North American Investment Grade CDS Index 88.52 bps -1.64%
European Financial Sector CDS Index 139.61 bps +5.01%
Western Europe Sovereign Debt CDS Index 179.50 bps +.75%
Emerging Market CDS Index 214.88 bps +1.33%
2-Year Swap Spread 19.0 -1 bp
TED Spread 17.0 unch.
Economic Gauges:
3-Month T-Bill Yield .13% -1 bp
Yield Curve 259.0 -4 bps
China Import Iron Ore Spot $165.40/Metric Tonne +.24%
Citi US Economic Surprise Index -14.0 +.1 point
10-Year TIPS Spread 2.15% -5 bps
Overseas Futures:
Nikkei Futures: Indicating -10 open in Japan
DAX Futures: Indicating +16 open in Germany
Portfolio:
Slightly Higher: On gains in my Biotech and Medical long positions
Disclosed Trades: Covered all of my (IWM), (QQQQ) hedges and some of my (EEM) short
Market Exposure: Moved to 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite recent equity gains, rising eurozone debt angst, China inflation worries, US tax policy uncertainty and US municipal debt concerns. On the positive side, Road & Rail, Bank, Telecom, Networking and Coal shares are especially strong, rising more than 1.0%. Cyclicals and small-caps are outperforming. (XLF) has traded very well throughout the day. Lumber is jumping +3.65% and is breaking above its 50-day moving average convincingly. The 10-year yield is falling -6 bps to 3.21%.On the negative side, Education, Restaurant and Homebuilding shares are under pressure, falling more than 1.0%. (IYR) has been heavy throughout the day and tech stocks are underperforming. The Greece sovereign cds is jumping +3.48% to 956.47 bps, the Spain sovereign cds is surging +6.45% to 324.19 bps, the Italy sovereign cds is climbing +6.56% to 206.17 bps, the Portugal sovereign cds is rising +4.2% to 450.03 bps and the Belgium sovereign cds is gaining +3.24% to 201.66 bps. The European Financial Sector CDS Index continues to trend higher and the US Muni CDS Index is rising another +4.01% to 207.50 bps. Some key investor sentiment gauges remain a bit too bullish. The AAII % Bulls rose to 53.05 this week, while the % Bears fell to 22.56. Despite a number of potential negative equity catalysts, the bears remain unable to gain any traction and stocks continue to consolidate recent gains in a healthy fashion. I expect US stocks to trade mixed-to-higher into the close from current levels on falling long-term rates, short-covering, less financial sector pessimism and seasonal strength.
Bank Debt Riskiest to Junk Bonds Since '05 on Sovereign Concern. Subordinated financial bonds are the riskiest in almost six years relative to corporate junk debt in Europe on concern investors will be forced to share in the cost of bailing out profligate governments. Credit-default swaps on the Markit iTraxx Subordinated Financial Index tied to bonds of 25 European banks and insurers jumped 4.5 basis points to 314.5, according to JPMorgan Chase & Co. The measure of swaps on the debt of companies with mostly high-yield ratings fell 9 basis points to 448, and the gap between the two risk gauges is the narrowest since March 2005. Investors are speculating European policy makers will be unable to contain the region’s worsening deficit crisis and that banks, the biggest holders of their debt, will be saddled with losses. Anglo Irish Bank Corp.’s subordinated bonds were valued as low as 18.25 percent of face value at an auction to settle credit-default swaps today. Swaps on the Markit iTraxx Crossover Index of mostly junk companies dropped 9 basis points to 448, according to JPMorgan prices at 11:30 a.m. in London. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 1 basis point to 104.75, JPMorgan prices show. The Markit iTraxx Financial Index of swaps on senior debt of 25 banks and insurers declined 0.5 basis points to 154.
U.S. Initial Jobless Claims Fell 17,000 to 421,000 Last Week. The number of workers filing first- time claims for unemployment insurance payments fell last week in the U.S., showing the labor market continues to improve. Applications for jobless benefitsdecreased to 421,000, less than the median forecast of economists surveyed by Bloomberg News, from a revised 438,000 the prior week, Labor Department figures showed today. The four-week moving average, a less-volatile measure, dropped to the lowest level in more than two years. The four-week moving average fell to 427,500, the lowest since August 2008, from 431,500. The number of people continuing to collect jobless benefits fell by 191,000 in the week ended Nov. 27 to 4.09 million. They were forecast to fall to 4.24 million. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, dropped to 3.2 percent in the week ended Nov. 27, the lowest in two years, today’s report showed.
