Thursday, August 11, 2011

Thursday Watch

Posted by Gary .....at 1:02 AM

Evening Headlines

Bloomberg:
  • Tremonti to Present New Austerity Plan as Unions Threaten General Strike. Italian Finance Minister Giulio Tremonti will present a new austerity plan that has prompted threats of strikes from unions as he seeks to eliminate the budget deficit and secure continued European Central Bank support for the country’s bonds. Tremonti will testify before bicameral committees in Parliament on the measures at 11 a.m. in Rome. The package seeks to bring down the deficit next year to between 1.5 percent and 1.7 percent of gross domestic product before eliminating it in 2013, Tremonti told business and labor leaders at a meeting yesterday. “If the measures that end up in the budget adjustment are those that have been circulated in the newspapers and that the government hasn’t denied, the only response will be a general strike,” Susanna Camusso, head of Italy’s biggest federation of unions, the CGIL, said after the talks.
  • SocGen Denies Credit Rumors as Shares Tumble. Societe Generale (GLE) SA, France’s second-largest bank, denied “all market rumors” and asked the nation’s market watchdog for an investigation after speculation France’s creditworthiness was in doubt sent the shares tumbling. The lender’s performance in July and early August shows it will be able to post “solid” results in the future, Paris- based Societe Generale said in a statement after the market closed yesterday. The bank asked France’s Autorite des Marches Financiers to open a probe into the origin of speculation that is “extremely harmful to the interests of its shareholders.” Societe Generale led European bank stocks to the lowest since the aftermath of the credit crisis yesterday, tumbling 15 percent to 22.18 euros in Paris, the biggest drop since Oct. 27, 2008.
  • Fed Said to Follow Basel Capital Rules for Biggest U.S. Banks. Federal Reserve officials are drafting rules for the biggest U.S. banks that won't be more stringent than international capital standards agreed to in Basel, Switzerland, according to a person familiar with the discussions. Federal Reserve Governor Daniel Tarullo cited a "goal of congruence" between the Basel standards and the Fed's work on rules under the Dodd-Frank Act, which overhauls banking regulation, in a June 3 speech. The central bank hasn't veered from that, according to the person, who declined to be identified because the rules are still being drafted. The Basel Committee on Banking Supervision, which includes regulators from the U.S. and Europe, set an additional capital buffer standard for the largest international banks in June that will range from 1 percentage point to 2.5 percentage points of risk-weighted assets. That comes on top of a requirement of 7 percent of common equity for all banks.
  • Koschyk Backs Call for Euro 'Stability Council,' Passauer Says. German Deputy Finance Minister Hartmut Koschyk supports Economy Minister Philipp Roesler’s call for a “stability council” for the euro area, Passauer Neuen Presse reported, citing an interview. Koschyk also called for the introduction of a “debt limit” among European Union members in order to help to regain market confidence, the newspaper reported. The U.S. should also introduce a debt limit policy, the newspaper cited Koschyk as saying, according to an e-mailed preview of an interview to appear in tomorrow’s edition.
  • Central Bankers Worldwide Race to Save Growth in 72 Hours of Policymaking. Central bankers are racing to shield their economies from fiscal tightening and lopsided currency swings that threaten a new global recession. In the 72 hours after a Group of Seven conference call on Aug. 7, the Federal Reserve pledged to keep interest rates near zero through at least mid-2013, the European Central Bank intervened in bond markets and the Bank of England indicated it’s ready to add more stimulus if needed. Japan signaled renewed concern about the yen and Switzerland yesterday stepped up its fight to curb an “overvalued” franc.
  • Gold Exceeds $1,800 as Investors Seek 'Ultimate Collateral' on Debt Crisis. Gold extended a rally to an all-time high, topping $1,800 an ounce, on increased demand for a haven investment as global equities plunged amid escalating European and U.S. debt woes. Immediate-delivery metal rallied as much as 1.2 percent to $1,814.95 an ounce, and traded at $1,802.60 at 8:55 a.m. in Singapore.
  • Junk Fund Outflows Soar to Record. Investors pulled an unprecedented $2.1 billion from high-yield bond funds globally yesterday. The outflows exceed the previous record of $1.43 billion on May 10, 2010, and followed $1.18 billion of redemptions on Aug. 8, said Cameron Brandt, director of research at Cambridge, Massachusetts-based EPFR Global.
  • Paulson Loses 31% in Main Hedge Fund After August Rout. John Paulson, the billionaire who is betting on an economic recovery by the end of 2012, lost 11 percent in the first week of August in his largest hedge fund, according to a person familiar with the firm. The decline leaves the Advantage Plus Fund, which tries to profit from corporate events such as takeovers and bankruptcies, down 31 percent since the start of the year, said the person, who asked not to be named because the fund is private. "He's in an awkward position because he doesn't have a lot of time to restore that capital," said Geoff Bobroff, who runs a money management consulting firm in East Greenwich, Rhode Island. "The only way to do it is to make significant bets, and he has to hope they are right."
  • Ford(F) Says It's Feeling 'Pricing Pressure' as China Market Slows. Ford Motor Co. (F), seeking to accelerate its growth in China, said it’s encountering pricing pressure as that auto market slows. “In the last three or four months, the auto industry clearly is not growing at the rate it was last year or even in the first quarter,” Joe Hinrichs, Ford’s group vice president and Asia chief, said today at the JP Morgan auto conference in Detroit. “We have seen some pricing pressure.” Ford is spending $1.6 billion to build four factories in China, where it plans to triple its lineup by offering 15 models by mid-decade, Hinrichs said. “The growth rate is not nearly as aggressive” in China as it has been, Hinrichs said.
  • Cooperman's Omega Sells Stakes in Bank of America(BAC), Citigroup(C), Filing Says. Leon Cooperman, chief executive officer of New York-based hedge fund Omega Advisors Inc., sold all of his Bank of America Corp. (BAC) and Citigroup Inc. (C) holdings in the second quarter as he reduced his financial stakes. Cooperman sold 794,000 Citigroup shares and 2.54 million Bank of America shares, according to a document filed today with the U.S. Securities and Commission. He sold 247,000 shares of Blackstone Group LP (BX), reducing his position to about 2 million shares as of June 30. The fund’s equity weighting in financial stocks decreased by 3.6 percent, according to data compiled by Bloomberg.
  • North, South Korea Trade Artillery Salvos. South Korea said North Korea fired artillery salvos near a disputed sea border that was the scene of a deadly shelling in November, a charge North Korea denied. South Korea returned fire after North Korea lobbed three shells into the waters near Yeonpyeong Island about 1 p.m. yesterday and shot back again around 7:46 p.m. when two more shells landed in the ocean, said an official from the defense ministry in Seoul who declined to be identified, citing military policy. North Korea denied firing any artillery and accused its neighbor of using construction blasting in nearby Hwanghaenam Province as a pretext for confrontation, according to a report from the state-run Korean Central News Agency.
