North American Investment Grade CDS Index 92.70 -.86%
European Financial Sector CDS Index 76.58 -12.11%
Western Europe Sovereign Debt CDS Index 162.69 bps -.70%
Emerging Market CDS Index 198.72 -.63%
2-Year Swap Spread 17.0 unch.
TED Spread 24.0 +1 bp
Economic Gauges:
3-Month T-Bill Yield .05% -1 bp
Yield Curve 270.0 +4 bps
China Import Iron Ore Spot $176.10/Metric Tonne +1.27%
Citi US Economic Surprise Index +34.60 -2.5 points
10-Year TIPS Spread 2.58% -1 bp
Overseas Futures:
Nikkei Futures: Indicating +106 open in Japan
DAX Futures: Indicating +18 open in Germany
Portfolio:
Slightly Higher: On gains in my Medical, Retail, Tech and Biotech sector longs
Disclosed Trades: Covered my (IWM)/(QQQ) 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 weaker economic data, Mideast unrest, rising energy prices, rising long-term rates and recent equity gains. On the positive side, Education, Bank, Wireless, Disk Drive and Semi shares are especially strong, rising 1.0%+. Tech and financial shares are outperforming. Copper is surging +2.57%. The Spain sovereign cds is falling -8.92% to 200.91 bps, the Italy sovereign cds is falling -6.36% to 129.66 bps, the Portugal sovereign cds is falling -5.7% to 551.66 bps, the Ireland sovereign cds is dropping -8.2% to 530.03 bps, the Belgium sovereign cds is falling -6.59% to 117.17 bps, the UK sovereign cds is dropping -6.4% to 47.56 bps and the US sovereign cds is falling -6.4% to 36.18 bps. On the negative side, HMO, Telecom, Steel, Ag, Oil Service, Energy, Alt Energy and Coal shares are under pressure, falling more than -.75%. Cyclicals are underperforming. Gold is rising +.22%, oil is up +.65% and Lumber is falling -3.24%. Lumber has broken down from the trading range that it had been in since mid-Dec. of last year. The 10-year yield is rising +6 bps to 3.54%. The US price for a gallon of gas is up +.02 today to $3.71/gallon. It is up .59/gallon in 50 days. The California Muni CDS is rising +10.71% to 230.40 bps. (XLF) is now trading above its 50-day moving average, which is a big positive. As well, the MS Tech Index is trading a bit better. However, leadership is lacking. As well, overall trading is still choppy with lackluster breadth/volume. The market seems to be anticipating a reversal lower in energy prices, which would likely send the S&P 500 to a new 52-week high. However, if this reversal fails to materialize soon, equity weakness is likely. I expect US stocks to trade mixed-to-higher into the close from current levels on less financial/tech sector pessimism, short-covering, bargain-hunting, fund inflows, buyout speculation and less eurozone debt angst.
Euro Rallies Before ECB Meeting; Dollar Declines to Record Against Aussie. The euro advanced to its highest level against the dollar in more than 14 months on speculation the European Central Bank will increase borrowing costs further after raising its target lending rate tomorrow. The greenback dropped to a record against the Australian dollar and the lowest level versus the Canadian currency in more than three years on the view the Federal Reserve will trail other central banks in boosting interest rates. The yen tumbled against all of its major counterparts on bets the Bank of Japan will expand economic stimulus as the nation recovers from its worst earthquake on record. “It’s a combination of the market expecting the ECB to hike tomorrow and the generally positive environment for risky assets,” said Aroop Chatterjee, a currency strategist at Barclays Plc in New York.
Portugal Finance Minister Calls for European Assistance, Negocios Reports. Portugal needs to ask the European Union for financial assistance, Portuguese newspaper Jornal de Negocios reported on its website, citing Finance Minister Fernando Teixeira dos Santos. “It’s necessary to resort to financing mechanisms available in the European framework in the appropriate terms for the current political situation,” Teixeira dos Santos said in a response to questions from the newspaper, Negocios reported today on its website. The comments mark the first time that the government has said it would need to seek aid.
Cuomo Repeats Threat to Dismiss 10,000 N.Y. State Workers. Governor Andrew Cuomo, who produced New York’s first on-time budget in five years last week, is standing by his threat to fire almost 10,000 workers unless they agree to provide the state with $450 million of savings. Labor contracts that increased state workers’ pay almost 14 percent over four years expired March 31, 10 days after formal negotiations with unions began. Cuomo has said he spoke with labor leaders about his goals before talks started. “Negotiations are ongoing and obviously if we don’t reach an agreement, we would need to proceed with layoffs,” said Joshua Vlasto, a spokesman for Cuomo, in a telephone interview today. Cuomo, a 53-year-old Democrat, reached agreement with top lawmakers March 27 to close a $10 billion gap in the $132.5 billion budget.