Household Worth in U.S. Rose by $1.2 Trillion in 3rd Quarter. Household wealth in the U.S. rose by $1.2 trillion in the third quarter as share prices jumped in response to an improving economy. Net worth for households and non-profit groups increased to $54.9 trillion from $53.7 trillion in the previous three months, according to the Federal Reserve’s Flow of Funds report issued today in Washington. American families also cut debt for a 10th consecutive quarter.
Dollar Climbs After Fitch Cuts Ireland's Ratings. The dollar climbed against the euro after the credit ratings agency Fitch slashed Ireland's debt rating, saying its big bailout showed its debt crisis was worse than had been known. The move highlighted the euro region's problems and prompted traders to resume selling euros. The European Union bailed out Ireland because of its soaring borrowing costs following the rescue of Greece in May. Investors are nervous that Portugal or Spain may be next, and that the current 750 billion euro fund would not be big enough to rescue Spain.
Dell(DELL) in Talks to Buy Compellent(CML) for About $876 Million to Add Data Storage. Dell Inc., the world’s third-largest personal-computer maker, is in exclusive talks to buy Compellent Technologies Inc. for about $876 million, a discount to the data-storage maker’s current market value. Dell would acquire all of the outstanding common stock of Compellent for $27.50 apiece in cash, the companies said today in a statement. That’s 18 percent less than yesterday’s closing price for Compellent. The stock had almost doubled in the past two months before today on speculation it will get bought.
Citigroup(C) Adds Hedge-Fund Service Amid Scrutiny, Regulation. Citigroup Inc., the third-biggest U.S. bank, said its prime finance business is starting a consulting service for hedge funds amid increased scrutiny from investors and new requirements from regulators.
Gold Futures Rebound as Drop From Record Price Spurs Demand From Investors. “The bottom line is that investors are losing faith in paper money,” said Lannie Cohen, the president of Capitol Commodity Services Inc. in Indianapolis. “Gold will continue to act as the currency of choice.” Gold futures for February delivery rose $1.50, or 0.1 percent, to $1,384.70 at 11:25 a.m. on the Comex in New York. “If you were in Europe, you’d be buying gold to preserve your wealth,” Cohen said. The metal priced in euros reached a record on Dec. 7 as Europe’s debt woes spurred demand.
Most Americans Say They're Worse Off Since Obama Took Office, Poll Shows. More than 50 percent of Americans say they are worse off now than they were two years ago when President Barack Obama took office, and two-thirds believe the country is headed in the wrong direction, a Bloomberg National Poll shows. The survey, conducted Dec. 4-7, finds that 51 percent of respondents think their situation has deteriorated, compared with 35 percent who say they’re doing better. Americans have grown more downbeat about the country’s future in just the last couple of months, the poll shows. The pessimism cuts across political parties and age groups, and is common to both sexes. Sixty-six percent say the nation is headed in the wrong direction. That’s up from 62 percent who felt that way in an October poll and is the worst reading since the Bloomberg National Poll began in September 2009.
Kim Jong Il Meets Chinese Diplomat for Talks Over Korea, Reaches Consensus. North Korean leader Kim Jong Il and China’s top diplomat “reached important consensus” today on issues of the Korean peninsula, where tensions have heightened since the North’s attack on South Korean soil. Kim met with State Councilor Dai Bingguo in Pyongyang today and had “frank and in-depth talks,” China’s Foreign Ministry said on its website, without providing details. The two discussed “ways to further solidify cooperative relations,” the state-run Korean Central News Agency reported.
Roach Says China Should 'Aggressively' Quell Inflation to Help Consumers. China should move “aggressively” to crack down on inflation to help the nation become a more consumption-driven economy, said Stephen Roach, non-executive chairman at Morgan Stanley Asia Ltd. “The longer government policy makers wait to address inflation, the tougher it will be to deal with” structural changes, Roach told reporters in Hong Kong today. “My advice is move quickly and aggressively to deal with inflation, so that you can get on with the most important transition in China, which is stimulating internal private consumption.”