  • China's Ban on U.S. Professors Elicits Silence. They call themselves the “Xinjiang 13.” They have been denied permission to enter China, prohibited from flying on a Chinese airline and pressured to adopt China- friendly views. To return to China, two wrote statements disavowing support for the independence movement in Xinjiang province. They aren’t exiled Chinese dissidents. They are American scholars from universities, such as Georgetown and Massachusetts Institute of Technology, who have suffered a backlash from China unprecedented in academia since diplomatic relations resumed in 1979. Their offense was co-writing “Xinjiang: China’s Muslim Borderland,” a 484-page paperback published in 2004. “I wound up doing the stupidest thing, bringing all of the experts in the field into one room and having the Chinese take us all out,” said Justin Rudelson, a college friend of U.S. Treasury Secretary Timothy Geithner and former senior lecturer at Dartmouth College, who helped enlist contributors to the book and co-wrote one chapter.
  • Australian Jobless Rate Rises Most Since 2010. Australia’s jobless rate unexpectedly rose to an eight-month high last month as employers cut full-time staff, prompting investors to increase bets the central bank will lower the developed world’s highest interest rates. Unemployment jumped to 5.1 percent in July from 4.9 percent a month earlier, the first increase since October, the statistics bureau said in Sydney today. The number of workers fell by 100 after a revised 18,200 gain in June. That compares with the median estimate for 10,000 additional jobs in a Bloomberg News survey of 25 economists.
  • Turkey Scrutinizes Short Sales Amid Rout After Bans in Greece, South Korea. Turkey is increasing scrutiny of short sales, joining countries from Greece to South Korea that have sought to prevent bearish bets from fueling declines in stocks after the worst global tumble since 2008.
Wall Street Journal:
  • Dissents Pose New Test for Bernanke. Regional Bank Presidents Fisher, Kocherlakota Say Their No Votes Not a Sign of Decisive Break With the Fed Chairman. Ben Bernanke's decision to open the door to easier monetary policy Tuesday marked another watershed moment in his 5½-year odyssey as chairman of the Federal Reserve. This time, it wasn't just the policy that raised eyebrows, but also the manner in which it was decided. For the first time in Mr. Bernanke's tenure, three colleagues formally dissented from the Fed's move, a new sign of deep internal opposition that contrasts with the chairman's oft-stated desire for consensus. Since the financial crisis, Mr. Bernanke has labored with mixed success to manage divisions within the central bank.
  • Among Hedge Funds, Big Winners, Losers. Yes, some investors are making money in this difficult market. Some are making a lot of money. Ray Dalio's Bridgewater Associates LP has scored gains of more than $3.5 billion, or about 5%, in its flagship hedge fund just in the past week, according to investors. The $71 billion fund now is up more than 20% this year, investors said, making it among the best performers in the hedge-fund business. The gains are partly due to a spike in safe-haven investments, such as gold, Treasury bonds and the Swiss franc, in which Bridgewater has sizable positions.
  • FTC Focuses Probe on Android, Web Search. U.S. antitrust regulators are focusing their investigation of Google Inc.(GOOG) on key areas of its business, including its Android mobile-phone software and Web-search related services, people familiar with the probe say. Six weeks after serving Google with broad subpoenas, Federal Trade Commission lawyers, in conjunction with several state attorneys general, have been asking whether Google prevents smartphone manufacturers that use its Android operating system from using competitors' services, these people said.
  • Deere & Co.(DE) Under Investigation For Possible Foreign Bribery. Deere & Co., the world’s largest manufacturer of farm equipment, is under investigation by U.S. authorities for possible violations of foreign bribery laws, according to two people familiar with the matter. Investigators are looking at whether payments made in Russia and elsewhere fell foul of the FCPA.
  • Verizon(VZ) Sues Union Over Workers' Strike in East. Verizon says striking workers have taken their demonstrations too far, and the telecommunications company is suing in five Eastern states to limit picketing and stop what it claims is harassment, sabotage and blocking access to its facilities. The company sued Communications Workers of America leaders Wednesday in New York and got a court order Monday in Pennsylvania.
  • Treasurys Extend Rally As US Sells Debt At Record Low Yields. The United States is no longer a purely triple-A rated borrower, but that fact hasn't done anything to stop the country from raising debt this week at the lowest yields on record.
  • Riots Stoke British Ethnic Tensions. Race Relations Come to Fore After Birmingham Car Attack Kills Three Asian Men; 'An Eye for an Eye'.
  • China Flexes Naval Muscle. China sent its first aircraft carrier to sea, a defining moment in its effort to become a top-tier naval power that seeks to challenge U.S. military supremacy in Asia and protect Chinese economic interests that now span the globe.
  • TV Buoys News Corp.(NWSA) Results. Murdoch Dismisses Criticism of Board; Media Giant Raises Dividend as Operating Profit Rises 8.9%.
  • Oil Surplus Seen if Recession Re-Emerges.
  • America as Less Than No. 1. So this is a taste of what it will be like when the American superpower starts shrinking. Enjoying it yet?
MarketWatch:
  • CME(CME) Hikes Gold Margins, But Prices Still Rising. U.S. exchange operator CME Group said late Wednesday it is raising the margin requirements for trade in a wide range of gold products, effective Thursday. The speculative margin requirement for a new position in Comex 100 gold futures will rise to $7,425 from $6,075, or to $5,500 from $4,500 for existing "current maintenance" margins.
  • China Widens Access to Shale Gas.
CNBC:
Business Insider:
Zero Hedge:
IBD:
Forbes:
CNN:
  • Obama Set to Raise Money in New York. President Obama is scheduled to attend two fundraisers in New York on Thursday to benefit his re-election effort, two Democratic sources tell CNN. One is a reception for 15 people at a hotel. Following that he’ll attend a dinner for approximately 50 people hosted by film producer Harvey Weinstein and Vogue Editor Anna Wintour, according to the sources. The dinner will be held at Weinstein’s apartment, one of the sources said. Tickets for both events are $35,800 with proceeds going to the Obama Victory Fund, whose proceeds are shared by the re-election campaign and the Democratic National Committee. Earlier this week the President attended two separate events in Washington. He attended a fundraiser with approximately 140 guests at a private residence with its proceeds also going to the Victory Fund. He also went to a reception that night which was a donor outreach event.
  • Inside a Hedge Fund. (video) As stock markets brace themselves for more turmoil, Nina Dos Santos gets a glimpse inside a hedge fund.
NY Times:
  • Hedge Funds Gets Unfamiliar Taste of Losing. For hedge funds, just one week can change their entire year. With the stock market shedding billions of dollars in value and uncertainty in Europe stoking fear, some funds are watching their returns sink by double digits while others are shooting the lights out. August, in less than two weeks, has brought a 13 percent decline in the Standard & Poor’s 500-stock index and roughly 12 percent drop in the Dow Jones industrial average.The turmoil has whipsawed some of the biggest names in hedge funds.
  • In U.S. Stress Tests, a Tool to Gauge Contagion in Europe.