Wall Street Journal:
Budget Talks Head to Brink. Republicans and Democrats stumbled one day closer to a government shutdown on Friday, as the two parties escalated what has become a broader battle over Washington's role in the U.S. economy.
CNBC.com:
Gold, Oil Soar to Fresh Highs as Inflation Fears Mount. Gold hit record highs a second straight day Wednesday and oil soared to fresh 2-1/2 year highs, sparking fears of inflation that could hurt some of the world's most dependable economies. Price pressures were rising in Asia's emerging economies — which had been the catalyst for the world's recovery from the financial crisis — and were unlikely to subside soon, the Asian Development Bank cautioned. "High and volatile oil and food prices will, in particular, reverberate through the world economy, and they are likely to stay that way in 2011-2012,'' the ADB said. "They will thus be a significant source of global inflation, especially in developing countries where recovery is firmly under way,'' the Manila-based agency said in a report.
Glenn Beck Pulling Show Off Fox News. According to the release Beck won't jump ship entirely. He'll develop a variety of programs for Fox News and its digital properties.
Google's(GOOG) on Verge of Victory. Google is poised to win Department of Justice approval for its controversial $700 million acquisition of ITA Software, The Post has learned.
New York Times:
Portugal Sells Debt But At a Much Higher Rate. Portugal was forced to offer higher interest rates to sell short-term debt on Wednesday, underlining concerns among investors about the country’s ability to continue financing itself without an emergency European bailout. Portugal sold 455 million euros, or $650 million, of one-year Treasury bills at an average yield of 5.9 percent, the country’s debt management agency said. That was significantly higher than the 4.33 percent yield when Portugal last sold such bills on March 16. The auction attracted bids for 2.6 times the amount offered, compared with a bid-to-cover ratio of 2.2 two weeks earlier. The agency also sold 550 million euros of six-month bills at an average yield of 5.12 percent, compared with a yield of 2.98 percent at a previous auction of on March 2.
Rasmussen Reports:
45% Say Government Programs Increase Poverty in America. A new Rasmussen Reports national telephone survey shows that 45% of American Adults think current government anti-poverty programs actually increase poverty in America. Only 18% say these programs decrease poverty, while 24% say they have no impact.
Obama Reviews Names to Run Consumer Agency: White House. A source aware of the process told Reuters on Tuesday that the White House is considering Federal Reserve Governor Sarah Raskin and former Michigan Governor Jennifer Granholm to run the Consumer Financial Protection Bureau, set to open in July.
U.S. Stock Market Bulls Near 4-Month High. Bullish sentiment is often used as a contrarian indicator, with a high level of bullishness often interpreted to indicate an imminent fall in stock prices. U.S. stock market bulls rose to their highest level in nearly four months as equities continue to recover from their recent fall, according to a weekly survey of advisers by Investors Intelligence. Bullish advisers rose to 57.3 percent in the latest week compared to 51.6 percent in the previous week and a recent low of 50.6 percent just prior to that. The reading was the highest since the middle of December when it hit 58.8 percent. "At the end of last August's market lows the bulls were as few as 29.4 percent, suggesting a time to buy," said Investors Intelligence. "The latest reading suggests increased danger. At the October 2007 top, the bulls were 62 percent."
Several eurozone governments no longer rule out a reorganization of Greek debt, amid concern that Greece will be unable to borrow in capital markets net year, citing government officials. To increase the Greek aid package would be politically impossible and an alternative plan is therefore needed.
El Pais:
The situation in Portugal is "not as easy" as in Spain, and whether Portugal needs a bailout or not depends on markets, IMF Managing Director Dominique Strauss-Kahn said in an interview.
Valor Economico:
Brazil's central bank may continue to raise its benchmark interest rate after its April 19-20 policy meeting. Policy makers will raise rates as much as necessary to bring inflation within target in 2012.
Xinhua:
China may raise the price of gasoline by 500 yuan a ton and the price of diesel by 400 yuan a ton.
China Business News:
BYD Co. sold 40,027 vehicles in March, a 41% decline from the same period a year ago, citing the company.
