Market Week in Review

S&P 500 1,101.60 -.09%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,101.60 -.09%
  
• DJIA 10,465.94 +.40%
  
• NASDAQ 2,254.70 -.65%
  
• Russell 2000 650.89 +.04%
  
• Wilshire 5000 11,372.08 -.13%
  
• Russell 1000 Growth 490.63 -.59%
  
• Russell 1000 Value 566.35 +.28%
  
• Morgan Stanley Consumer 676.04 -.35%
  
• Morgan Stanley Cyclical 858.29 -.83%
• Morgan Stanley Technology 555.55 -1.40%
  
• Transports 4,422.94 +1.22%
  
• Utilities 385.53 -.32%
  
• MSCI Emerging Markets 41.22 +.85%
  
• Lyxor L/S Equity Long Bias Index 959.70 +1.07%
  
• Lyxor L/S Equity Variable Bias Index 848.79 +.54%
  
• Lyxor L/S Equity Short Bias Index 861.65 -2.16%
  

Sentiment/Internals

• NYSE Cumulative A/D Line +92,376 +2.69%
  
• Bloomberg New Highs-Lows Index +34 +45
  
• Bloomberg Crude Oil % Bulls 33.0 +13.79%
  
• CFTC Oil Net Speculative Position +44,313 +22.60%
  
• CFTC Oil Total Open Interest 1,240,029 +2.13%
  
• Total Put/Call .80 -3.61%
  
• OEX Put/Call 1.37 -52.26%
  
• ISE Sentiment 102.0 -10.53%
  
• NYSE Arms 1.21 +18.63%
  
• Volatility(VIX) 23.50 +.13%
  
• G7 Currency Volatility (VXY) 11.24 -8.69%
  
• Smart Money Flow Index 8,810.75 +1.09%
  
• Money Mkt Mutual Fund Assets $2.801 Trillion +.10%
  
• AAII % Bulls 40.0 +24.38%
  
• AAII % Bears 33.33 -25.98%
  

Futures Spot Prices

• CRB Index 274.35 +2.90%
  
• Crude Oil 78.95 +.07%
  
• Reformulated Gasoline 212.24 +.35%
  
• Natural Gas 4.92 +8.38%
  
• Heating Oil 208.81 +.49%
  
• Gold 1,183.90 -.79%
  
• Bloomberg Base Metals 204.72 +3.84%
  
• Copper 331.15 +3.57%
  
• US No. 1 Heavy Melt Scrap Steel 322.96 USD/Ton -.11%
  
• China Hot Rolled Domestic Steel Sheet 4,217 Yuan/Ton +1.91%
• S&P GSCI Agriculture 354.14 +6.78%
  

Economy

• ECRI Weekly Leading Economic Index 121.10 +.41%
  
• Citi US Economic Surprise Index -37.4 -.4 point
  
• Fed Fund Futures imply 66.20% chance of no change, 33.80% chance of 25 basis point cut on 8/10
• US Dollar Index 81.54 -1.12%
  
• Yield Curve 236.0 -4 basis points
  
• 10-Year US Treasury Yield 2.91% -8 basis points
  
• Federal Reserve's Balance Sheet $2.308 Trillion -.31%
  
• U.S. Sovereign Debt Credit Default Swap 36.84 +1.45%
• U.S. Municipal CDS Index 207.88 -4.87%
  
• Western Europe Sovereign Debt Credit Default Swap Index 114.92 -10.05%
  
• 10-Year TIPS Spread 1.77% unch.
  
• TED Spread 31.0 -4 basis points
  
• N. America Investment Grade Credit Default Swap Index 104.88 -2.36%
  
• Euro Financial Sector Credit Default Swap Index 99.62 -17.86%
  
• Emerging Markets Credit Default Swap Index 213.55 -7.63%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 253.0 -14 basis points
  
• M1 Money Supply $1.706 Trillion +.06%
• Business Loans 591.20 -.72%
  
• 4-Week Moving Average of Jobless Claims 452,500 -1.0%
  
• Continuing Claims Unemployment Rate 3.6% +10 basis points
  
• Average 30-Year Mortgage Rate 4.54% -2 basis points
  
• Weekly Mortgage Applications 720.60 -4.37%
  
• ABC Consumer Confidence -48 -3 points
  
• Weekly Retail Sales +2.80% -10 basis points
  
• Nationwide Gas $2.74/gallon +.02
  
• U.S. Cooling Demand Next 7 Days 17.0% above normal
• Baltic Dry Index 1,942 +7.83%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 40.0 -5.88%
  