Seeking Alpha:
Gallup:
Politico:
Rasmussen Reports:
USA Today:
  • Economic Woes Offer Awkward Backdrop for Obama's Vacation. Fourteen million people are out of work. Millions more are losing fortunes in the stock market. America's AAA bond rating has slipped. So should President Obama be vacationing next week in Martha's Vineyard, off the coast of Massachusetts, where the average home costs $650,000? Yes, says White House press secretary Jay Carney. Obama, like most Americans, needs down time to recharge his batteries for the battles ahead. And besides, he says, "The presidency travels with you." Maybe not, say some academics, authors and political pundits. While Obama deserves a break, they say, this might not be the time, and Martha's Vineyard might not be the place.
Reuters:
  • BofA(BAC) Negotiates to Sell Big China Bank Stake - Sources. Bank of America Corp has held exploratory talks with the principal investment funds of Kuwait and Qatar about selling part of its stake in China Construction Bank, sources with direct knowledge of the talks told Reuters. Bank of America, which owns about 10 percent of CCB's Hong Kong-listed shares and is scurrying to raise capital for its mortgage-scarred balance sheet, will be contractually free to sell the bank shares after Aug. 29. They are valued at about $17 billion.
Telegraph:
  • Weaker Euro States Could Lose Local Banks. Weaker eurozone members face the prospect of being left with no domestic banks in future as market resistance to funding lenders in peripheral countries grows.
  • Commerzbank Takes €760m Greek Hit. The results knocked its profits for the second quarter down more than 90pc, as it became the latest European lender to take a hit on its exposure to the indebted Southern European country.

