North American Investment Grade CDS Index 85.99 bps -.12%
European Financial Sector CDS Index 138.45 bps -.97%
Western Europe Sovereign Debt CDS Index 184.17 bps -1.78%
Emerging Market CDS Index 208.44 bps -1.14%
2-Year Swap Spread 22.0 +1 bp
TED Spread 18.0 unch.
Economic Gauges:
3-Month T-Bill Yield .13% +1 bp
Yield Curve 283.0 +14 bps
China Import Iron Ore Spot $167.50/Metric Tonne +.36%
Citi US Economic Surprise Index +11.0 +9.6 points
10-Year TIPS Spread 2.22% +2 bps
Overseas Futures:
Nikkei Futures: Indicating +70 open in Japan
DAX Futures: Indicating +2 open in Germany
Portfolio:
Slightly Higher: On gains in my Medical and Biotech long positions
Disclosed Trades: None
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades slightly lower despite less eurozone debt angst and mostly positive economic data. On the positive side, Hospital, Biotech, Medical Equipment and Telecom shares are especially strong, rising more than 1.0%. The Spain sovereign cds is dropping -3.04% to 324.80 bps and the Portugal sovereign cds is falling -3.56% to 451.80 bps. Weekly retail sales rose +3.1% this week versus a +3.8% gain the prior week. On the negative side, Education, Gaming, REIT, Bank, Disk Drive, Networking, Alt Energy, Oil Tanker and Computer Hardware shares are under meaningful pressure, falling more than 1.0%. (XLF)/(IYR) have underperformed throughout the day and the transports are relatively weak again today. The Asia Ex Japan High Yield CDS Index is up another +1.38% and has risen +4% over the last five days. As well, the US Muni CDS Index is up another +.18% and has jumped +14% over the last five days. Shanghai copper inventories are jumping +5.4% and have risen +16.5% over the last five days to the highest level since May 20th. Short/intermediate-term gauges of investor sentiment remain overly bullish, which is a big negative. The financials had been propping up the broad market of late. They are now rolling over. As well, a number of market leaders are a bit "tired." I expect US stocks to trade modestly lower into the close from current levels on China inflation worries, profit-taking, US tax policy uncertainty, more shorting, soaring long-term rates, technical selling and ongoing eurozone debt fears.
Producer Prices in U.S. Rose .8% in November; Core Up .3%. Wholesale costs in the U.S. rose in November by the most in eight months, led by higher prices for gasoline, heating oil and fruit. Separate figures from the Commerce Department showed retail sales rose more than forecast in November, a sign consumers will play a bigger role in the recovery. Purchases increased 0.8 percent, following a 1.7 percent gain in October that was larger than previously estimated.
Treasuries Drop as Fed Cites Recovery Signs, Maintains Easing. Treasuries fell as the Federal Reserve said the U.S. recovery is continuing and maintained a $600 billion program of debt purchases. The 30-year bond yield advanced to a seven-month high on speculation President Barack Obama’s agreement to extend tax cuts will win passage in Congress, supporting growth and stoking inflation.
Europe's Bondholders Shouldn't Share Bailout Cost, Danish Government Says. Euro-area senior bondholders shouldn’t have to share the cost of bailing out the region’s most indebted members as the onus is on governments to rein in budgets and reassure investors, Danish Finance Minister Claus Hjort Frederiksen said. “It’s important that the countries consolidate in a convincing way to tell the markets that they are on the right track,” Frederiksen said in an interview in Copenhagen yesterday. Asked whether Europe should force debt investors to foot part of the bill on subsequent bailouts, he said: “I don’t think so, frankly.”
Belgium Has S&P Outlook on Debt Cut to 'Negative' Amid Political Stalemate. Belgium had the outlook on its debt rating lowered to “negative” from “stable” at Standard & Poor’s Ratings Services because the country’s political stalemate makes it vulnerable to rising borrowing costs. S&P may cut Belgium’s AA+ sovereign credit rating by one step within the next six months should the seven parties involved in coalition talks fail to form a government “soon,” the credit agency said today in a statement. It may also cut the rating within two years should the next government fail to stabilize public debt and improve political cohesion. “Belgium’s current caretaker government may be ill- equipped to respond to shocks to public finances,” Marko Mrsnik, a credit analyst at S&P in Madrid, said in the statement. “The federal government’s projected 2011 gross borrowing requirement of around 11 percent of GDP leaves it exposed to rising real interest rates.”