Life Expectancy in the U.S. Drops for First Time Since 1993. Life expectancy of Americans fell for the first time in 15 years, as the nation’s oldest adults died from heart disease, cancer and respiratory ailments, according to a report by the National Center for Health Statistics. Based on data from 2008, the latest available, life expectancy in the U.S. fell 36.5 days from 2007 to 77.8 years, according to the report released today.
SEC Considering Curbs on Algorithms Blamed for May 6 Crash, Official Says. The Securities and Exchange Commission is considering whether to require automated trading programs known as algorithms to run risk checks that prevent errant executions, according to David Shillman, an associate director in the agency’s division of trading and markets. Regulators are concerned algorithms could act “too aggressively,” causing a security’s price to move rapidly, Shillman said. Safety checks could prevent algorithms, which execute larger trades by slicing them into pieces, from destabilizing markets. The SEC says an algorithmic trade of futures that gave no regard to prices or timing helped drive the May 6 crash that erased $862 billion from the value of U.S. equities in less than 20 minutes. The SEC is considering whether there should be a “throttle on an algorithm that prevents overly aggressive moves without checks on price or time,” Shillman said at an Investment Company Institute conference in New York today. Another idea regulators are evaluating is whether “baseline qualifications” should be required for individuals who design and use trading algorithms. Shillman said this is a separate issue from the notion of a throttle.
Citigroup(C) Names Obama's Orszag Vice Chairman of Investment Bank. Citigroup Inc., the biggest bailout recipient among U.S. banks during the financial crisis, hired former White House Budget Director Peter Orszag to be vice chairman of its investment-banking division.
Chubb(CHB) Plans to Buy Back 30 Million Shares in Insurer's Biggest Repurchase. Chubb Corp., the insurer of commercial property and high-end homes, said it will repurchase 30 million shares, the company’s biggest buyback, after raising its forecast for full-year profit. The repurchase program equals almost 10 percent of the 304.9 million Chubb shares outstanding as of Sept. 30 and would cost about $1.8 billion at the Warren, New Jersey-based company’s $58.70 closing price yesterday. Chubb’s largest buyback announced before today was in December 2007 when the company said it would repurchase 28 million shares.
CNBC:
Mortgage Rates Hit Six Month High, Threatening Housing. Rates on fixed mortgages rose for the fourth straight week this week, hitting 4.61 percent. The surge could slow refinancings and further hamper the housing market.
Hulu's in a Netflix(NFLX) Headlock. Netflix's muscle-flexing deal yesterday with Disney not only reinforces the fact that it is a programming distributor to be reckoned with, it is also forcing rival Hulu to reconfigure its business plan, sources tell The Post. Hulu CEO Jason Kilar must either step up and acquire additional distribution rights to compete head-to-head with Netflix or drop its fee and focus on free offerings, the sources said.
Politico:
House Dems Reject Tax Deal.The House Democratic Caucus voted to oppose President Barack Obama’s tax plan, throwing into flux weeks of negotiations on an issue that has turned many congressional Democrats against the White House. Oregon Rep. Peter DeFazio offered a resolution in a closed Democratic caucus meeting Thursday morning that said Democrats would oppose the bill in its current form.
Reuters:
China, HK Should Rein in Property Prices - IMF Paper. China and Hong Kong need to implement more measures to rein in the threat of property bubbles forming in certain sectors of their markets, the International Monetary Fund said in a working paper citing the views of economists. China and Hong Kong, and many other markets in Asia including Singapore and India, face asset bubble threats, especially in the property sector, from strong economic growth and cheap money flowing in from the West driven by ultra-easy monetary policies. "The mass-market segment in a few large cities such as Shanghai and Shenzhen, and the luxury segment in Beijing and Nanjing appear to be increasingly disconnected from fundamentals," the IMF said in the paper released on Friday. "(Cooling prices) will require an increase in real interest rates, a higher carrying cost of homeownership (such as can be achieved by a broad-based property tax), and, in the case of China, broad financial market development to alternative investment vehicles to housing."
Mexican Newspaper: Chávez's family has $137 million in US accounts. According to DEA reports, Venezuela’s presidential family holds five bank accounts in the United States. La Razón reported that "under the umbrella of power, the Venezuelan president's family has a life style that includes jewelry, cars, travels and even weapons, in contrast to Chávez's anti-capitalist discourse."
