North American Investment Grade CDS Index 93.52 bps +.20%
European Financial Sector CDS Index 90.50 bps -3.35%
Western Europe Sovereign Debt CDS Index 138.50 bps -.30%
Emerging Market CDS Index 204.54 bps +.66%
2-Year Swap Spread 17.0 unch.
TED Spread 17.0 unch.
Economic Gauges:
3-Month T-Bill Yield .12% +1 bp
Yield Curve 225.0 +5 bps
China Import Iron Ore Spot $149.90/Metric Tonne +.33%
Citi US Economic Surprise Index -3.70 +.2 point
10-Year TIPS Spread 2.19% +2 bps
Overseas Futures:
Nikkei Futures: Indicating +53 open in Japan
DAX Futures: Indicating +16 open in Germany
Portfolio:
Higher: On gains in my Tech, Ag and Retail long positions
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades near session highs despite recent sharp gains, mixed economic data and US dollar strength. On the positive side, Airline, Gaming, Disk Drive, Software and Oil Service shares are especially strong, rising 1.0%+. "Growth" shares are also outperforming "value" shares again. Copper is rising +.3% and the S&P GSCI Ag Spot Index is rising +.88%. Weekly retail sales rose +2.7% this week versus a +2.6% gain the prior week. The 10-year yield is rising +8 bps to 2.64%. The ongoing trend lower in key credit default swap indices remains a large positive. On the negative side, Education, HMO and Computer Hardware shares are under pressure, falling more than 1.0%. The Greece sovereign cds is rising +1.87% to 689.75 bps and the Russia sovereign cds is rising +2.15% to 142.56 bps. The broad market is consolidating recent gains again on below average volume, which is healthy. Select stocks continue to massively outperform the major averages on good volume, as well. One of my longs, (MOS), is hitting another 52-week high today on above-average volume. I still see meaningful upside in the shares from current levels. I expect US stocks to trade mixed-to-higher into the close from current levels on tax policy/election optimism, diminishing sovereign debt angst, less economic fear, short-covering, buyout speculation, investment manager performance angst, less financial sector pessimism and earnings optimism.
Hedge Funds Buying Bearish Options is Bullish Signal: Technical Analysis. Hedge funds are buying bearish options on exchange-traded funds to protect their positions, a signal that stocks may rally, said Todd Salamone at Schaeffer’s Investment Research. Since mid-September, the ratio of bought-to-open puts versus bought-to-open calls has been increasing on major ETFs, such as the SPDR S&P 500 ETF Trust, the PowerShares QQQ and the iShares Russell 2000 Index Fund, Salamone said.
Transport Companies May Reach Level Bullish for Stocks: Technical Analysis. Transportation companies are close to a level that may help drive more gains for U.S. stocks, said Christopher Verrone, at Strategas Research Partners. “Those are economically sensitive groups leading the push in the markets,” Verrone, lead technical analyst at Strategas, said in a telephone interview from New York. “It’s a pretty constructive backdrop. With the transports leading the push higher, the market’s advance may have the potential to extend into the first quarter.”
PayPal Taps Developers to Spread Its Software, Vying With Visa(V). PayPal Inc., the online-payments processor owned by EBay Inc.(EBAY), plans to introduce a mobile version of its checkout software today as it tries to capitalize on surging smartphone use. The company, holding a conference in San Francisco to promote its service to mobile-phone and Web developers, also said it will introduce a cheaper way for businesses to handle transactions of less than $12, such as a 99-cent digital song or a single newspaper article. As more commerce moves to phones and social networks, PayPal is racing against Visa Inc. and MasterCard Inc. to earn the loyalty of programmers.
Ford(F) Posts $1.69 Billion Third-Quarter Profit on Gains in U.S. Ford Motor Co., the world’s most profitable automaker, reported record third-quarter net income of $1.69 billion and said it is paying down debt faster than planned as new models boost its U.S. market share.