U.S. Credit Swaps Decline for a 10th Day, Longest Drop Since October 2006. The cost of protecting bonds from default in the U.S. fell for a 10th straight trading day, the longest streak since October 2006. “People are bulled up on credit,” said Stephen Antczak, head of U.S. credit strategy at Societe Generale SA in New York. “There’s no fear of defaults. There just isn’t in the near term.” The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, fell 1.2 basis points to a mid- price of 84.8 as of 12:14 p.m. in New York, the lowest since April, according to index administrator Markit Group Ltd.
Credit-default swaps on General Motors(GM) were at a mid-price of 332.5 basis points as of 10:42 am in New York, according to Barclays Capital. It marked the first time the contracts were cited since the U.S. automaker's bankruptcy.
Best Buy(BBY) Plunges Most in 8 Years After Cutting Profit Forecast. Best Buy Co., the world’s largest consumer-electronics retailer, fell the most in more than eight years after slashing its annual profit forecast amid increasing competition from Wal-Mart Stores Inc. and Target Corp. Best Buy plunged $6.50, or 16 percent, to $35.20 at 1:21 p.m. in New York Stock Exchange composite trading, after falling as much as 18 percent, the biggest intraday drop since Aug. 8, 2002.
Chief Executives in U.S. Are the Most Optimistic Since 2006, Survey Shows. Optimism among U.S. chief executives in the fourth quarter rose to the highest level since the start of 2006 as business leaders projected increased sales, investment and hiring, a private survey showed. The Business Roundtable’s economic outlook index climbed to 101 after falling in the previous quarter for the first time since the beginning of 2009, the Washington-based group said today. Readings higher than 50 coincide with an economic expansion. The gauge, which increased from a third-quarter reading of 86, rose to 102 in the first quarter of 2006. Forty-five percent of respondents said they will add to payrolls, an increase of 14 percentage points, while 80 percent said they expect sales will grow in the next six months, up from 66 percent in the third quarter.
Airline Profits to Drop 40% on Taxes, Oil, Group Says. Airlines may post a 40 percent decline in combined profits next year on slower economic growth, higher fuel costs and austerity measures in Europe, a leading industry group said today. Net income will drop to $9.1 billion in 2011 from $15.1 billion this year, International Air Transport Association Chief Executive Officer Giovanni Bisignani told reporters in Geneva.
Canadians With More Debt Than U.S. Spark Policy Makers' Warning. Canada’s top economic officials yesterday urged households to be wary of taking on too much debt after data showed the indebtedness of Canadians surpassed U.S. levels for the first time in 12 years. Bank of Canada Governor Mark Carney, Finance Minister Jim Flaherty and Prime Minister Stephen Harper said in separate public appearances that they are concerned about rising debt. The ratio of household debt to disposable income in Canada was 1.48 in the third quarter according to Statistics Canada, exceeding the U.S. level of 1.47. “Our parents were more inclined to pay off that mortgage as soon as possible, and some Canadians are not as inclined to do that now,” Flaherty told reporters yesterday. “I encourage them to do it.”
ECB Criticizes Hungary Over Central Bank Independence. The European Central Bank criticized Hungary Tuesday for failing to observe central bank independence in several instances. The ECB said it “is closely following the recent legislative developments in Hungary.” The Hungarian government’s move to reduce the remuneration of the central bank’s interest-rate decision-making body, the Monetary Policy Council, and its plan to eliminate the central bank governor’s right to nominate two members of the seven-member MPC, together with the repeated government criticism of the bank’s interest rate decisions “raise concerns as this could be seen as the government trying to influence the governor in the performance of his tasks,” the ECB said in a statement.
CNBC:
Fed Holds on Rates, Says Recovery Remains 'Slow'. The U.S. Federal Reserve said on Tuesday the economic recovery was still too slow to bring down unemployment, reaffirming its commitment to purchase $600 billion in bonds to stimulate growth and create jobs.
Cap & Trade - A Train Wreck. What to do with carbon based emissions? I have no clue. I’m not sure Congress does either. They will be more confused than ever after reading a recent CBO report on the topic.
