- The US hit China with another big trade action on Thursday as it slapped preliminary anti-dumping duties on $2.6bn worth of Chinese pipe imports. The commerce department’s decision to impose duties of up to 99 per cent on imports of some steel pipes is the latest in a string of trade spats between over tyres, cars and chickens. It comes less than a fortnight before President Barack Obama’s first visit to China. The ruling will affect more imports by value than Mr Obama’s recent move to impose duties on Chinese tyres, which sparked an international row in which Beijing accused the US of “rampant protectionism”.
Late Buy/Sell Recommendations Citigroup:
- Upgraded (EQY) to Buy, target $17.50.
Night Trading Asian Indices are +.50% to +1.50% on average.
Asia Ex-Japan Inv Grade CDS Index 114.50 -2.0 basis points.
S&P 500 futures -.07%.
NASDAQ 100 futures -.06%.
Earnings of Note Company/EPS Estimate - (AIG)/1.20
- (BX)/.15
- (EIX)/1.04
- (AES)/.26
Economic Releases
8:30 am EST
- The Change in Non-Farm Payrolls for October is estimated at -175K versus -263K in September.
- The Unemployment Rate for October is estimated at 9.9% versus 9.8% in September.
- Average Hourly Earnings for October are estimated to rise +.1% versus a +.1% gain in September.
10:00 am EST:
- Wholesale Inventories for September are estimated to fall -1.0% versus a -1.3% decline in August.
3:00 pm EST:
- Consumer Credit for September is estimated at -$10.0B versus -$12.0B in August.
Upcoming Splits - None of Note
Other Potential Market Movers - The Fed’s Evans speaking, Fed’s Duke speaking and the (GR) analyst day could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by financial and technology shares 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 higher into the final hour on gains in my Biotech longs, Medical longs, Retail longs, Financial longs and Technology longs. I covered all my (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, every sector is rising and volume is about average. Investor anxiety is very high. Today’s overall market action is very bullish. The VIX is falling -7.58% and is very high at 25.62. The ISE Sentiment Index is below average at 128.0 and the total put/call is slightly above average at .88. Finally, the NYSE Arms has been running slightly above average most of the day, hitting 1.19 at its intraday peak, and is currently .86. The Euro Financial Sector Credit Default Swap Index is falling -.69% today to 66.33 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is falling -.57% to 103.43 basis points. This index is also well below its Dec. 5th record high of 285.99. The TED spread is up +1 basis point to 24 basis points. The TED spread is now down 440 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising +.18% to 34.69 basis points. The Libor-OIS spread is unch. at 13 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up +3 basis points to 2.15%, which is down 50 basis points since July 7th. The 3-month T-Bill is yielding .03%, which is down -1 basis point today.Cyclical and small-cap shares, which had been under the most pressure of late, are strong outperformers today.HMO, Biotech, Bank, Defense, Coal, Alt Energy, Computer, Semi and Disk Drive stocks are especially strong, rising 2.5%+.The market shouldn’t have been that surprised by today’s strong productivity report(which bodes very well for profitability and future hiring) and Cisco’s earnings report.Thus, today’s broad-based rally is even more impressive.Investor angst gauges have been high throughout the day, considering the magnitude of today’s advance.As well, the AAII % Bulls plunged to 22.2% this week, while the % Bears jumped to 55.6%, which is a large positive.I expect an “around expectations” or “slightly better than expectations” jobs report tomorrow.A “bad” report is unlikely, in my opinion.While the market is extended now very short-term, I expect stocks to build on today’s gains next week.Nikkei futures indicate an +183 open in Japan and DAX futures indicate an +1 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on lower energy prices, less financial sector pessimism, diminishing economic fear, short-covering and bargain-hunting.