U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.
BOTTOM LINE: I expect US stocks to finish the week mixed as buyout speculation, less economic fear and short-covering offset technical selling, rising sovereign debt angst and China bubble worries. My intermediate-term trading indicators are giving mixed signals and the Portfolio is 75% net long heading into the week.
Sunday, September 12, 2010
Friday, September 10, 2010
Weekly Scoreboard*
Indices
- S&P 500 1,109.55 +1.78%
- DJIA 10,462.77 +1.38%
- NASDAQ 2,242.48 +1.93%
- Russell 2000 636.46 +.66%
- Wilshire 5000 11,432.09 +1.60%
- Russell 1000 Growth 493.53 +1.63%
- Russell 1000 Value 571.70 +1.74%
- Morgan Stanley Consumer 683.03 +1.90%
- Morgan Stanley Cyclical 851.61 +.86%
- Morgan Stanley Technology 553.21 +1.86%
- Transports 4,401.18 +1.36%
- Utilities 394.74 -.54%
- MSCI Emerging Markets 42.10 +1.70%
- Lyxor L/S Equity Long Bias Index 964.88 +1.62%
- Lyxor L/S Equity Variable Bias Index 851.28 +1.18%
- Lyxor L/S Equity Short Bias Index 859.09 -1.35%
- NYSE Cumulative A/D Line +95,849 +3.72%
- Bloomberg New Highs-Lows Index +169 -67
- Bloomberg Crude Oil % Bulls 18.0 -37.93%
- CFTC Oil Net Speculative Position +10,489 -20.05%
- CFTC Oil Total Open Interest 1,347,231 +3.0%
- Total Put/Call 1.27 +39.56%
- OEX Put/Call 1.08 -41.62%
- ISE Sentiment 96.0 -1.03%
- NYSE Arms .79 +66.66%
- Volatility(VIX) 21.99 -5.26%
- G7 Currency Volatility (VXY) 11.79 -1.58%
- Smart Money Flow Index 9,063.14 -.52%
- Money Mkt Mutual Fund Assets $2.839 Trillion +.4%
- AAII % Bulls 43.87 +42.44%
- AAII % Bears 31.61 -25.09%
- CRB Index 275.14 +1.47%
- Crude Oil 76.56 +2.10%
- Reformulated Gasoline 197.37 +2.77%
- Natural Gas 3.88 +1.94%
- Heating Oil 210.40 +2.24%
- Gold 1,247.60 -.43%
- Bloomberg Base Metals 213.47 -.50%
- Copper 341.20 -2.25%
- US No. 1 Heavy Melt Scrap Steel 323.0 USD/Ton unch.
- China Hot Rolled Domestic Steel Sheet 4,423 Yuan/Ton +4.44%
- S&P GSCI Agriculture 396.91 +4.11%
- ECRI Weekly Leading Economic Index 122.0 +1.24%
- Citi US Economic Surprise Index -16.90 +21.50 points
- Fed Fund Futures imply 80.0% chance of no change, 20.0% chance of 25 basis point cut on 9/21
- US Dollar Index 82.80 +.33%
- Yield Curve 222.0 +4 basis points
- 10-Year US Treasury Yield 2.79% +9 basis points
- Federal Reserve's Balance Sheet $2.288 Trillion +.13%
- U.S. Sovereign Debt Credit Default Swap 47.60 +5.80%
- U.S. Municipal CDS Index 228.50 +2.58%
- Western Europe Sovereign Debt Credit Default Swap Index 151.84 +6.0%
- 10-Year TIPS Spread 1.82% +15 basis points
- TED Spread 16.0 -1 basis point
- N. America Investment Grade Credit Default Swap Index 103.25 -1.43%
- Euro Financial Sector Credit Default Swap Index 111.83 +.50%
- Emerging Markets Credit Default Swap Index 249.77 +5.48%
- CMBS Super Senior AAA 10-Year Treasury Spread 255.0 -2 basis points
- M1 Money Supply $1.778 Trillion +1.91%
- Business Loans 604.10 +.18%
- 4-Week Moving Average of Jobless Claims 477,800 -1.90%
- Continuing Claims Unemployment Rate 3.5% unch.