Libya's Ghanem Expects OPEC Quota Rollover, Expects $100 Crude Oil 'Soon'. The Organization of Petroleum Exporting Countries will keep its production quotas unchanged as oil gets ready to hit $100 a barrel, Shokri Ghanem, chairman of Libya’s National Oil Corp., said. OPEC, which is scheduled to gather Dec. 11 in Quito, Ecuador, will probably agree to a quota rollover and will focus on discussing compliance during this meeting, Ghanem said today at Amsterdam’s Schiphol airport.
Copper Gains to Record in London on Concern Fed May Extend Asset Purchases. Copper climbed to a record in London and advanced to a 31-month high in New York on concern that the Federal Reserve may extend asset purchases to support the economy, driving the dollar lower and boosting the appeal of commodities as alternative investments. The metal for three-month delivery on the London Metal Exchange rose as much as 0.6 percent to $9,066 a metric ton on the London Metal Exchange, surpassing the previous peak of $9,044 on Dec. 7. It traded at $9,037.25 at 11:30 a.m. Singapore time, up 23 percent this year.
Obama Proposes Easing Export Controls on 37 Allies. The Obama administration proposed easing controls on the export of technology items that may be used for military purposes to 37 allies, including Canada, Japan, Germany and France. The U.S. requires exporters to obtain a license to sell civilian technology, such as aircraft parts and encryption software, that also can be used for military purposes. The restrictions vary based on U.S. relations with the government, and those rules are administered by the Commerce Department and State Department.
India's Inflation Holds Above 'Tolerance Level,' Subbarao Says. India’s inflation remains above “tolerance level,” central bank Governor Duvvuri Subbarao said ahead of the monetary policy announcement next week. “Inflation is coming down but is still above the RBI’s tolerance level,” Subbarao told reporters in the eastern Indian city of Kolkata yesterday. India’s benchmark wholesale-price inflation cooled to a nine-month low of 8.58 percent in October. The Reserve Bank of India aims to slow inflation to between 4 percent and 4.5 percent.
Apple(AAPL) Displaces Samsung on Home Turf With iPhone. For more than a decade, Kim Jung Yeon only bought phones from Samsung Electronics Co. and LG Electronics Inc., passing on best sellers made by non-Korean companies such as Motorola Inc.’s Razr. Her loyalty ended with Apple Inc.’s iPhone. “The iPhone has a cool design and I love the feel and grip of the phone,” said the 37-year-old Web designer in Seoul, who bought the device last year, and enjoys using applications about food recipes. “I don’t see any reason why I should return to LG or Samsung phones again if I buy another smartphone.”
LBO Defaults to Climb as Debt Costs Top Growth, Mudrick Says. Defaults on speculative-grade debt will climb in the next five years as companies bought by private-equity firms before markets seized up in 2008 struggle to boost earnings, said hedge-fund manager Jason Mudrick. Borrowers may renege on $150 billion to $250 billion of leveraged loans and high-yield bonds due by 2015, or between 15 percent and 25 percent of the amount maturing, said Mudrick, president of Mudrick Capital Management LP, at a briefing in New York. The former money manager at Contrarian Capital Management LLC, who started his fund in July 2009 and oversees $150 million, is predicting the rise in defaults even as Moody’s Investors Service said the 12-month rate in the U.S. fell to 3.5 percent in November from 14.7 percent last year.
Mullen Says 'Too Much at Stake' for China 'Myopia' on North Korea. China’s reluctance to try and persuade North Korea to abandon its aggressive stance in Asia imperils regional stability, said U.S. Admiral Mike Mullen, chairman of the Joint Chiefs of Staff. China is “unwilling” to use its influence as the North’s biggest ally to curtail Kim Jong Il’s regime, Mullen told reporters today in Tokyo, reiterating earlier remarks. North Korea “has been unable” to “recognize the risks and the costs of miscalculation,” Mullen said. “China must lead and guide North Korea to a better future. There is too much at stake for this sort of myopia.” “What once was unusual is becoming all too routine,” he said. “I speak mainly here of North Korean aggression that threatens all of us, but it applies as well to a wide range of economic, social and political changes throughout the region. As threats evolve, so too must we.”
Wall Street Journal:
House Democrats Seek Boost In Regulator Funding. A budget bill unveiled by U.S. House Democrats on Wednesday contains big funding boosts for federal securities and futures regulators working to erect a vast regime for the over-the-counter derivatives market.