The Telegraph.au:
  • French President Nicolas Sarkozy Gathers Ministry to Battle Possible Credit Downgrade. PRESIDENT Nicolas Sarkozy cut short his holiday to announce new moves to slash France's massive debt amid fears it might be next after the United States to suffer a credit-rating downgrade. Sarkozy gave his finance and budget ministers one week to come up with new ideas for keeping France's promises to slash its public deficit, it said, adding that the measures would then be decided on on August 24. The announcement came after ministers battled this week to head off speculation that France will be the next country to lose its top AAA status after the United States was stripped of the prized credit rating last week. Shares in French banking giant Societe Generale briefly crashed more than 20 per cent on the ratings speculation and concern over its exposure to Greek debt amid renewed concern about Athen's implementation of a rescue plan. If France, the eurozone's second-largest economy, lost its AAA rating the effects would stretch far beyond its borders. France provides the second-largest contribution, after Germany, to the eurozone's temporary rescue fund, the European Financial Stability Facility, which enjoys an AAA rating to borrow at low rates and lend to states under bailout programmes. Markets are wondering whether France and Germany can continue to underwrite the debts of troubled eurozone countries without losing their own top credit ratings and thus falling victim to the crisis themselves. French debt has faced pressure on the markets as the cost of credit default swaps - insurance policies against a default -- hit record highs this week, suggesting investors were starting to look at the country more closely. After the United States, "the other AAA-rated G7 sovereigns are all at risk of a downgrade, with the markets focusing particularly on France," said London-based Citi economist Willem Buiter. Jennifer McKeown, senior economist at Capital, said: "Growing concerns about France's fiscal position have underlined the breadth of the eurozone's debt crisis." The International Monetary Fund said last month that France would probably need extra action to cut its deficit in 2012 and 2013 as falling growth threatened to complicate economic recovery.
South China Morning Post:
  • Industrial Bank Chief Economist Lu Zheungwei said China should work with developing countries through the G20 to limit countries' net sovereign debt as a proportion of GDP. Emerging economies are "victims" of high inflation caused by easy credit in developed countries, especially the U.S., says Wang Jun, senior economist at the Beijing-based China Centre for International Economic Exchanges.
Beijing News:
  • Chinese central bank adviser Li Daokui said a third round of quantitative easing in the U.S. may increase imported inflationary pressure in China, citing comments he made in an interview.
Evening Recommendations
Raymond James:
  • Upgraded (CCOI) to Strong Buy, target $17.
  • Upgraded (TWTC) to Strong Buy, target $25.
  • Upgraded (JBL) to Strong Buy, target $26.
  • Upgraded (PLXS) to Strong Buy, target $37.
  • Upgraded (ARW) to Strong Buy, target $50.
  • Upgraded (AVT) to Strong Buy, target $45.
  • Upgraded (DELL) to Strong Buy, target $20.
  • Upgraded (IM) to Strong Buy, target $23.
  • Upgraded (NTAP) to Strong Buy, target $60.
Night Trading
  • Asian equity indices are -1.50% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 135.50 +15.5 basis points.
  • Asia Pacific Sovereign CDS Index 147.50 +4.75 basis points.
  • FTSE-100 futures +1.25%.
  • S&P 500 futures +1.28%.
  • NASDAQ 100 futures +1.29%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (EAT)/.47
  • (WEN)/.05
  • (RGLD)/.40
  • (KSS)/1.08
  • (SLE)/.20
  • (NVDA)/.31
  • (BYI)/.56
  • (MCP)/.41
  • (RRGB)/.36
  • (JWN)/.74
  • (DV)/1.04
  • (BGG)/.38
Economic Releases
8:30 am EST
  • The Trade Deficit for June is estimated at -$48.0B versus -$50.2B in May.
  • Initial Jobless Claims are estimated to rise to 405K versus 400K the prior week.
  • Continuing Claims are estimated to fall to 3725K versus 3730K prior.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The 30-Year Treasury Bond Auction, Fed's weekly balance sheet report, M1/M2 reports, weekly EIA natural gas inventory report and the weekly Bloomberg Consumer Comfort Index could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and industrial shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the day.

0 comments

Wednesday, August 10, 2011

Stocks Sharply Lower into Final Hour on Soaring Eurozone Debt Angst, US Tax Hike Concerns, Global Growth Worries, Financial Sector Pessimism