• Rail Freight Carloads 230,443 +1.22%
  
• Iraqi 2028 Government Bonds 84.06 +.44%
  

Best Performing Style

• Small-Cap Value +.43%

Worst Performing Style

• Mid-Cap Growth -.77%

Leading Sectors

• Hospitals +2.77%
• HMOs +2.77%
• Airlines +2.32%
• REITs +1.98%
• I-Banks +1.88%

Lagging Sectors

• Steel -2.39%
• Networking -3.07%
• Disk Drives -3.07%
  
• Oil Tankers -4.49%
• Education -4.80%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Reversing Higher into Final Hour on Heatlhcare Stock Strength, Short-Covering, Bargain-Hunting

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Around Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 24.35 +.91%
  
• ISE Sentiment Index 103.0 -.96%
  
• Total Put/Call .78 -21.21%
  
• NYSE Arms 1.22 -9.16%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 104.88 bps +1.18%
  
• European Financial Sector CDS Index 99.0 bps +.05%
  
• Western Europe Sovereign Debt CDS Index 115.0 bps +2.56%
  
• Emerging Market CDS Index 209.85 bps -2.12%
  
• 2-Year Swap Spread 17.0 unch.
  
• TED Spread 31.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .14% -1 bp
  
• Yield Curve 235.0 -5 bps
  
• China Import Iron Ore Spot $136.30/Metric Tonne +.15%
  
• Citi US Economic Surprise Index -37.40 +3.4 points
  
• 10-Year TIPS Spread 1.77% -2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -7 open in Japan
• DAX Futures: Indicating +12 open in Germany

Portfolio:

• Higher: On gains in my Biotech, Medical, Technology and Retail long positions
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is very bullish as the S&P 500 reverses higher from morning losses again despite a mildly disappointing GDP report and a weaker euro. On the positive side, Homebuilding, HMO, Hospital, Biotech, Medial and Gold stocks are especially strong, rising 1.5%+. The S&P GSCI Ag Spot Index is rising another +3.07% today and is now up +25.5% from its June 7th low. Copper also continues to trade well, rising another +.78%. Lumber is jumping +3.7% today. The Baltic Dry Index has gained another +6.35% this week. The Spain sovereign cds is falling -1.33% today to 176.17 bps, despite negative comments from Moody's. The Libor-OIS spread is falling to the lowest level since May 20th. On the negative side, Oil Tanker, Alt Energy, Steel and Software shares are under mild pressure, falling more than -.5%. The 10-year yield continues to fall too much, dropping another -8 bps to 2.89%. I suspect stocks will build on today's reversal early next week. I expect US stocks to trade modestly higher into the close from current levels on short-covering, less economic fear, technical buying, healthcare stock strength and bargain-hunting.

Today's Headlines

Bloomberg:

• U.S. Economy: Growth Slows as Consumer Spending Decelerates. The U.S. economy slowed in the second quarter as a scarcity of jobs eroded consumer spending, leaving the rebound dependent on a surge in business investment. Gross domestic product grew at a 2.4 percent annual pace, less than forecast, after a 3.7 percent first-quarter gain that was larger than previously estimated, according to Commerce Department data issued today in Washington. Other reports showed business activity unexpectedly accelerated in July and consumer sentiment fell less than projected. “The economy is muddling through,” Ethan Harris, head of North America economics at Bank of America-Merrill Lynch Global Research in New York, said in an interview. “We’re probably not going to see a really strong number for a while. We need to see some pickup in job growth.”
  