- Average 30-Year Mortgage Rate 4.35% +3 basis points
- Weekly Mortgage Applications 880.0 -1.94%
- ABC Consumer Confidence -43 +2 points
- Weekly Retail Sales +3.0% +20 basis points
- Nationwide Gas $2.69/gallon +.1/gallon
- U.S. Cooling Demand Next 7 Days 1.0% below normal
- Baltic Dry Index 2,988 +5.40%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 35.0 -6.67%
- Rail Freight Carloads 237,006 -.08%
- Iraqi 2028 Government Bonds 85.52 -.58%
- Large-Cap Value +1.74%
- Small-Cap Growth +.65%
- HMOs +3.87%
- Oil Service +3.77%
- Education +3.70%
- Biotech +3.43%
- Tobacco +3.35%
- REITs -.59%
- Gold -.72%
- Oil Tankers -.86%
- Airlines -1.49%
- Semis -3.14%
One-Week High-Volume Losers
*5-Day Change
Stocks Rising into Final Hour on Less Economic Fear, Short-Covering, Falling Sovereign Debt Angst
Broad Market Tone:
- Advance/Decline Line: Slightly Higher
- Sector Performance: Most Sectors Rising
- Volume: Light
- Market Leading Stocks: Underperforming
- VIX 21.91 -3.95%
- ISE Sentiment Index 103.0 +3.0%
- Total Put/Call 1.25 +15.74%
- NYSE Arms .76 -1.61%
- North American Investment Grade CDS Index 103.25 bps -.24%
- European Financial Sector CDS Index 111.83 bps -4.09%
- Western Europe Sovereign Debt CDS Index 151.84 bps -.74%
- Emerging Market CDS Index 249.77 bps -1.08%
- 2-Year Swap Spread 20.0 unch.
- TED Spread 16.0 unch.
- 3-Month T-Bill Yield .13% unch.
- Yield Curve 223.0 +3 bps
- China Import Iron Ore Spot $139.70/Metric Tonne -.21%
- Citi US Economic Surprise Index -16.90 +.4 point
- 10-Year TIPS Spread 1.82% +7 bps
- Nikkei Futures: Indicating +26 open in Japan
- DAX Futures: Indicating -1 open in Germany
- Slightly Higher: On gains in my Biotech, Retail and Medical long positions
- Disclosed Trades: None
- Market Exposure: 75% Net Long
Today's Headlines
Bloomberg:
- Anglo Irish Bank Subordinated Credit Swaps Rise After Good, Bank Bank Split. Credit-default swaps tied to Anglo Irish Bank Corp.’s subordinated bonds rose, according to data provider CMA. Swaps protecting the riskier, subordinated debt of the nationalized lender climbed 43 basis points to 1,780 as of 4 p.m. in London, while contracts on its senior notes fell 13 basis points to 763, CMA prices show. Credit swaps on European government bonds rose, while contracts linked to the region’s corporate debt declined. The Markit iTraxx Crossover Index of credit-default swaps on 50 mostly junk-rated European companies fell 5.7 basis points to 477.2, the lowest level in a month and little changed in the past week, according to Markit Group Ltd. The cost of insuring financial company debt declined, with the Markit iTraxx Financial Index on the senior debt of 25 banks and insurers falling 6 basis points to 129.5 and the subordinated measure dropping 8 basis points to 193, JPMorgan Chase & Co. prices show. Default swaps to protect Ireland’s government debt rose 9 basis points to 385, according to CMA. The cost of insuring other European sovereign bonds also increased on speculation more governments will be forced to bail out their banking systems. Credit swaps linked to Greece’s bonds added 4 basis points to 893, swaps tied to Spanish debt climbed 2 basis points to 230, Italy rose 3 basis points to 206 and Portugal increased 5 basis points to 339, CMA prices show.
- Crude Gains After U.S. Pipeline Shut. Oil rose the most in six weeks after a pipeline that carries Canadian crude to refineries in the U.S. Midwest was closed because of a leak. Futures increased as much as 3.1 percent after Enbridge Energy Partners LP shut its Line 6A, part of a system that can transport 670,000 barrels a day from Canada. “It’s all about Enbridge,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “It’s a big line, which supplies a bunch of refineries in the Midwest. Depending on how long it is shut, this could put a big-sized crimp on supplies in the region.”