Posted by Gary .....at 3:38 PM

Broad Market Tone:
  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Most Sectors Declining
  • Volume: Heavy
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • VIX 37.56 +7.3%
  • ISE Sentiment Index 104.0 -37.7%
  • Total Put/Call 1.18 -8.53%
  • NYSE Arms 1.95 +480.10%
Credit Investor Angst:
  • North American Investment Grade CDS Index 113.73 +.93%
  • European Financial Sector CDS Index 212.93 +17.7%
  • Western Europe Sovereign Debt CDS Index 290.83 unch.
  • Emerging Market CDS Index 282.65 -3.06%
  • 2-Year Swap Spread 24.0 -1 bp
  • TED Spread 27.0 +3 bps
Economic Gauges:
  • 3-Month T-Bill Yield .02% -2 bps
  • Yield Curve 298.0 -10 bps
  • China Import Iron Ore Spot $176.20/Metric Tonne -.90%
  • Citi US Economic Surprise Index -70.50 +1.0 point
  • 10-Year TIPS Spread 2.31% +13 bps
Overseas Futures:
  • Nikkei Futures: Indicating -143 open in Japan
  • DAX Futures: Indicating +150 open in Germany
Portfolio:
  • Slightly Lower: On losses in my Biotech, Medical and Tech sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and added to my (EEM) short
  • Market Exposure: Moved to 25% Net Long
BOTTOM LINE: Today's overall market action is very bearish, as the S&P 500 was unable to build on yesterday's sharp reversal higher, on rising eurozone debt angst, US tax hike concerns, FOMC statement disappointment, financial sector pessimism, emerging market inflation fears and global growth worries. On the positive side, Coal, Steel, Paper and REIT shares are especially strong, rising more than +.5% on the day. (IYR) has traded well throughout the day. On the negative side, Defense, Oil Tanker, Networking, Computer Service, Bank, I-Banking, Medical Equipment, Biotech, Drug, Insurance, Retail, Airline and Tobacco shares are especially weak, falling more than -3.0% on the day. (XLF) has been under tremendous pressure throughout the day. Gold is +2.5%, Oil is up +1.75%, Lumber is falling -2.24%, the UBS-Bloomberg Ag Spot Index is up +.25% and Copper is down -.83%. Rice is up another +1.0% and is near a multi-year high, soaring about +28.0% in about 6 weeks. The US price for a gallon of gas is falling -.01/gallon today to $3.64/gallon. It is up .50/gallon in about 6 months. The 10-year yield is falling too rapidly again, dropping -11 bps to 2.14%. The +13 bps jump in the TIPS spread is a bit odd considering today's broad market action. The Spain sovereign cds is soaring +12.45% to 391.85 bps, the Italy sovereign cds is rising +11.8% to 383.0 bps, the Belgium sovereign cds is gaining +13.77% to 276.67 bps, Russia sovereign cds is rising another +2.88% to 203.0 bps, the UK sovereign cds is rising +3.84% to 86.0 bps, the France sovereign cds is jumping +8.20% to 175.0 bps and the Germany sovereign cds is rising +3.21% to 85.67 bps. The Emerging Markets Sovereign CDS Index is soaring +27.0 bps today to 233.0 bps. The France sovereign cds is making another new record high again today and has risen +83.0 bps in 14 days. The German sovereign cds is hitting another multi-year high and is only 7.0 bps from its Feb. 09 high of 93.0 bps. The Eurozone Financial Sector CDS Index is taking out its March 09 record high. The 3-Month Euribor-OIS spread is jumping another +8 bps to a multi-year high of 70.0 bps. Despite gains in the rest of Asia, Singapore fell another -2.2% last night and is down -11.6% ytd. As well, South Korea(+.27%) and China(+.91%) had uninspiring rebounds overnight. Germany fell another -5.1% today and is now down 18.8% ytd. As well, France fell -5.5% and is down 21.1% ytd. Spain(-5.5%) and Italy(-6.65%) also suffered severe losses again and are down -19.2% and -27.2% ytd, respectively. The ongoing surge in many key emerging markets cds remains a big negative. As well, a number of key European cds continue to soar as the pressure on the financial sector mounts. The eurozone situation has that spinning out of control feel to it, once again. The cds and equity markets continue to telegraph rising worries among investors over the implications to Germany and France of recent ECB actions. I suspect the German public is irate with what is currently transpiring, which could further exacerbate the situation longer-term. As well, the markets continue to price in another global recession. Select growth stocks are holding up relatively well today. The market is deeply oversold again, however Europe needs to at least shows some signs of stabilizing. I plan to cover some of my hedges into the close. I expect US stocks to trade mixed-to-lower into the close from current levels on soaring eurozone debt angst, US tax hike worries, more shorting, technical selling, emerging markets inflation fears, rising food/energy prices, financial sector pessimism and forced margin selling.

2 comments

Bear Radar

Posted by Gary .....at 1:37 PM

Style Underperformer:
  • Small-Cap Value (-3.10%)
Sector Underperformers:
  • 1) I-Banks -5.85% 2) Banks -5.38% 3) Airlines -5.10%
Stocks Falling on Unusual Volume:
  • PTNR, BCS, DB, PHG, E, TEF, SI, TOT, VRUS, NVS, MOV, OME, ASYS, MASI, SGNT, LMNX, IIIN, AMTD, CHRW, MYL, MEOH, HSFT, CME, ARII, ALGT, IPAR, ZION, PCAR, OTTR, SBNY, WCRX, VOD, RXI, IYJ, DIS, IHG, JXI, MXI, EXI, SF, IYH, CSC, BBL, URS, IXG and RWT
Stocks With Unusual Put Option Activity:
  • 1) EWT 2) KEY 3) LEN 4) YOKU 5) BBVA
Stocks With Most Negative News Mentions:
  • 1) LXK 2) CECO 3) PETM 4) MWW 5) GMR
Charts:
0 comments

Bull Radar

Posted by Gary .....at 11:24 AM

Style Outperformer:
  • Mid-Cap Growth (-2.81%)
Sector Outperformers:
  • 1) Gold & Silver +.99% 2) Utilities -1.61% 3) Foods -1.81%
Stocks Rising on Unusual Volume:
  • EGO, AUY, FOSL, PEGA, LGCY, CLMT, PRXL, CREE, NUAN, OPEN, BEXP and RL
Stocks With Unusual Call Option Activity:
  • 1) SFI 2) DIS 3) ATML 4) MRVL 5) HK
Stocks With Most Positive News Mentions:
  • 1) GWW 2) CREE 3) SWN 4) RIMM 5) JBT
Charts:
0 comments