New York Times:
To Conquer Wind Power, China Writes the Rules. Judging by the din at its factory here one recent day, the Spanish company Gamesa might seem to be a thriving player in the Chinese wind energy industry it helped create. But Gamesa has learned the hard way, as other foreign manufacturers have, that competing for China’s lucrative business means playing by strict house rules that are often stacked in Beijing’s favor.
Washington Post:
Poll: Americans Say WikiLeaks Harmed Public Interest; Most Want Assange Arrested. Most of those polled - 68 percent - say the WikiLeaks' exposure of government documentsabout the State Department and U.S. diplomacy harms the public interest. Nearly as many - 59 percent - say the U.S. government should arrest Assange and charge him with a crime for releasing the diplomatic cables.
Expert: Seven-Year Moratorium on Gulf Oil Drilling an Unwise Decision. The recently announced seven-year moratorium on offshore drilling is yet another example of the short-sightedness of the U.S. Department of the Interior, says John W. Kindt, a professor of business and legal policy at Illinois and expert on marine pollution. "It's a ridiculous decision on the part of the Interior Department," said John W. Kindt, a professor of business and legal policy at Illinois. "The previous 180-day moratorium really hurt a lot of businesses. Well, a seven-year ban is going to sting even more." Kindt says giving the oil companies a public spanking through a seven-year ban isn't going to solve our energy problems, and that unreasonably prohibiting offshore drilling will not only exacerbate the region's economic woes, it also will strengthen U.S. dependence on foreign oil.
Politico:
Harry Reid to Bring START to Senate Floor. Senate Majority Leader Harry Reid plans to bring both the START Treaty and the bill to fund the federal government the floor Wednesday, despite continued protests from senior Republican leadership that the treaty should wait until the next congress.
USA Today:
U.S.: More Teens Smoke Marijuana Than Cigarettes. More high school seniors this year used marijuana than smoked cigarettes in the past 30 days, according to government data released Tuesday. In addition, daily marijuana use increased significantly among eighth-, 10th- and 12th-graders, with about one in 16 high school seniors using marijuana daily or near-daily, the annual "Monitoring the Future Survey" found. Teens in all three grades exhibited more favorable attitudes toward the drug, according to the national survey of more than 46,000 teens. The survey's lead investigator, the director of the National Institute on Drug Abuse (NIDA), and the White House "drug czar" blamed the rising use among teens in the past three years on publicity surrounding medical marijuana. "Young people are increasingly seeing marijuana as not dangerous," said lead investigator Lloyd Johnston of the University of Michigan's Institute for Social Research.
Reuters:
JPMorgan(JPM) Denies it Holds 90% of LME Copper Stocks. U.S. investment bank JPMorgan said it does not hold more than 90 percent of copper stock warrants in London Metal Exchange warehouses, but declined on Tuesday to comment on whether it had a smaller position. A single holder, recently controlling 50-80 percent of copper stocks and cash contracts in London Metal Exchange warehouses, appears to have raised the position to above 90 percent, latest data from the world's biggest metals market showed.
US Senate Democratic Spending Bill Adds Earmarks. A 2,000-page Senate bill that would fund the U.S. government until October 2011 includes many examples of the pet projects known as earmarks that have become a symbol of wasteful spending for many voters. The bill, obtained by Reuters ahead of its release, is likely to draw the ire of Senate Republicans who have renounced earmarks.
Telegraph:
ECB Urges Bigger Rescue Fund as Bond Investors Punish Spain.The European Central Bank urged Europe to increase the size and scope of its €750bn financial rescue fund ahead of a crucial leaders' summit this week as bond investors demanded higher interest rates to hold Spanish debt.
Der Spiegel:
Capitalizing on the Euro Crisis. China Expanding Its Influence in Europe. China is seizing on Europe's debt problems to expand its influence on the continent with large-scale investments and purchases of government bonds issued by highly-indebted states. The strategy could push Europe into the same financial dependency on China that is posing a dilemma for the US.
DigiTimes:
Nvidia(NVDA) Seeing Popularity Grow in Tablet PC Market. Nvidia's Tegra 2 platform has recently become a new spotlight in the tablet PC market as most of the tablet PC vendors including Acer, Asustek Computer, Toshiba and Samsung Electronics as well as several regional brand vendors in China, Germany and the UK, are all set to launch Tegra 2-based models, according to sources from notebook players.