Citigroup(C) Cuts Euro View Against Dollar, Pound, Franc. Citigroup Inc. technical analysts scrapped recommendations to bet the euro will appreciate against the Swiss franc, British pound and U.S. dollar, citing “price action in the past 48 hours.” The euro’s drop against the pound and franc and its failure to close near the intraday high versus the dollar yesterday shows Europe’s single currency lost momentum, Tom Fitzpatrick, chief technical strategist in New York, said in a telephone interview after publishing a research note.
IBM(IBM) Board Approves $10 Billion for Stock Repurchases. International Business Machines Corp., the world’s biggest computer-services provider, added $10 billion to its stock-buyback plan to return cash to investors and help increase its per-share earnings. The move brings the amount authorized for repurchases by the board to $12.3 billion, Armonk, New York-based IBM said in a statement today. In April, it authorized $8 billion in buybacks.
Coach's(COH) Profit Increases 34%, Beating Analysts' Estimates. Coach Inc., the largest U.S. maker of luxury leather handbags, reported a 34 percent increase in first-quarter profit after luring more shoppers to its stores. The stock climbed the most in more than a year. Net income rose to $188.9 million, or 63 cents a share, the New York-based company said today. That compared with the 55- cent average of estimates compiled by Bloomberg. Sales gained 20 percent to $911.7 million, also topping projections. Chief Executive Officer Lew Frankfort cited "resiliency" in handbags and accessories in North America for the gains. Some U.S. consumers are spending more on discretionary goods such as Coach’s Poppy bags, which typically sell for $200 to $400.
Wall Street Journal:
Autotrader.com Buys Kelley Blue Book. Autotrader.com is expected to announce Tuesday the $500 million-plus acquisition of venerable Kelley Blue Book Co., the best-known provider of information about the value of new and used cars.
Misleading Claims on 'Green' Labeling. Confused by all the "green" claims of products on store shelves out there? There's good reason to be. According to a study due out Tuesday, more than 95% of consumer products examined committed at least one offense of "greenwashing," a term used to describe unproven environmental claims, according TerraChoice, a North American environmental-marketing company that issued the report.
CNBC:
The Best of Times For Stocks May Be Ahead. The midterm election may be setting the stage for a political power struggle in Washington, as Democrats and Republicans jockey for control of Congress, but it’s also stacking the deck for a much-anticipated Wall Street rally.
Is An LBO of Cardinal Health(CAH) Imminent? The below chart which compares CAH CDS and stock, shows that something may be afoot in Cardinal Health, and that someone knows something, but is hiding their knowledge from the stock very well.
New York Times:
Treasury Hid AIG Loss, Report Says. The United States Treasury concealed $40 billion in likely taxpayer losses on the bailout of the American International Group earlier this month, when it abandoned its usual method for valuing investments, according to a report by the special inspector general for the Troubled Asset Relief Program.
LA Times:
Former Bell Police Chief Accused of Quashing an Internal Investigation. Shortly after taking office last year, former Bell Police Chief Randy Adams quashed an investigation by one of his sergeants into possible corruption involving city officials, charges that became the subject of criminal probes by other agencies, the since-retired officer said.
Drug Abuse Booming With Baby Boomers. A new federal report shows a boom in hospital admissions for medication misuse and illicit drug abuse as Baby Boomers approach old age.
ABC News:
Public Optimism in U.S. System of Government Hits a 36-Year Low. Optimism in the country's system of government has dropped to a new low when measured against polls going back 36 years, and the public's belief that America is the greatest nation on earth, while still high, has fallen significantly from its level a generation ago.
Google Blog:
Advertise Your Local Business With Google(GOOG) Boost. Today, we’re announcing the availability of a new online advertising solution to help local businesses connect with potential customers in their area. Boost enables business owners to easily create online search ads from directly within their Google Places account.
Politico:
Dems' 2010 Crisis Has Roots in 2009. The political forces currently aligned against Democrats — apathy in the liberal base, flight among independents and Republican rage — trace back to early 2009, and the White House either miscalculated their risks or intensified them through its actions. That’s the way it appears on the eve of midterm elections that are shaping up as a referendum on President Barack Obama’s first two years, a period notable for its ambitious agenda but also for the administration’s missteps in the face of evidence ranging from eroding public opinion to town hall meetings gone wrong to unfavorable outcomes in three bellwether elections last fall and winter.