Wednesday Watch

Posted by Gary .....at 12:44 AM

Evening Headlines

Bloomberg:
  • France in Crosshairs as Germany Enjoys Sole Safe-Haven Status: Euro Credit. France’s borrowing costs are rising as Europe’s debt crisis makes investors wary of lending to any nation other than Germany. “There is only one sovereign in Europe, and that is Germany,” said Stuart Thomson, who helps oversee about $120 billion as a portfolio manager at Ignis Asset Management in Glasgow. “Everything else is a credit and trades like a credit, even France.” Investors currently demand about 90 basis points of extra yield to buy 10-year French debt rather than German bunds, even though both carry AAA grades from the major rating companies. That spread is almost triple the 2010 average of 33, and compares with 17 in the second half of the previous decade. The ECB bought Italian and Spanish bonds for a second day yesterday as it tries to halt a market rout, pushing Spain’s 10- year yield below 5 percent for the first time since December. The central bank’s previous round of bond purchases, though, failed to protect Ireland and Portugal from following Greece in needing financial aid as their funding costs surged. French bonds are the most costly AAA government securities to insure as investors raise bets that top-rated euro-region nations may be next in the firing line after the U.S. was downgraded by one notch to AA+ by S&P on Aug. 5. Credit-default swaps on France trade at 159 basis points, double the rate to protect German securities. “If the ECB is successful in bringing down Italian and Spanish bond yields, and I hope it is, then that will be at the expense of German bonds,” said Steve Major, head of fixed- income research at HSBC Holdings Plc in London.
  • Bernanke Time Commitment Provokes Most Dissents Since 1992. Ben S. Bernanke lost the full consensus of the Federal Open Market Committee as he reached for another non-traditional tool and provoked three dissenting votes in the process -- the most for a Federal Reserve chairman since 1992. For the first time today, U.S. central bankers specified a date for their commitment to low borrowing costs, saying the benchmark rate will stay in a range of zero to 0.25 percent at least through mid-2013. The new language replaces their prior promise to keep rates low for an “extended period.”
  • The cost of insuring Swiss government bonds from default more than doubled yesterday, according to traders of credit default swaps. Contracts on the sovereign surged 43.7 basis points to 80 basis points, according to CMA. That's the highest level since May 2009, the data show.
  • S&P Doesn't Plan More Muni Rating Cuts Linked to U.S. Downgrade. Standard & Poor’s won’t consider further downgrades on state and local government credits dependent on federal funding until details of the U.S. budget are complete, Steve Murphy, managing director of U.S. public finance for the ratings company, said in a telephone interview.
  • Company Pension Underfunding Jumps 38% to $351 Billion as Economy Slows. Corporate pensions in the U.S. are falling behind future payouts to retirees by the most this year as the U.S. economy slows, driving down bond yields that determine the plans’ future obligations. The gap between the assets of the 100 largest company pensions and their projected liabilities has widened by $97 billion in August to $351 billion, actuarial and consulting firm Milliman Inc. said today in a statement. That compares with the record $446 billion deficit in August 2010. “July was a brutal month for these pensions,” John Ehrhardt, a principal and consulting actuary in New York with Milliman, said in the statement. “Unfortunately it looks like we may be in for more bad news, with August off to a miserable start.”
  • GM(GM) 'Unsure' of Demand as Share Rout Loses U.S. $6.7 Billion. General Motors Co. (GM) is unsure whether stock-market volatility will put its forecast for U.S. vehicle sales out of reach this year, Chief Executive Officer Dan Akerson said. “There’s a lot of turmoil in the business and turmoil means uncertainty, so we’re a little unsure of these numbers,” Akerson said today of Detroit-based GM’s forecast for at least 13 million vehicle sales this year. “When the market does recover, we should be able to really leverage it beyond what you’ve seen so far since our IPO.” The worst stock-market rout since 2008 has exacerbated a decline in GM’s shares, wiping out $6.7 billion from the value of the stock held by the U.S. Treasury Department.
  • Och-Ziff Said to Rise Last Week as Some Hedge Funds Dodge Rout. Och-Ziff Capital Management Group LLC and Brevan Howard Asset Management LLP hedge funds advanced last week as some of the industry’s largest managers dodged the deepest slump for global stocks since 2008. Och Ziff, the $30 billion firm run by Daniel Och in New York, rose 1 percent with its main fund, and Brevan Howard’s $25 billion Master Fund in London, the world’s biggest macro fund, gained 2 percent, according to people briefed on the returns. “Managers who were macro aware have managed to pull their exposures much faster than the stock pickers,” said Alper Ince, a partner at Pacific Alternative Asset Management Co. in Irvine, California, which invests in hedge funds on behalf of clients. “Many people are in a wait-and-see mode. They want to see the dust settle before making massive changes.”
  • California Revenue Fell 10.3% Short of Forecast in July. California collected 10.3 percent less tax revenue in July than projected, putting the most populous state closer to “drastic” cuts to universities, libraries and health programs, the state controller said. Sales taxes were 12.5 percent, or $139.4 million, below forecasts, while corporate receipts were down 19.3 percent, or $69.5 million. Personal-income taxes were 2.9 percent, or $89 million, higher than projected in May, Controller John Chiang said in a statement. The July numbers widen the gap between actual receipts and additional revenue on which Governor Jerry Brown and Democrats based their new budget, Chiang said. That $86 billion spending plan signed into law June 30 cut spending by $12 billion and counted on $4 billion in higher-than-forecast tax revenue from a recovering economy. “While July’s revenues performed remarkably similar to last year’s, they still did not meet the budget’s projections,” Chiang said in the statement. “While we hope for better news in the months ahead, every drop in revenues puts us closer to the drastic trigger cuts that could be imposed next year.”
  • Falling Bank Stocks Offer a Too-Big-to-Fail Wakeup Call: View. Bank of America and Citigroup stood out for all the wrong reasons in Monday’s market meltdown. Shares of the two banks led the decline amid new doubts about the quality of the assets buried on their balance sheets. Investors now believe that Bank of America’s net worth is only about a third of what the bank claims; for Citigroup the figure is less than half. Any time shares of a financial company such as Bank of America or Citigroup plunge it’s particularly worrying. Both are among the roughly 40 U.S. institutions considered too big to fail. The Dodd-Frank Act, adopted in response to the financial convulsions of 2008, was supposed to ensure that taxpayers never have to rescue one of these banks again.
  • Singapore Cuts Export Growth Forecast as Global Risks Rise. Singapore cut its forecast for export growth this year as a struggling U.S. economy and Europe’s debt crisis intensified risks to the global recovery. The currency pared gains. Non-oil domestic exports will probably rise 6 percent to 7 percent in 2011, lower than a previous forecast for shipments to grow 8 percent to 10 percent, the trade promotion agency said in a statement today. Gross domestic product fell an annualized 6.5 percent in the second quarter from the previous three months, compared with a preliminary estimate of 7.8 percent, the trade ministry said separately.