- Bullishness Surges After Hitting One-Year Low: Chart of the Day. The AAII bullish gauge, which measures data back to 1987, has only doubled in a two-week period eight other times, and this week’s move is the fifth-biggest increase for that timeframe. The largest was in July 2000, when the gauge increased to 65 percent from 26.7 percent.
- NBC All Action, No Talk as Network Tries to Rebound. A year after its ratings debacle with comedian Jay Leno, NBC has changed course and will air prime-time shows from some of Hollywood’s most expensive producers when the new television season begins this month.
- Commercial Property Losses Mount as Loan Services Triage Real Estate Debt. Monthly losses on commercial property debt bundled into bonds have doubled since April as loan specialists gave up trying to restructure smaller mortgages, Deutsche Bank AG data show. Average losses on loans packaged into U.S. commercial mortgage-backed securities totaled $501 million in August compared with $245 million in April, according to Harris Trifon, a Deutsche Bank analyst in New York who based the estimate on a three-month average. In August 2009, the number was $41 million. “It’s the beginning of a trend,” Trifon said in a telephone interview. “Given the sheer volume of loans in special servicing, there are going to be many loans that are liquidated.”
- CBOE Asks SEC for Permission to List Options That Expire Within Single Day. CBOE Holdings Inc.(CBOE), operator of the largest U.S. options market, asked regulators for permission to become the nation’s first to list contracts that expire in as little as one day. The daily options would be linked to as many as 200 stocks, exchange-traded funds, exchange-traded notes and indexes, according to a filing with the Securities and Exchange Commission dated Aug. 24. The contracts may have terms of one, two, three or four days, the owner of the Chicago Board Options Exchange said.
Wall Street Journal:
- Terror Threat More Diverse, Study Says. The terrorist threat faced by the U.S. nine years after the 2001 attacks on New York and Washington is far more difficult to detect but less likely to produce mass-casualty attacks, according to the former leaders of the 9/11 Commission.
- New Corporate Tax Regime Part of EU Market Reform - Draft. The European Commission is planning to come forward with a proposal for a pan-European tax regime for corporations next year, according to a draft document seen by Dow Jones Newswires.
- Bullard Fed Ready for Further Action if Necessary. A top Federal Reserve official said Friday the central bank has moved closer to providing additional support to the economy via new asset purchases, although he added he doesn’t expect that action to become necessary.
- U.S. Sees Heightened Threat in Mexico. To Combat 'Narcoinsurgency,' Obama Administration Considers New Military and Intelligence Aid Against Drug Gangs.
New York Post:
- Alpha Titans Says Hedge Funds Pulling Back From Uncertain Markets. Apparently, even the biggest hedge funds are sitting on the sidelines. The latest sign that hedge fund managers are pulling back from tumultuous investing waters comes in the form of an August letter to investors from Alpha Titans, a fund of hedge funds that invests in tops hedge funds such as SAC Capital, Paulson & Co., Citadel, DE Shaw and Bridgewater. "Many investors are resting on the sidelines with few hot performance numbers to chase," according to a copy of the letter obtained by The Post.
- The Full List of How Obama Spent $792 Billion on Fiscal Stimulus.
- Yale Paid David Swensen $5.3 Million During Year That Endowment Got Crushed.
- Capitol Hill Employees Owed $9.3 Million in Back Taxes Last Year, Data Show. Capitol Hill employees owed $9.3 million in overdue taxes at the end of last year, a sliver of the $1 billion owed by federal workers nationwide but one with potential political ramifications for members of Congress. The debt among Hill employees has risen at a faster rate than the overall tax debt on the government's books, according to Internal Revenue Service data. It comes at a time when some Republican members are pushing for the firings of government workers who owe the IRS and President Obama has urged a crackdown on delinquent government contractors.
- The Special-Interest President. Obama introduces new giveaways for Wall Street and Big Labor. On Tuesday, the Federal Housing Administration announced a "short refinance option" for underwater mortgages - that is, mortgages on which the amount that the homeowner owes is more than the house is worth. Under this new program, the government promises to guarantee what's left of the mortgage's face value after the mortgage holder agrees to write off 10 percent of the principal. For some big Wall Street financial houses, this could represent a major windfall. Some of these firms bought risky mortgages at huge discounts from their face value, often just 40 percent or 50 percent of the amount owed. Say a Wall Street firm paid $250,000 to take over a risky $500,000 mortgage. If the firm agrees to reduce the face value of what is owed by $50,000, the FHA will guarantee the mortgage. Thanks to the protection from default, the loan's value instantly increases from $250,000 to $450,000 - a $200,000 gift to the Wall Street mortgage holder. According to the Center for Responsive Politics, Wall Street giants Goldman Sachs(GS), Citigroup(C), JPMorgan Chase(JPM) and Morgan Stanley(MS) preferred Mr. Obama to Republican opponent John McCain by nearly 3 to 1.