Mortgage-Bond Slump No 'Fun' for Housing as Rates Increase: Credit Markets. A slump in government-backed mortgage securities that’s sent yields to the highest level since May is threatening a recovery in the U.S. housing market, which had been bolstered by record-low borrowing costs. Yields on Fannie Mae-guaranteed securities that most affect loan rates jumped as high as 4.21 percent today, an increase of 1 percentage point from an all-time low in October, according to data compiled by Bloomberg. Higher loan rates “won’t be fun” for a fragile housing market, said Scott Simon, head of mortgage bonds at Newport Beach, California-based Pacific Investment Management Co., manager of the world’s biggest bond fund. “If you were looking at buying a house a few weeks ago, the same house, to you, looks as much as 9 percent more expensive,” he said. The effects of higher mortgage rates, along with climbing gasoline prices, will offset much of the tax package’s intended stimulative effects, according to Gluskin Sheff & Associates Chief Economist David Rosenberg. The average rate on a typical 30-year fixed-rate mortgage has climbed for four weeks, to an average of 4.61 percent last week, according to Freddie Mac, pushing the monthly cost of a $300,000 loan to $1,540, from $1,462.
U.S. Crisis Panel Republicans Plan Protest on Report Due Date. Republicans on the congressionally appointed commission investigating the 2008 financial crisis are planning a public protest of the panel’s decision to ignore a deadline for reporting its findings. Bill Thomas, vice chairman of the Financial Crisis Inquiry Commission, told reporters in Washington today that he is trying to schedule a news conference for Dec. 15, the day the panel was required to issue its final report. While Thomas didn’t give details, three people with knowledge of the plan said the FCIC’s four Republicans are likely to attend and may release a statement or their own report.
Baltic Index Falls to Four-Month Low on Excess Supply of Ships. The Baltic Dry Index, a measure of commodity-shipping costs, fell to the lowest level in more than four months on a surplus of ships. The index declined 19 points, or 0.9 percent, to 2,076 today, according to data from the Baltic Exchange in London. That’s the lowest since Aug. 6. Declines were led by rates to hire capsesize ships, the biggest in the gauge. They fell 2.1 percent to $24,852 a day. “The dry bulk market is showing no signs of improvement,” Shalini Shekhawat, a Gurgaon, India-based analyst at Drewry Shipping Consultants Ltd., wrote in a report. “The remainder of the year will be no better, with iron ore and grain trade being insufficient to absorb the over-supply of tonnage in the market.” Shipping rates have fallen 31 percent this year as new vessels entered the fleet. Capesizes will expand 24 percent in 2010, driving overall dry-bulk fleet growth of 17 percent, Clarkson Plc, the world’s largest shipbroker, estimates. Demand will grow 10 percent over the same time, Clarkson said. Capesizes mostly carry iron ore, used to make steel.
U.S. East Braces for Frigid Blast as Storm Grounds More Flights. The eastern U.S. braced for frigid weather from a snowstorm that slammed the Midwest over the weekend, grounding thousands of flights. “It will be below to much-below normal across most of the eastern half of the nation over the next couple of days,” said Brian Korty, a meteorologist with the National Weather Service. Strong winds will compound the cold, he said. Colder-than-normal weather is likely in parts of the Midwest, Southeast and mid-Atlantic through Dec. 27, according to MDA Federal Inc.’s EarthSat Energy Weather in Rockville, Maryland.
Amgen's(AMGN) Denosumab Slows Spread of Prostate Cancer to Patients' Bones. Amgen Inc., the world’s largest biotechnology company, said denosumab helped prevent prostate cancer from spreading to men’s bones. The shares rose about 7 percent in extended trading. The study, involving 1,432 prostate tumor patients, showed that men who took denosumab delayed the spread of cancer to their bones by 4.2 months compared with those taking placebos, Thousand Oaks, California-based Amgen said in a statement. Amgen increased $3.64, or 6.7 percent, to $57.75 in extended trading at 6:31 p.m.
Bailouts Test Limits of Taxpayer Tolerance: Karl Heinz Daeke. These are testing times for European taxpayers, especially German ones. The European stabilization package, worth as much as 750 billion euros, already meant a huge burden on ordinary people when it was set up in May 2010. But at that time we were still told that such a protective shield would suffice to fend off speculators around the world. It hasn’t worked.