Small Businesses Losing Out to Red Tape. In an economic climate with few jobs and cutbacks on basic city services such as police protection and firefighting, you would think cities and states would be overjoyed when someone was willing to open up a new business, bringing with him jobs, economic vitality and tax revenues. You might think that, but you'd be wrong. Instead, cities and states stifle new small businesses at every turn, burying them in mounds of paperwork; lengthy, expensive and arbitrary permitting processes; pointless educational requirements for occupations; or even just outright bans. Today, the Institute for Justice released a series of studies documenting government-imposed barriers to entrepreneurship in eight cities. In every city studied, overwhelming regulations destroyed or crippled would-be businesses at a time when they are most needed.
Reuters:
China Minister Says Dollar Printing "Out of Control". Dollar issuance by the United States is "out of control", leading to an inflation assault on China, the Chinese commerce minister said in comments reported on Tuesday. Chen Deming, speaking at a trade fair in southern China, said that exporters had done a good job of preparing themselves for exchange rate changes as well as rising labour costs, but were suddenly confronted with new challenges. "Because the United States' issuance of dollars is out of control and international commodity prices are continuing to rise, China is being attacked by imported inflation. The uncertainties of this are causing firms big problems," Chen was quoted as saying by the official Xinhua news agency.
II-VI(IIVI) Beats Estimates, Sees Q2 Above Street View. II-VI Inc posted higher-than-expected quarterly results, helped by a rise in sales of its infrared and near-infrared optical products, and forecast second-quarter results above analyst estimates on increased orders, sending its shares up to their highest in two years.
Telegraph:
Greece Reignites Europe Debt Woes. Europe's debt woes have returned to the fore after Greek premier George Papandreou threw open the door to fresh elections and vowed to liberate the nation from "slavery and surveillance".
The euro area is suffering from a weak dollar and from the lack of a freely floating Chinese currency, French finance minister Christine Lagarde said. Priorities for the next meeting of G20 finance ministers in France in February will include financial regulation and the reform of commodity markets and related derivatives, Lagarde said.
Diario Economico:
International Energy Agency Executive Director Nobuo Tanaka said countries that are part of the OECD now have historically high levels of oil stocks and that scenario should continue in 2011.
Fitch Ratings analyst Douglas Renwick said there is a "strong risk" that the Portuguese economy enters a recession in 2011.
China Daily:
Apple's(AAPL) iPhone 4 Still in High Demand in China.It has been a month since US-based Apple Company launched its iPhone 4 series in the Chinese mainland market, yet demand shows no sign of abating. The smart phone's popularity has even given rise to scalpers (grey marketers) looking to make a quick profit. The scalpers lurk outside stores ready to pounce on anyone who walks out without Apple merchandise. One scalper offered the 16-gigabyte version of the device for 5,400 yuan ($795) -- a 10-percent mark-up over the official retail price of 4,999 yuan.
DigiTimes:
Hard Drive Shortage May Persist Through 1Q11. As notebook brand vendors are starting to prepare their shipments for the end-of-year holidays, hard drive makers, which had conservative production plans for the fourth quarter due to a weaker-than-expected third-quarter performance, have recently started seeing short supply of hard drives and the problem is likely to persist through the first quarter of 2011, according to sources from hard drive makers.
Globes:
The Brilliant Private Future of SanDisk(SNDK). Most analysts are totally missing the potential at SanDisk, based on developments which CEO Harari has been discussing quite clearly.
Bernanke's Next Round of Asset Purchases Risks Jimmy Carter-Like Inflation. For the second time since he became chairman in 2006, Ben S. Bernanke is leading the Federal Reserve into uncharted monetary territory. Bernanke next week is likely to preside over a decision to launch another round of large-scale asset purchases after deploying $1.7 trillion to pull the economy out of the financial crisis, comments from policy makers over the past week indicate. This time, with interest rates already near zero, the Fed will be aiming to increase the rate of inflation and reduce the cost of borrowing in real terms.