Traders Ready for Silver to Tarnish. There is a tinge of worry about silver in the options market. Bearish put options have been unusually active lately in the iShares Silver Trust, a popular exchange-traded fund tracking the metal that broke a new 52-week high on Tuesday. Puts convey the right to sell shares at a fixed price on or before an agreed-upon date. Nearly the same number of puts as bullish call options to buy the fund changed hands Wednesday, according to Trade Alert, following similar action in the previous session.
Investor Survey Says: Bet Oppositely. When the American Association of Individual Investors' weekly gauge of sentiment hits the tape early Thursday, much of Wall Street will be ready to pore over the numbers.
North Korea Claims Waters Around Shelled Island. North Korea state media on Thursday issued a statement that claimed possession of all waters around South Korea-controlled Yeonpyeong Island, clarifying for the first time that its Nov. 23 attack of the island was motivated by a different view of the inter-Korean maritime boundary in the Yellow Sea than is widely held.
MasterCard(MA), Visa(V) Targeted in Apparent Cyberattack. The corporate websites of Visa and MasterCard were inaccessible at times Wednesday due to an apparent cyberattack by purported Wikileaks backers. Messages posted on Twitter indicated the attacks maybe be in response to recent moves by Visa and Mastercard against WikiLeaks, the website that recently released thousands of secret U.S. State Department documents.
Politico:
Tax Deal Gains Steam Toward Passage. A wave of new Democratic support Wednesday signaled that President Barack Obama’s deal to renew the Bush tax cuts would make it through Congress, as long as most Republicans lined up behind it as expected. With Democrats in both chambers still angry about parts of the package, the administration scrambled to allay concerns and build momentum for the unusual deal with congressional Republicans reached this week. By the end of the day, the measure looked increasingly likely to pass, as Democrats stepped forward one by one to back it.
Reuters:
Fortress(FIG) CEO Sees Raising $5 Billion of Capital in '10.Hedge fund and private equity firm Fortress Investment Group said that he expects the firm to have raised $5 billion in new capital this year as it works to build relationships with investors globally. The firm's Chief Executive Dan Mudd said at the Goldman Sachs U.S. Financial Services Conference in New York, that the company "should be over" $5 billion in new capital raising through the full year of 2010.
BlackRock's(BLK) Fink Sees "Very Strong" Q4 Profit. BlackRock Inc, the world's largest money manager, will report "very strong" earnings and profit margins for the fourth quarter, Chief Executive Laurence Fink said on Wednesday.
Fed Said to Unveil Debit-Card Fee Limits Next Week. The Federal Reserve is expected to unveil a proposed rule next week that would limit the transaction fees that banks can charge retailers when a customer uses a debit card, according to two industry sources familiar with the matter.
Financial Times:
Merkel Seeks Calm After Juncker E-Bond Blast. Angela Merkel, the German chancellor, has called for calm in the European Union after an angry attack by Jean-Claude Juncker, prime minister of Luxembourg, who accused Berlin of being “un-European” and “a bit simple” in making some areas “taboo” in EU negotiations. Amid signs of increasing tension between eurozone leaders over how to cope with the sovereign debt crisis that has undermined their common currency, Ms Merkel urged her fellow EU leaders to concentrate on reaching a good decision for the future of the euro at their summit in Brussels next week. At the same time she repeated her rejection of Mr Juncker’s proposal for jointly guaranteed eurobonds to help finance the most debt-laden members of the currency union. “The discussion does not help us,” she said after meeting Fredrik Reinfeldt, the Swedish prime minister.
Allied Irish Banks to Pay €40m bonuses despite bailout. Stricken Allied Irish Banks says court case forces it to give out bonuses while Ireland's taxpayers suffer. Stricken Allied Irish Banks is preparing to hand out €40m (£34m) of bonuses next week – despite being on the brink of receiving another emergency bailout from the Irish government. As many as 2,400 bankers in its Dublin capital markets division are to receive the payments on 17 December under agreements struck with the bank in 2008. The bank, 19% owned by Ireland's taxpayers but expected to reach 95% state-ownership, had originally been blocked from making the payments under one of the government's bailout programmes.
Shanghai Daily:
New homes in major Chinese cities are "overpriced" by an average of 30%, citing the Chinese Academy of Social Sciences' annual housing report released yesterday. The report said prices of new properties in Fuzhou in the southeastern seaboard province of Fujian were most inflated with a "price-bubble index" of .703. Hangzhou in Zhejiang province and Nanning in the Guangxi region were second and third.