• Business Activity in U.S. Expanded Faster in July. Business activity in the U.S. expanded in July at a faster pace than projected, signaling manufacturing is driving growth in the world’s largest economy. The Institute for Supply Management-Chicago Inc. said today its business barometer rose to 62.3 this month, exceeding the median forecast of economists surveyed by Bloomberg News, after 59.1 in June. The employment measure rose to 56.6 from 54.2 in June, and the production gauge increased to 65 from 64.2. The gauge of new orders climbed to 64.6 from 59.1. The index of backlogs rose to 57.6 from 50.7. The gauge of inventories increased to 50.8 from 46.5.
• Bank Debt Swaps Headed for Biggest Monthly Drop Since April 08'. An index of credit-default swaps insuring against losses on European bank bonds is heading for the biggest monthly drop since April 2008. The Markit iTraxx Financial Index linked to 25 banks and insurers has fallen 43.5 basis points this month and is near the lowest level since April 23. The gauge pared the decline today, rising 3.5 basis points to 118.5, according to JPMorgan Chase & Co. prices at 1:30 p.m. in London. “We believe the best course of action for investors is to go with the flow,” said Aziz Sunderji, a London-based strategist at Barclays Capital. “We would advise investors to spend the remainder of the summer adding risk.”
• Acquisition Spree May Point to Second-Half Pickup in Dealmaking. A spate of mergers and acquisitions during the past two weeks may signal the start of a comeback for global dealmaking in the second half of 2010. There have been 787 announced deals since July 19 with a total disclosed value of $86.4 billion, according to data compiled by Bloomberg. The surge pushed global deal volume past the $1 trillion mark for the year, more than a 10 percent increase over the first seven months of 2009. Companies are now getting more confident as they increasingly hoard cash and borrowing costs fall, according to some dealmakers. “While boards have been reluctant to pull the trigger, they’re getting more comfortable with the economic environment and so there may be a pickup,” said Wilhelm Schulz, head of European M&A at Citigroup Inc.
• Soybeans, Corn Gain as Small World Crops May Aid U.S. Exports. Soybeans jumped to a 12-week high and corn rose for a third day as hot, dry weather damaged crops from Russia to Germany, boosting demand for supplies from the U.S., the world’s largest grower and exporter. Russia, the seventh-largest feed-grain exporter and oilseed processor, declared emergencies in 27 crop-producing regions, four more than a week ago, as drought harmed crops across at least 10.3 million hectares (25.5 million acres). German grain production will fall as much as 11 percent to 44 million metric tons from last year, Alfred C. Toepfer International GmbH said. “People have underestimated the damage and the crops are still shrinking,” said Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis. “There is a tightening global supply, and that means more U.S. exports.” Soybean futures for November delivery climbed 9.25 cents, or 0.9 percent, to $9.9725 a bushel at 11:03 a.m. on the Chicago Board of Trade, after rising to $10.0175, the highest price since May 3. The most-active contract was up 10 percent in July, heading for the biggest monthly gain since May 2009. Corn futures for December delivery rose 7.25 cents, or 1.8 percent, to $4.01 a bushel on the CBOT, after touching $4.025, the highest level since July 19. Corn has advanced 7.4 percent this month, which would be biggest monthly increase since April.
• Congress to Vote on Lifting Obama Ban on Deep-Water Drilling. Lawmakers will vote today on a proposal to overturn President Barack Obama’s suspension of deep-water drilling as the House debates legislation toughening rules for companies producing oil and natural gas offshore. An amendment that would end the Obama administration’s moratorium on exploration is among nine scheduled for debate before the House votes on an overhaul of drilling rules in the aftermath of BP Plc’s Gulf of Mexico oil spill.
• 'Meaningful Correction' Looms for China Housing, Economists Say. China’s housing prices, which have tripled in major cities in the past 10 years, face a “meaningful correction” in the next year or two, according to a paper from the U.S. National Bureau of Economic Research. Prices of like-for-like-quality land at auction in Beijing climbed almost 800 percent between 2003 and this year, economists Jing Wu, Joseph Gyourko and Yongheng Deng wrote in the working paper published by the Cambridge, Massachusetts- based arbiter of U.S. business cycles. Their calculations showed Beijing prices could fall as much as 40 percent if investors lost confidence in the market.
• McAfee Advances the Most in 17 Months on Third-Quarter Forecast. McAfee Inc., the second-largest maker of security software, rose the most in 17 months in New York trading after the company’s forecast allayed investors’ concerns about slowing growth. McAfee jumped $2.65, or 8.8 percent, to $32.90 at 1:53 p.m. in New York Stock Exchange composite trading. Earlier, it climbed 10 percent to $33.30 in the biggest gain since February 2009.

Wall Street Journal:

• BP(BP) Well-Plugging Effort Hits Snag. The government's point man for the Gulf oil spill said Friday there has been a delay in a procedure that will help stop the gusher for good.

CNBC:

• Letting Bush Tax Cuts Die 'Not a Good Plan': Fed's Bullard.

NY Times:

• Moody's Says Spain's Credit Rating Likely to Slip. Moody’s said on Friday that Spain’s sovereign debt, whose triple-A rating was put on review late last month, would likely be downgraded at the end of a three-month study, given the country’s growth prospects and the challenges it may face in implementing fiscal austerity. The cost of credit default swaps on Spanish sovereign debt widened to 185 basis points, 7 more than the previous day. By comparison, the cost of protecting Greek sovereign debt swung out by 15 basis points to 739, while the C.D.S. on Portuguese sovereign debt moved 3 basis points to 221. The Spanish national statistics agency said Friday that unemployment had edged higher for a second quarter, hitting 20.09 percent, up 0.04 percent since the last measure was announced in March. Despite the ratings review, Moody’s said “the credit fundamentals of Spain continue to be very strong.”

Lloyd's List:

• US Shippers Wary as Box Shortages Continue. SOME of the largest shippers in the US are continuing to suffer from container shortages as the back-to-school and pre-Christmas peak shipping season gets underway on the transpacific trade. During what is a traditional financial results season for US-listed corporations, executives leading firms shipping toys, clothing and household goods reported facing problems with both capacity on vessels and a shortage of boxes.