Pimco's El-Erian Says Fed Easing to Spur Faster Inflation. Federal Reserve Treasury purchases will lead to faster global inflation while failing to revive U.S. economic growth, said Mohamed A. El-Erian, chief executive officer of Pacific Investment Management Co. Quantitative easing, the strategy of buying bonds to keep borrowing costs low that is under consideration at the central bank, won’t be enough to curb U.S. unemployment, El-Erian said at a reception in New York sponsored by the Financial Women’s Association. The Fed will buy more bonds because it is terrified of deflation, an extended decline in consumer prices, he said. “QE on its own means we’ll have the same issues in six to nine months time with the rest of the world being inflated,” El-Erian said. “It will have some benefits but not as much as we’d like. It will have costs and unintended consequences.” Fresh purchases will drive up commodity prices as much of the money injected into the U.S. economy leaks out to other currencies, El-Erian said. He also has said governments and central banks haven’t detected the “ongoing paradigm shift” in their economies that will require remedies beyond stimulus programs. Among the fault lines he spots are strained balanced sheets, persistently high unemployment and a misunderstanding of financial markets. “We have a structural unemployment issue,” El-Erian said in New York. “It is worrisome because it erodes the skillset of a society. The numbers are terrifying. The longer you are unemployed, the more difficult it is to get a job.”
Fed-Induced Junk Rally Makes Riskiest Debt Most Expensive: Credit Markets. The lowest-rated junk bonds are the most expensive corporate debt following a Federal Reserve- induced rally in high-risk assets, adding to concern fixed- income securities are overvalued. The extra yield investors demand to hold global bonds rated CCC or lower instead of government debt is about 10.2 percentage points, or 3.3 percentage points narrower than the average over the past 12 years, according to Bank of America Merrill Lynch index data. Debt with B ratings is the only other part of the market trading tighter than its historical average. Record-low interest rates in the U.S. and Europe, and speculation the Fed will purchase more bonds to keep the economy from faltering, are encouraging debt investors to take on riskier securities and stoking concern prices are rising to unsustainable levels. Goldman Sachs Group Inc. advised its clients to avoid adding CCC rated debt in a report published Oct. 22 because of slower economic growth.
Citigroup's(C) Pandit Says Basel Accords Could Make Credit Crunches Worse.Citigroup Inc. Chief Executive Officer Vikram Pandit said many of the goals set by the Basel Committee on Banking Supervision are likely to be ineffective or make existing capital inequalities worse. While Pandit supports higher capital levels, Basel’s rules have a cyclical quality that lowers targets in good times and raises them in bad times, the CEO said today in the prepared text of a speech at the Buttonwood Gathering in New York. The result could be “piling risk into the system” when the economy is strong as capital requirements fall, while “raising the cost of credit precisely when credit is needed most” during weak economies, he said. “By creating an illusion of safety, Basel actually dulls the sense of urgency further,” said Pandit, 53, whose company is based in New York and ranked third by assets in the U.S. Citigroup, 12 percent-owned by U.S. taxpayers, is grappling with stricter financial regulation in the wake of the 2008 financial crisis, during which the bank received a $45 billion bailout.
Buffett-Backed BYD's Profit Plunges More Than 99% as Sales Drop. BYD Co., the Chinese carmaker backed by Warren Buffett, fell the most in more than five months in Hong Kong trading after third-quarter profit dropped 99 percent amid faltering sales. The shares declined as much as 7.7 percent to HK$52.50, the biggest drop since May 17, and traded at HK$53.55 as of 10:18 a.m. after BYD posted net income of 11.34 million yuan ($1.7 million) for the three months ended Sept. 30. It was the fourth- biggest decline among 982 stocks in the MSCI Asia Pacific Index. “Profit was pretty disappointing and well below our estimations,” said Galant Ng, an analyst at Taifook Securities Group Co. in Hong Kong. BYD suffered from declining car sales and higher costs, Ng said in an interview today. The company, the fastest growing automaker in China last year, cut its 2010 vehicle sales target 25 percent in August as it struggled to maintain momentum amid higher taxes on small cars. Vehicle sales at BYD, 10 percent owned by Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc., slumped 25 percent in September to 33,085 vehicles. BYD’s deliveries dropped 19 percent in August. “Most local brands suffered from the government policy tax revision,” Ricon Xia, a Hong Kong-based senior analyst at Mitsubishi UFJ Asset Management, said before the earnings. BYD’s fourth quarter also “won’t be very strong,” he said.