Oriental Morning Post:
China's three commodities exchanges in Shanghai, Dalian and Zhengzhou are considering increasing contract sizes to curb speculation, citing managers at futures brokerages. Large contract sizes require more funds to trade.
21st Century Business Herald:
Former Chinese central bank deputy governor Wu Xiaoling said banks' reserve ratio should be raised more frequently while there are large foreign exchange inflows. There is still room to further raise reserve ratios, Wu said.
Evening Recommendations Citigroup:
Reiterated Buy on (GLW), target $22.50.
Reiterated Sell on (GNW), target $13.
Oppenheimer:
Rated (VPRT) Outperform, target $55.
Night Trading
Asian equity indices are -.50% to +.75% on average.
Asia Ex-Japan Investment Grade CDS Index 106.50 unch.
Asia Pacific Sovereign CDS Index 106.0 +1.75 basis points.
Initial Jobless Claims for last week are estimated to fall to 425K versus 436K the prior week.
Continuing Claims are estimated to fall to 4237K versus 4270K prior.
10:00 am EST'
Wholesale Inventories for October are estimated to rise +.8% versus a +1.5% gain in September.
Upcoming Splits
None of note
Other Potential Market Movers
The weekly EIA natural gas inventory report, Goldman Sachs Automotive Conference, Lazard Cloud Computing Summit, Barclays Tech Conference, (BFB) analyst conference, (AKAM) investor summit, (DPZ) analyst meeting, (DLR) investor day, (NUAN) analyst day, (PFG) investor day and the (UTX) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by financial and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
North American Investment Grade CDS Index 90.0 bps +2.26%
European Financial Sector CDS Index 135.28 bps +5.82%
Western Europe Sovereign Debt CDS Index 178.17 bps -1.29%
Emerging Market CDS Index 211.88 bps +.78%
2-Year Swap Spread 20.0 -1 bp
TED Spread 17.0 unch.
Economic Gauges:
3-Month T-Bill Yield .14% +1 bp
Yield Curve 263.0 +1 bps
China Import Iron Ore Spot $165.0/Metric Tonne +.18%
Citi US Economic Surprise Index -14.10 unch.
10-Year TIPS Spread 2.20% -5 bps
Overseas Futures:
Nikkei Futures: Indicating +38 open in Japan
DAX Futures: Indicating +9 open in Germany
Portfolio:
Slightly Higher: On gains in my Biotech, Medical and Technology long positions
Disclosed Trades: None
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite soaring long-term rates, recent gains, China inflation worries and US municipal debt concerns. On the positive side, Education, Insurance, Hospital and Bank shares are especially strong, rising more than 1.0%. (XLF) has traded well throughout the day. Copper is rising +1.27% and Lumber is gaining +2.89% despite more euro weakness. The Italy sovereign cds is falling -3.81% to 194.40 bps. Gold is falling -1.11%. On the negative side, Airline, Road & Rail, Gaming, Restaurant, REIT, Homebuilding, Steel, Gold, Ag, Coal, Oil Tanker and Paper shares are under pressure, falling more than 1.0%. (IYR) has been heavy throughout the day. Cyclicals and small-caps are underperforming. The Greece sovereign cds is jumping +3.41% to 940.47 bps, the China sovereign cds is surging +5.51% to 74.19 bps and the Japan sovereign cds is rising +3.33% to 70.21 bps. The European Financial Sector CDS Index is beginning to trend higher again. Moreover, the US Muni CDS Index is rising +4.34% to 199.50 bps. The 10-year yield is soaring another +11 bps to 3.24%. The Citi Asia Pacific Economic Surprise Index is falling to another 52-week low today to -10.0. It is now at the lowest level since May 2009. Some key investor sentiment gauges remain a bit too bullish. The 10-year yield is mostly jumping on rising economic growth and inflation expectations, not on deficit worries, in my opinion. The US sovereign cds is flat over the last 5 days. Despite a number of potential negative equity catalysts, the bears remain unable to gain any traction, which is a big positive. I expect US stocks to trade mixed-to-lower into the close from current levels on soaring long-term rates, profit-taking, China inflation fears, US municipal debt concerns and technical selling,