Market Folly:

• Hedge Fund Viking Global Likes American Tower(AMT), Invesco(IVZ): Q2 Letter.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Friday shows that 26% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -16 (see trends).

Politico:

• Budget-Cutting Democrats Are Undercut. A Democratic spending fight broke out behind closed doors Thursday, as party leaders successfully pressured four junior lawmakers not to offer an amendment slashing housing and transportation programs by $1.02 billion. House Appropriations Committee Chairman David R. Obey argued passionately against the amendment and its authors — though not by name — in a speech to the Democratic Caucus in the morning, according to Democratic insiders.
• Democrats Race Republican Party to Health 'Repeal'. For the first time, House Democrats are proposing repealing a piece of the health care overhaul, one that small businesses have been warning is going to be overly burdensome. The move comes just four months after the Democrats' health plan passed in March. The provision would have required businesses to file 1099 tax forms for all transactions with vendors that total over $600. Due for implementation in 2012, it would have raised $19 billion over 10 years to pay for the health care overhaul. Rep. Scott Murphy (D-NY) offered the bill on Friday morning. Ways and Means Chairman Sander Levin (D-Mich.), spoke in favor of the bill on the House floor Friday. The move comes after Republicans threatened to attach a similar amendment to a vote on the Democrats? jobs legislation late Thursday.

Real Clear Politics:

• Dems' Health Care Plans Mean Lower Quality, Long Waits. Senate Majority Leader Harry Reid, D-Nev., told a group of liberal activists meeting in Las Vegas they shouldn't worry about not getting the single-payer provision in the new health care law. "We're going to have a public option," Reid said. "It's just a question of when." Remember the objections conservatives and many Republicans raised during the debate about government-run health care and the danger of eliminating private health insurance, despite its many flaws? Recall that Britain's National Health Service was frequently cited as an example of where the U.S. health system might be headed: coverage for all, but with lower quality, long waits for major surgery and denial of care when the government decides the procedure is not "cost effective."Anyone who believes a U.S. health care system based on the NHS model can somehow fare better than Britain's had better consider this recent headline and story from London's Sunday Telegraph: "Axe Falls on NHS Services; Hip operations, cataract surgery and IVF rationed; Cancer care, maternity, pediatric services at risk."

MailOnline:

• America's Deadliest Month Yet: As 3 More U.S. Soldiers Are Killed in Afghanistan the Death Toll for July Stands at 63.

CESR:

• Report on Trends, Risks and Vulnerabilities in Financial Markets.

Vedomosti:

• Russia will boost defense spending 60% by 2013 to 2.03 trillion rubles to upgrade its arms, fleet and air forces, citing a three-year budget approved by the government yesterday.

Valor Economico:

• Brazil's economy will continue to have a "weak" expansion in the third quarter, after growth decelerated in the second quarter as a result of the withdrawal of fiscal and monetary stimulus, citing Economic Policy Secretary Nelson Barbosa. Growth is Latin America's biggest economy will be closer to .5% than to 1% in the second quarter over the first three months of the year, Barbosa said. Barbosa forecast the economy contracted .1% in July.

Bear Radar

Style Underperformer:

• Mid-Cap Value (-.30%)

Sector Underperformers:

• 1) Oil Tankers -1.70% 2) Oil Service -.86% 3) Alt Energy -.74%

Stocks Falling on Unusual Volume:

• THOR, CVD, COHR, FSLR, CTV, VLCM, APKT, NTRI, CSTR, CAVM, CTCT, PLCE, ARBA, FNSR, OCLR, ANW and GNW
  

Stocks With Unusual Put Option Activity:

• 1) JDSU 2) WFR 3) CSTR 4) K 5) UPL
  

Stocks With Most Negative News Mentions:

• 1) AEP 2) ATI 3) X 4) MNI 5) KRNY
  

Bull Radar

Style Outperformer:

• Small-Cap Value (+.20%)

Sector Outperformers:

• 1) HMOs +2.13% 2) Hospitals +1.52% 3) Biotech +1.47%

Stocks Rising on Unusual Volume:

• ABAX, CQB, VOLC, BG, QDEL, MNTA, TWC, CHA, TLK, CVC, MFE, QSFT, VECO, CPL, COP, PWER, PRAA, WCRX, MXWL, SHOO, ACOM, VPRT, GPRO, HMSY, ABAX, EXPE, CHDX, ASIA, IDSA, ROVI, VOLC, LIFE, MNTA, NFLX, ITRI, BPO and AGP
  

Stocks With Unusual Call Option Activity:

• 1) LPX 2) APKT 3) PWER 4) VPRT 5) CSTR
  

Stocks With Most Positive News Mentions:

• 1) CVX 2) ACI 3) GOOG 4) MSFT 5) AAPL