- The corporate bond market showed encouraging signs last week as the extra yield borrowers typically pay on new debt to lure investors shrank and bond prices rose in secondary market trading, Bank of America said.The “new issue concessions” companies paid on debt sold last week fell to 70 basis points, from 130 basis points the previous week, analysts led by Hans Mikkelsen and Mike Cho wrote.“The one of the market improved significantly in the latter part of the month,” the analysts wrote, with newly priced bonds trading “meaningfully tighter.”
- Dow Jones Hedge Fund Indexes, Inc., today announced it will temporarily suspend publication of the Dow Jones Hedge Fund Equity Long/Short and Equity Market Neutral Strategy Benchmarks, effective November 3 until further notice.The company also said that its Dow Jones Hedge Fund Balanced Portfolio Indexes also will be suspended. In a statement, Dow Jones said: "The decision to halt publication of the benchmarks is the result of the temporary measures taken by the investment manager of the managed account platform that supports the Dow Jones Hedge Fund Strategy Benchmarks and Dow Jones Hedge Fund Balanced Portfolio Indexes to temporarily reduce the risk profiles of some of its managers."
- The cost of protecting investors in Australian corporate bonds from default declined, according to traders of credit-default swaps.The Markit iTraxx Australia index was quoted 10 basis points lower at 235 basis points as of 11:26 am in Sydney, Citigroup Inc. data show.
- More companies have given up their factory space in Singapore because of the credit crunch, citing JTC Corp., the city’s largest industrial developer.Termination at ready-built facilities jumped 45% in the third quarter from a year earlier as manufacturers merged their operations, citing JTC.
South China Morning Post:
- China carmakers including Jianghuai Motor, Changan Ford Mazda and Dongfeng Peugeot Citroen are cutting staffbecause of a slowdown in the global economy.
Investor Daily Indonesia:
- PT Perusahaan Listrik Negara will delay the construction of 31 power-plant projects because of a lack of funding, citing an official of the utility.
Late Buy/Sell Recommendations - None of note
Night Trading Asian Indices are -1.0% to +1.25% on average.
S&P 500 futures -.14%.
NASDAQ 100 futures -.09%.
- Factory Orders for September are estimated to fall .8% versus a 4.4% decline in August.
Upcoming Splits - None of note
Other Potential Market Movers - The Fed’s Fisher speaking, weekly retail sales reports, (FFIV) analyst meeting, Oppenheimer Healthcare Conference and Goldman Sachs Software Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and technology stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Medical longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is neutral as the advance/decline line is slightly higher, sector performance is mixed and volume is below average. Investor anxiety is high. Today’s overall market action is neutral. The VIX is falling 8.4% and is very elevated at 54.85. The ISE Sentiment Index is below average at 133.0 and the total put/call is above average at .96. Finally, the NYSE Arms has been running high most of the day, hitting 1.47 at its intraday peak, and is currently 1.36. The Euro Financial Sector Credit Default Swap Index is falling .72% today to 92.67 basis points. This index is up from a low of 52.66 on May 5th, but down from 157.81 on Sept. 16th. The North American Investment Grade Credit Default Swap Index is falling 1.0% to 198.0 basis points. The TED spread is falling another 8.6% to 242 basis points. The TED spread is now down 222 basis points in about three weeks.The 2-year swap spread is up 4.79% to 125.75 basis points.The Libor-OIS spread is falling 6.47% to 223 basis points.The 10-year TIPS spread, a good gauge of inflation expectations, is falling 5 basis points to .86%, which is down 177 basis points in about four months and at the lowest level since January 1999.The market’s consolidating, low volatility, action today is a large positive after last week’s gains.The (XLF) trades well despite more weakness in shares of (GS).Oil trades very poorly considering recent stock gains and the pullback in the US dollar.I still expect another substantial move higher in US stocks to begin no later than Wednesday.One of my longs, (ISRG), is 6% higher today.I still see substantial upside in these shares from current levels over the intermediate/long-term.Nikkei futures indicate an +483 open in Japan and DAX futures indicate a -8 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, less financial sector pessimism, diminishing forced selling, less credit market angst, lower energy prices and bargain-hunting.
Bloomberg: - The Federal Reserve’s provision of $30 billion each to four central banks’ need to sell assets in support of their currencies, said Matthew Moore, an interest-rate strategist in New York at Banc of America Securities LLC.The Fed on Oct. 29 agreed to provide so-called currency swaps to the central banks of Brazil, Mexico, South Korea and Singapore, expanding to emerging nations its efforts to thaw frozen money markets.If tapped, the swaps make it less likely they’ll have to sell reserve assets, which tend to consist largely of Treasuries and agency securities, to prop up their currencies, Moore wrote.
- A combination of this year’s credit crisis and slumping commodities triggered an exit from exchange-traded notes, with investors pulling about $460 million out of the 30 ETNs tracked by researcher Morningstar Inc.Barclays Plc, which runs iPath Dow Jones-AIG Commodity Index Total Return, and which is the biggest ETN with $2.7 billion, lost 12% of assets in October.