Kan Orders 5% Cut in Japan Corporate Tax to Spur Growth. Japan’s Prime Minister Naoto Kan ordered a 5 percentage point cut in the nation’s corporate tax rate starting in the next fiscal year to boost an economy that is showing signs of contraction. "I’ve instructed ministers to lower the corporate tax by five percent to lift up the economy and beat deflation," Kan told reporters in remarks broadcast last night on TV Tokyo.
Wall Street Journal:
'Temporary' Tax Code Puts Nation in a Lasting Bind. Welcome to the world of the temporary tax code. In the late 1990s, there were typically fewer than a dozen tax provisions that had just a limited lease on life and needed to be renewed every year or so. Today there are 141.
Mexico's Tortilla Industry Threatens Price Hike. Mexican tortilla producers say they are planning to raise prices by at least 20% to meet the rising price of corn and other operating costs, prompting an immediate response from the government that is trying to keep food prices under control.
Rising Computer Prices Buck the Trend. Average Prices Rose 6% in November, Industry Reversal Has Some Executives Saying Prices Have Bottomed; No $99 Laptop.
Goldman(GS): We Didn't Topple Bear Stearns. Goldman Sachs Group Inc. told a U.S. panel examining the financial crisis that the company wasn't responsible for toppling two Bear Stearns & Co. hedge funds in early 2007. In dozens of pages of documents submitted to the Financial Crisis Inquiry Commission, Goldman detailed its valuation of mortgage securities underwritten by the New York company, some of which were held in two Bear hedge funds managed by Ralph Cioffi and Matthew Tannin. The collapse of the two Bear hedge funds, which invested primarily in subprime mortgage securities and derivatives, was an early victim of the crisis and a harbinger of the pummeling suffered by financial institutions and investors during the next 18 months. The Bear hedge funds were fatally wounded by a precipitous decline in the value of mortgage securities. The funds valued their assets partly on valuations of mortgage-related securities obtained from trading partners such as Goldman. Some critics have suggested that Goldman helped push the hedge funds over the edge.
CFTC Chief Fees Need for Speed. Gary Gensler's mission to turn his tiny agency into a regulatory powerhouse is running into trouble. The difficulties include resource strains, discord among commissioners and accusations that the Commodity Futures Trading Commission isn't taking enough care as it writes at breakneck speed rules that will transform the derivatives market.
Comcast(CMCSA) Trialing Internet and TV Linking Service.Comcast Corp. is testing a new service that knits together television and the Internet, as the U.S. cable giant goes after rivals that threaten to undermine its business.
Meet The Anti-Wall Street Fed Governor Who Thinks Bernanke Made a Deal With The Devil. The NYT profiles Thomas Hoenig, the KC Fed Chief who's made a name for himself by being the only dissenter on the FOMC, as it's loosened and loosened monetary policy on the way towards quantitative easing. Hoenig represents a distinct Midwestern populist sort of economic conservatism. He thinks Bernanke's made a "deal with the devil" in plying the market with endless liquidity, and at the same time he's called for the breakup of gigantic, too-big-to-fail Wall Street banks, having long ago warned about the prospect of bailouts of large institutions (before the repeal of Glass-Steagall). As for the risks of current policy:
Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-one percent (41%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -17 (see trends).
Support for Health Care Repeal Hits Highest Point Since September. The latest Rasmussen Reports national telephone survey shows that 60% of Likely U.S. Voters at least somewhat favor repeal of the health care law while 34% are opposed. As has been the case since the law was first passed, those who favor repeal feel more passionately than those who want to keep the law--46% Strongly Favor repeal while just 23% who are Strongly Opposed.
CNBC to Launch CNBC Pro Trading Service With Real-Time Info. Investors may think that the Internet already provides all the trading information they need. But CNBC is betting that it has the goods and marketing clout to persuade investors to pay for more. The business news channel Tuesday launched CNBC Pro, a subscription news and data service for traders who want to play in lots of markets — including commodities, exchange traded funds, futures, bonds, real estate and currencies. The introductory price is $24.99 for each of the first six months and an option to pay $269.99 for an annual subscription.