JPMorgan(JPM), Bank of America(BAC) Subpoenaed Over Foreclosures in Texas by Abbott. Texas Attorney General Greg Abbott sent subpoenas to JPMorgan Chase & Co., Bank of America Corp. and seven other banks or loan servicers seeking information about foreclosure practices, a spokesman said. “The state is subpoenaing information and documents,” Jerry Strickland, the spokesman, said in an interview. He didn’t elaborate. The state also subpoenaed Ally Financial Inc., CitiMortgage Inc. and Wells Fargo & Co.
Ford's(F) Drive to Ditch 'Junk'. For the past 12 months, Ford Motor Co. has been on a campaign to lift its credit rating out of "junk" territory and get back to investment grade. Judging by the way bond investors view the company, it's just about there.
Pimco's El-Erian: Expects Greece Will Default In 3 Years. Mohamed El-Erian, chief executive and co-chief investment officer of bond giant Pimco, said he bets Greece will default on its debt in three years. Greece is likely to default, and it will be to the country's and the European Union's benefits, said El-Erian, speaking at the Buttonwood Gathering in New York. Without an orderly restructuring, he said, Greece's economy could spiral into a lost decade of high unemployment and low growth as seen in Asia and Latin America in the past. That is because the fiscal plan imposed by the International Monetary Fund and EU for Greece's bailout to adjust its debt to GDP ratio will require enormous growth sacrifices, and yet see the country's debt rise further into the future. "Europe has shown its ability to make changes that people thought were not very likely," said El-Erian. He said it is in the region's interest for Greece to default "because the alternative doesn't promise growth and employment generation."
Buffett Flags a Successor. Fund Manager Named Leading Candidate as Next Investment Chief at Berkshire.
Big Insurance, Big Medicine. ObamaCare is already driving a wave of health-care consolidation - and higher costs. ObamaCare's once and future harms have been well chronicled, but the major effects so far are less obvious and arguably more important: A wave of consolidation is washing over the health markets, and the result is going to be higher costs. The turn toward consolidation among insurance companies is not new, and neither is it among doctors, hospitals and other providers. Yet the health bill has accelerated these trends, as all sides race to anticipate and manage political risk and regulatory uncertainty. This dynamic is leading to much larger hospital systems and physician groups, and fewer insurers dominated by a handful of national conglomerates. ObamaCare was sold using the language of choice and competition, but it is actually reducing both.
CNBC:
Foreclosure Sales Were 'Accurate', Moratorium Stands: BofA. Bank of America issued a statement Monday crying out against so-called "factual errors" regarding its foreclosure affidavit review process, as an industry-wide foreclosure scandalcontinues to plague several of the nation's largest lenders.
India Warned Over Capital Inflow Risks. Economists are warning that New Delhi may be underestimating the risks of excessive capital inflows, as huge foreign portfolio investment into India has helped push both the stock market and the rupee to pre-crisis levels.
Berkshire Hathaway(BRK/A) Tells SEC: Accounting Rules Don't Apply To Us, And We Don't Have to Take Writedowns. Is Berkshire Hathaway asking the SEC for special treatment? The regulator questioned Buffett's firm in May over a glaring absence in write-downs concerning losses worth $1.86 billion on Kraft and US Bancorp, Reuters reported today. Berkshire denies any accounting malpractice despite the fact that the losses endured for at least 12 months and were clearly not temporary under SEC guidelines.
NY Times:
Connecticut Fund Manager Sued for Fraud Over Fees. A Connecticut hedge fund manager was accused by state and federal regulators on Monday of inflating the value of its holdings, which allowed it to fraudulently collect millions of dollars of undeserved fees.
