topic is, drumroll, QE2: "by perpetuating an artificially low 10-year government bond rate, the Fed may be delaying the very fiscal policy action that the nation most needs, while doing little to boost an economy whose principal problem is not high long-term interest rates."
New York Times:
Democrats Retain Edge in Campaign Spending. Lost in all of the attention paid to the heavy spending by Republican-oriented independent groups in this year’s midterm elections is that Democratic candidates have generally wielded a significant head-to-head financial advantage over their Republican opponents in individual competitive races.
Washington Post:
U.S. Afghan Campaign Judge to Be Failing. An intense military campaign aimed at crippling the Taliban has so far failed to inflict more than fleeting setbacks on the insurgency or put meaningful pressure on its leaders to seek peace, according to U.S. military and intelligence officials citing the latest assessments of the war in Afghanistan. Escalated airstrikes and special operations raids have disrupted Taliban movements and damaged local cells. But officials said that insurgents have been adept at absorbing the blows and that they appear confident that they can outlast an American troop buildup set to subside beginning next July.
VentureBeat:
Angel Investors Flee as Seed and Startup Bubble Begins to Deflate. New data released today by the University of New Hampshire’s Center for Venture Research found that angel investors put much less money into startup deals during the first half of 2010 than they did in 2009, a direct refutation of the widely held notion in Silicon Valley that seed valuations have been rising.
Politico:
White House: No Regrets on Health Care, Climate Strategy. The White House doesn't regret simultaneously pushing health care and climate change legislation, despite the ultimate failure to pass cap and trade, President Barack Obama's domestic policy adviser said Wednesday. Barnes said the White House believes the country can still tackle climate change without Congress passing legislation that caps greenhouse gas emissions, noting the push for executive agencies to curb emissions, coupled with efforts at the state and local government levels.
Rasmussen Reports:
Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 27% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-five percent (45%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -18 (see trends).
Dow Jones:
Acer Inc. fourth quarter revenue may rise from 5 to 10% from the previous quarter, CEO Gianfranco Lanci said. Revenue may increase by 10-15% next year, he said.
Greek real estate prices dropped 11% in the second quarter of 2010 compared with the same time last year, citing figures from a Bank of Greece survey of realtors.
Star:
Turkey's oil and gas exploration agency has discovered shale beds in the country that could hold between 2.6 billion and 8.3 billion barrels of extractable oil. the shale-oil beds near the central cities of Konya and Nigde are similar in geological composition to those in Wyoming, the world's largest.