Telegraph:
Euro Has 'One in Five Chance' of Survival, Warns CEBR. The chances of the euro surviving in its current form have been put at "one-in-five" by one of the UK's leading economics consultancies. In a research paper published today, the Centre for Economics and Business Research (CEBR) claims that keeping "the euro alive will require cuts in living standards greater than the UK faced in the Second World War" for weaker eurozone members. "There is no modern history of falling living standards in peacetime on the scale necessary to keep the euro in its current form. This is why I think there is at best a one-in-five chance that the euro will survive as it is," Douglas McWilliams, CEBR chief executive, said.
Evening Recommendations Citigroup:
Reiterated Buy on (NVDA), raised target to $20.
CSFB:
Rated (MYL) Outperform, target $25.
Rated (WPI) Outperform, target $60.
Rated (SLXP) Outperform, target $55.
Night Trading
Asian equity indices are unch. to +.25% on average.
Asia Ex-Japan Investment Grade CDS Index 104.0 -2.0 basis points.
Asia Pacific Sovereign CDS Index 104.25 -.75 basis point.
The NFIB Small Business Optimism Index for November is estimated to rise to 92.3 versus 91.7 in October.
8:30 am EST
Advance Retail Sales for November are estimated to rise +.6% versus a +1.2% gain in October.
Retail Sales Less Autos for November are estimated to rise +.6% versus a +.4% gain in October.
Retail Sales Ex Autos & Gas for November are estimated to rise +.6% versus a +.4% gain in October.
The Producer Price Index for November is estimated to rise +.6% versus a +.4% gain in October.
The PPI Ex Food & Energy for November is estimated to rise +.2% versus a -.6% decline in October.
10:00 am EST
Business Inventories for October are estimated to rise +1.0% versus a +.9% gain in September.
2:15 pm EST
The FOMC is expected to leave the benchmark Fed Funds Rate at .25%.
Upcoming Splits
None of note
Other Potential Market Movers
The weekly retail sales reports, (GE) annual investor meeting, (BRCM) analyst day, (ONXX) analyst briefing, (BMC) investor day and the Raymond James IT Supply Chain Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the day.
North American Investment Grade CDS Index 86.09 bps -2.40%
European Financial Sector CDS Index 144.27 bps +1.14%
Western Europe Sovereign Debt CDS Index 187.50 bps +1.08%
Emerging Market CDS Index 209.51 bps -1.98%
2-Year Swap Spread 21.0 -2 bps
TED Spread 18.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .12% +1 bp
Yield Curve 269.0 +1 bp
China Import Iron Ore Spot $166.90/Metric Tonne +.72%
Citi US Economic Surprise Index +1.40 -.3 point
10-Year TIPS Spread 2.20% +2 bps
Overseas Futures:
Nikkei Futures: Indicating +57 open in Japan
DAX Futures: Indicating +6 open in Germany
Portfolio:
Slightly Higher: On gains in my Tech long positions
Disclosed Trades: Added (IWM)/(QQQQ) hedges, added to my (EEM) short
Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite recent equity gains, China inflation worries, US tax policy uncertainty and rising eurozone sovereign debt angst. On the positive side, Education, Homebuilding, Disk Drive, Steel, Gold, Oil Service, Energy, Oil Tanker and Utility shares are especially strong, rising more than 1.0%. (XHB) is continuing its recent outperformance. Copper is rising +2.54% and is breaking convincingly to a new 52-week high. The S&P GSCI Ag Spot Index is also surging +2.37%. The Italy sovereign cds is dropping -5.1% to 208.67 bps, the Hungary sovereign cds is falling -2.28% to 367.22 bps and the UK sovereign cds is declining -4.16% to 67.97 bps. On the negative side, Hospital and Restaurant shares are under pressure, falling more than 1.0%. Small-caps are underperforming. Transport shares are also relatively weak. The China sovereign cds is gaining +2.18% to 72.05 bps and the Greece sovereign cds is climbing +1.58% to 961.26 bps. Moreover, the Emerging Markets Sovereign CDS Index is up +2.43% to 196.97 bps. The European Financial Sector CDS Index continues to trend higher(still below May/June levels). Short/Intermediate-term gauges of investor sentiment remain overly bullish, which is a big negative. Given the jump in the Shanghai Composite last night and strength in the euro currency today, I am somewhat surprised that equities aren't putting in a better showing. Today may just be another healthy consolidation day, however some stocks look a bit "tired." I expect US stocks to trade mixed-to-lower into the close from current levels on China inflation worries, profit-taking, US tax policy uncertainty, more shorting and ongoing eurozone debt fears.