New York Daily News:
Are Bert and Ernie Gay? Official 'Sesame Street' Twitter Account Sparks Rumors With Ambiguous Post. It was the tweet heard round "Sesame Street." "Ever notice how similar my hair is to Mr. T's?" lovable sweater-clad Bert wrote on the official "Sesame Street" Twitter account in June. "The only difference is mine is a little more 'mo,' a little less 'hawk.'" Taking the "mo" to mean "homosexual," the tweet had gay bloggers, activists, and parents buzzing that the show was letting them in on a big secret with an under-the-radar wink. The Los Angeles Times took the post as the latest evidence in a history of clues the show has dropped over the years that Bert and Ernie are more than just friends, reviving the (nearly) age-old question: are Bert and Ernie gay?
Mess in Rhode Island for Obama. President Barack Obama’s decision not to endorse the Democratic gubernatorial candidate here turned a routine campaign stop Monday into a political headache, complete with the candidate telling Obama to "shove it."
Reuters:
Comcast(CMCSA) Launches New Web Video Service, Stepping Up Fight. Comcast Corp. (CMCSA), the largest U.S. cable operator, on Monday rolled out a service that allows its subscribers to watch an array of television shows and movies on a personal computer or laptop.
Euro Close to Overvalued; Growth Risk- IMF Official. The euro is close to being overvalued and further gains could impede growth rates in the single currency area, Bas Bakker, an economist at the International Monetary Fund, told a news conference on Monday. "(The) euro is at a level which we call close to overvaluation. A stronger euro means slower growth (in the euro zone). Should there be further appreciation, the effect will be larger but it is difficult to comment on day-to-day exchange-rate changes," Bakker said.
Chavez Nationalizes Venezuela Arm of U.S. Bottle Co. Venezuelan President Hugo Chavez ordered the takeover of the local unit of U.S. glass bottle firm Owens-Illinois (OI) on Monday, part of a drive to nationalize large swathes of the food processing and distribution business. Since an election last month that left the socialist leader's party with a reduced majority in parliament, he has nationalized a large fertilizer factory, a motor lubricants firm and a huge swathe of land belonging to a wealthy British family. "Expropriate it ... a company of North American capital that has been here for years exploiting the workers, destroying the environment," he said of Owens-Illinois on a late night TV appearance a few hours after returning from a tour of friendly nations such as Russia and Iran.
Fed's Hoenig Says More Easing Could Be Dangerous. A U.S. Federal Reserve official who has persistently dissented against the central bank's easy money policies said on Monday that further monetary easing would be a hazardous bet. "There are real risks to quantitative easing," Kansas City Federal Reserve Bank President Thomas Hoenig said in a speech, referring to extensive asset purchases by the Fed to push borrowing costs lower even though short-term rates are near zero. Hoenig said further asset buying -- which other officials have said will likely resume in November -- would be "a very dangerous gamble."
TI(TXN) Sees PC, TV Weakness for Few Quarters.Texas Instruments Inc (TXN) warned its fourth-quarter revenue will be hurt by slowing demand for chips for computers and televisions, sending its shares lower even though its results beat Wall Street forecasts. The maker of chips used in products from cars to cellphones said strong demand from industrial customers was offset by weak chip sales for consumer products.
Digital River Q3 Tops Wall Street. E-commerce services provider Digital River Inc (DRIV) reported better-than-expected quarterly results, helped by extension of services with Microsoft (MSFT) and new contract from video-game publisher Electronic Arts (ERTS), and forecast fourth-quarter revenue above market estimates.
German Boom Creates ECB Policy Nightmare as South Lags. Blistering growth in Germany is aggravating the growing gap between the eurozone's North and South and may force the European Central Bank to tighten monetary policy long before the high-debt states are ready, Standard & Poor's has warned.