- FTC Sues Lights of America Over Performance Claims for Some LED Bulbs. The bulbs don't burn as brightly or as long as advertised, the suit says.
- Cadmium in Chinese Jewelry Raises Alarms. U.S. regulators have recalled more than 200,000 pieces of jewelry containing the metal, which can be toxic in high levels.
- Pensions Perilously Binging Upon Hedge Funds, Funds of Funds and Funds of Funds of Funds(March 20,2007). As pensions load up on multi-tiered hedge fund products created and recommended by their so-called independent consultants, fiduciary principles fall by the wayside. A debate is swirling in Washington about the risks and rewards of hedge funds and their impact upon the financial markets.
- VIX Futures Contango Soars. Extreme contango readings are generally associated with turning points in stocks, which is why in the chart below, I have highlighted the two most extreme VIX futures contango readings.
Rasmussen Reports:
- 61% Say Cutting Spending Will Create More Jobs Than Obama's New $50 Billion Stimulus Program. President Obama this week proposed a long-term federal jobs program with a $50 billion price tag, but 61% of U.S. voters say cutting government spending and deficits will do more to create jobs than the president's new program. A new Rasmussen Reports national telephone survey finds that just 28% think the president's jobs program is a better way to create new jobs.
- Just Don't Call it a 'Stimulus'. President Barack Obama has “no problem” with the idea that he’s trying to stimulate the economy. He’s just not quite willing to call his new economic proposals a stimulus. Obama repeatedly avoided using the word during his Friday news conference, using a grab bag of other terms to describe the $787 billion package that passed in 2009 and the White House’s fresh infrastructure spending proposal.
- Pelosi Tells Canada She Dislikes Fossil Fuels. Nancy Pelosi educates herself about Canada’s oil sands, but makes clear her distaste for fossil fuel. Nancy Pelosi would like to see the United States buy less of what Canada is selling. At a luncheon at the U.S. ambassador’s Ottawa residence on Thursday, the powerful Speaker of the House of Representatives said she is committed to reducing her country’s dependence on fossil fuels – and that includes Canadian crude oil and natural gas. In a casual post-meal conversation with a group that included Laureen Harper, the wife of the Prime Minister, Ms. Pelosi remarked pointedly that she doesn’t like any “fossil” and doesn’t care whose it is or where it comes from. Canada is the largest source of imported fossil fuels into the United States.
- America's Public Servants Are Now Its Masters by Mort Zuckerman. There really are two Americas, but they are not captured by the standard class warfare speeches that dramatise the gulf between the rich and the poor. Of the new divisions, one is the gap between employed and unemployed that President Barack Obama seeks to close with yet another $50bn stimulus programme. Another is between workers in the private and public sectors. No guesses which are the more protected. A recent study by the Mayo Research Institute found that “private-sector workers were nearly three times more likely to be jobless than public-sector workers”.
- China's employment situation remains "very grave" with 24 million job-seeks for only 12 million openings, citing Yin Chengji, a Minister of Human Resources and Social Security spokesman. People looking for work include 6.3 million fresh graduates from universities and 6 million from high schools.
Bear Radar
Style Underperformer:
- Small-Cap Value (+.24%)
- 1) Semis -2.35% 2) Disk Drives -1.12% 3) Computer Hardware -.99%
- NSM, PCG, POWI, CHL, CETV, BTE, ENB, EEP, CROX, SCOK, TNDM, AVGO, MCHP, CREE, OVTI, ADBE, ATHR, CSTR, ARST, NETL, NUVA, SNDA, RBCN, HAIN, CRUS, ILMN, CMO, WPI, TRW and ADI
- 1) WEN 2) ARM 3) AEO 4) NSM 5) ALTR
- 1) PGE 2) ACN 3) DTE 4) CMA 5) F
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