Barack Obama's Poor Economic Policies Are Playing into China's Hands. No one here wants to turn America back into the Wild West but the current paralysis of US governance is the single biggest mistake America is making and the single biggest competitive advantage being enjoyed by China. Beggar-thy-neighbour trade wars based on currency devaluationis only a very short-term tonic for America and is no substitute for longer-term sustainable job creation. It is jobs that will create the wealth to allow households to pay off their mortgages and afford the fees needed to pay for higher education that will equip the next generation to compete. Quantitative easing (a way of printing money) will support the price of financial assets in the short term in the hope of inspiring confidence and a positive wealth effect. But a return to the credit-induced consumerism and illusions of wealth that characterised the last boom are no answers to America's current economic problems. And that goes for the UK too.
21st Century Business Herald:
The Chinese city of Chongqing may impose a property tax on second homes and large first homes, citing a government official.
Shanghai Securities News:
China should resist pressure from the U.S. and Europe to let its currency appreciate, Wang Yong, a central bank researcher wrote. The Asian nation should not increase holdings of U.S. or European government bonds as long as pressure remains, Wang wrote.
Evening Recommendations Citigroup:
Reiterated Buy on (NSH), raised target to $39.50.
RBC Capital:
Rated (ESRX) Outperform, target $57.
Rated (MHS) Outperform, target $68.
Night Trading
Asian equity indices are -.25% to +.50% on average.
Asia Ex-Japan Investment Grade CDS Index 101.0 -4.0 basis points.
Asia Pacific Sovereign CDS Index 95.0 -2.75 basis points.
Consumer Confidence for October is estimated to rise to 49.9 versus a reading of 48.5 in September.
The House Price Index for August is estimated to fall -.2% versus a -.5% decline in July.
Richmond Fed Manufacturing Index for October is estimated to rise to 1.0 versus a reading of -2 in September.
Upcoming Splits
None of note
Other Potential Market Movers
The Fed's Dudley speaking, S&P/CaseShiller Home Price Index, weekly retail sales reports, $35 Billion 2-Year Treasury Notes Auction and the weekly ABC Consumer Confidence report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and real estate shares in the region. I expect US stocks to open modestly lower 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 93.33 bps -3.54%
European Financial Sector CDS Index 93.67 bps -2.63%
Western Europe Sovereign Debt CDS Index 138.92 bps unch.
Emerging Market CDS Index 202.23 bps -3.11%
2-Year Swap Spread 17.0 unch.
TED Spread 17.0 unch.
Economic Gauges:
3-Month T-Bill Yield .11% -1 bp
Yield Curve 220.0 -1 bp
China Import Iron Ore Spot $149.40/Metric Tonne -1.58%
Citi US Economic Surprise Index -3.90 +.8 point
10-Year TIPS Spread 2.17% +4 bps
Overseas Futures:
Nikkei Futures: Indicating +30 open in Japan
DAX Futures: Indicating +13 open in Germany
Portfolio:
Higher: On gains in my Tech, Ag, Medical, Biotech and Retail long positions
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades higher despite recent sharp gains, mixed economic data and further bank weakness. On the positive side, Networking, Coal, Gold, Semi, Gaming, Ag, Alt Energy and Airline shares are especially strong, rising 1.5%+. Small-cap and cyclical shares are outperforming. "Growth" shares are also outperforming "value" shares again. Copper is rising +1.78% and the S&P GSCI Ag Spot Index is rising +1.43%. The Eurozone Investment Grade CDS Index is dropping -3.78% to 79.11 bps and the California Municipal CDS is falling -7.61% to 257 bps. The ongoing trend lower in key credit default swap indices remains a large positive. On the negative side, Hospital, Bank, Disk Drive, Oil Tanker and Utility shares are down on the day. (XLF) has been a bit heavy throughout the day. The Emerging Markets Sovereign CDS Index is rising +1.92% to 186.98 bps. I continue to see select stocks exploding higher on volume despite overall lackluster market volume. Despite high correlations in the markets this year, it has been a very good year for true stockpickers. I suspect this trend will become more pronounced over the intermediate/long-term. I expect US stocks to trade mixed-to-higher into the close from current levels on tax policy/election optimism, diminishing sovereign debt angst, less economic fear, short-covering, buyout speculation, investment manager performance angst and earnings optimism.