  • Japan's Noda Signals Concern as Yen Strengthens to Near Intervention Level. Japan’s Finance Minister Yoshihiko Noda said that one-sided moves in the yen can hurt growth as the currency strengthened against the dollar to close to the level where authorities intervened last week. “Recent one-sided movements in the currency market risk hurting the economy’s recovery from the earthquake,” Noda said in parliament in Tokyo today, reiterating remarks made on Aug. 4 when authorities sold the yen. The government may include measures to help companies combat the strong yen in its next reconstruction package, Chief Cabinet Secretary Yukio Edano said.
  • Korea Bans Shorting as State Funds Aim to Buy. South Korea banned equity short sales for three months while the two biggest state-run funds said they may boost investments as the government seeks to shore up a market that’s had its biggest six-day drop in three years. The Financial Services Commission said it will ban short selling on all shares until Nov. 9 from today.
Wall Street Journal:
  • Reid Names First Debt-Panel Picks. Senate Majority Leader Harry Reid named three Democratic senators who are considered neither ideological purists nor eager compromisers to a "super committee" charged with finding at least $1.2 trillion in deficit reduction over the next decade. The move on Tuesday came as lobbying has intensified about who will be chosen for the remaining spots on the Joint Select Committee on Deficit Reduction—appointments that will play a large role in the eventual shape of any deal.
  • Chinese Property Firms Getting Squeezed. Beijing Plans to Tighten Access to Credit From Lightly Regulated 'Trust' Firms That Are Key Lenders to the Sector. China's property developers are heading for a funding crunch in the next several months, analysts and industry executives say, as the government tightens access to credit from the lightly regulated trust firms that have become the sector's biggest lenders. The efforts by the China Banking Regulatory Commission, which haven't been publicly announced, add pressure to an industry that already was struggling with other government attempts to take some of the air out of the country's property bubble. How those efforts proceed, and whether the credit squeeze contributes to a significant decline in construction, has big implications for overall growth in the world's second-largest economy, which has been a rare bright spot in an otherwise gloomy global outlook.
  • Call to Downsize Giants of Ratings. Three weeks ago, Egan-Jones Ratings Co. downgraded America. Almost no one paid attention. "S&P's downgrade was on the front page of every newspaper," said Sean Egan, president of the Haverford, Pa., ratings firm, which has been issuing ratings since 1995. Mr. Egan's disappointment that Standard & Poor's rattled the world with its Friday-night rating cut on long-term U.S. government debt to double-A-plus, from triple-A, while his identical move was essentially ignored, is a sign of the grip on the debt-ratings industry held by its three giants.
  • Egypt's Rulers Stoke Anti-U.S. Trend. In the final days of President Hosni Mubarak's regime, Egypt's state media whipped up a xenophobic frenzy not seen here since the 1950s, blaming the revolution on alien plots and inciting vigilante mobs to assault and detain scores of foreigners. After a lull, Egypt's new military rulers are increasingly using the same tactic: portraying pro-democracy activists as spies and saboteurs, blaming the country's economic crisis and sectarian strife on foreign infiltrators, and blasting the U.S. for funding agents of change.
  • Report Predicts US Container Ports' Volume Weaker This Summer. Import cargo volume at major U.S. container ports are predicted to be weaker for the rest of the summer before holiday retail restocking drives growth in the fall, according to a port report from the National Retail Federation and Hackett Associates.
  • BofA(BAC) Sells Part of Mortgage Portfolio to Fannie Mae. Bank of America Corp. has agreed to sell part of its home-loan portfolio to government-controlled housing giant Fannie Mae, as the bank looks to shed assets and pare its exposure to an array of mortgage woes.
  • Fund Stars Find Fortunes Fading. Well-known mutual-fund investors Bruce Berkowitz and Bill Miller enjoyed winning streaks that lasted years. But they have been among those whacked in the current downturn. The $13.4 billion Fairholme Fund lost about 18% in August through Monday, including a nearly 9% drop on Monday. That compares with a 14% decline in that time for similar large-value funds, according to Morningstar Inc. data.
  • SEC Probes Goldman(GS) Over Libyan Dealings. Gadhafi Fund Trades Lost $1 Billion. Goldman Sachs Group Inc. said U.S. securities regulators are investigating whether the securities firm broke bribery laws. Tuesday's disclosure by Goldman of numerous investigations, regulatory reviews and legal action related to its sprawling businesses included a probe of the company's "compliance with the U.S. Foreign Corrupt Practices Act," according to a securities filing.
  • Rental Options Sought On Foreclosed Homes. The Obama administration will announce plans Wednesday to seek investors' ideas for turning thousands of foreclosed properties owned by government-backed entities into rental homes, according to administration officials. The move is intended to put a floor under declining home prices by creating a way to deal with hundreds of thousands of potential foreclosures in coming years.
  • Market Turmoil Stings Commercial Sector. Demand for Mortgage-Backed Securities Takes a Hit as Some Key Lenders Are Backing Off From Making New Loans.
CNBC:
  • El-Erian: Unprecedented Fed to the Rescue. By boldly and controversially stepping up to the plate with an imperfect policy instrument, the Fed is again assuming considerable reputational and institutional risks. In the process, it ends up carrying even more of the policy burden. Like its counterparty in Europe (the ECB) last Sunday, the Fed’s intention is to provide a bridge for other, glacially-moving economic agencies. Let us hope that these agencies will finally get their act together. Otherwise, the Fed will simply be providing an expensive bridge to nowhere.
  • Economic Uncertainty Leading to Global Unrest. Here's a look at what's happening around the world and how economic downturns are bringing protestors into the streets.
  • August Sell-Off Hits Big Hedge Fund Names Hard. August is not even two weeks old and for top hedge fund traders like Steven Cohen, John Paulson and Bill Ackman it could be a month to forget. Even Cohen, one of the industry's titans, hasn't escaped the global sell-off — his $14 billion SAC Capital is down 4 percent this month. Still after SAC's poor start to the year, the fund is still in the black with a roughly 6 percent gain this year. That's not the case for John Paulson, whose two flagship funds had suffered steep losses even before the month began. The Paulson's Advantage funds lost more than 10 percent in the last week, bringing total losses in the two portfolios, which oversee about $17 billion of investor money, to more than 25 percent. The brutal global stock sell-off is quickly turning hedge funds that had been up for the year into losers. Meanwhile, funds that entered August already down for the year are piling up even more red ink.
Business Insider:
  • Obama Plans Scorched Earth Re-Election Campaign. Today, Politico reports that the Obama re-election campaign has reviewed all of the available data, war-gamed various campaign stratagems and decided that the only way the president can win re-election is by destroying his Republican opponent. "Obama Plan: Destroy Romney" is the headline. The story was leaked to Politico by the president's re-election campaign advisors. On purpose. Are things really that bad? Is the only path to President Obama's re-election a scorched-earth, relentlessly negative campaign that positions the president as less horrible than his GOP rival? The short answer is: yes.
Zero Hedge:
IBD:
Forbes:
NY Times:

Washington Times:
  • It's Clear Now, American Cannot Afford Obamacare. Perhaps the most frustrating aspect of the debt-ceiling debate, other than witnessing establishment politicians in complete denial of the mess they’ve made, is the fact that the Orwellian-named Budget Control Act of 2011 does so little to actually, you know, control the budget. Over the next decade, the plan piles up another $7 trillion of debt to be added to the current $14.5 trillion national debt - not exactly a profile in restraint.
Rasmussen Reports:
  • Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 21% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -21 (see trends ).
USA Today:
  • White House's Former 'Car Czar' to Drive Into Sunset. The man who helped engineer the Obama administration's bailout of the U.S. auto industry is leaving his post at the end of August. Ron Bloom, who later became assistant to the president for manufacturing policy, played a key role in the 2009 bailouts and oversight of General Motors and Chrysler. He also helped to craft the deal between the government and automakers to raise light-duty vehicle fuel economy standards to 54.5 miles per gallon by 2025.
Reuters:
  • Micron(MU) Says NAND Chip Demand Buoyed by Tablets. Orders for Micron Technology Inc's NAND memory chips are holding up despite growing economic uncertainty, thanks to strong demand from manufacturers making tablets and solid-state drives, a senior executive at the chipmaker said.
  • NYSE Short Interest Dips in Late July. Short interest on the NYSE fell 0.7 percent in the second half of July, the exchange said on Tuesday. Through July 31, short interest fell to 13.31 billion shares from 13.40 billion shares as of July 15.
  • Nasdaq Short Interest Dips in Late July. Short interest on the Nasdaq edged down 1.3 percent in the second half of July, the exchange said on Tuesday. Through July 29, short interest fell to 6.99 billion shares, compared with 7.09 billion shares in the first half of the month.
Financial Times:
  • Merkel Faces Revolt Over Eurozone Deal. Battle lines are being rapidly drawn up in the German Bundestag for what promises to be a bruising debate over the crisis measures to stabilise debt markets in the eurozone. Angela Merkel, the chancellor, and her finance minister Wolfgang Schäuble face a revolt among their own supporters in both the Christian Democratic Union and the Free Democratic Party, junior partner in the ruling coalition in Berlin, over the deal they agreed last month with their 16 eurozone partners in Brussels.
Telegraph:
  • Ambrose Evans-Pritchard: Euro is 'Unsaveable'. (audio) Telegraph columnist Ambrose Evans-Pritchard tells Robert Miller why the single currency cannot work in its current form, and what he believes will happen to the eurozone next.
Daily News & Analysis:
  • London Tense as Riots Spread to New UK Towns. Rioting spread to towns in the Midlands and Manchester as 16,000 policemen flooded the streets of London to prevent another night of violence that has blighted the David Cameron government's image and ability to hold the 2012 London Olympics safely.

JoongAng Ilbo:
  • North Korean spies with orders to assassinate South Korean Defense Minister Kim Kwan Jin have secretly entered the country, citing South Korean government officials. South Korean and U.S. intelligence officials are working to find them, the report said.
Economic Daily:
  • A possible third round of U.S. quantitative easing may impact the trend of commodity prices in China, Zhou Wangjun, a deputy director at the National Development and Reform Commission's pricing department, wrote in a commentary. That adds to uncertainty surrounding China's consumer prices in the second half, Zhou wrote.
21st Century Business Herald:
  • China's auto sales may grow by 3% this year, citing Zhang Xiaoyu, vice president of the China Machinery Industry Federation. That rate of growth would be the slowest in about a decade, Zhang said.
People's Daily:
  • China's M2 growth has been "too high" in the past two years, citing Yao Jingyuan, a researcher at the State Council's counselors' office.
  • A weak U.S. economy may drag down global growth, including in China, Fan Jianjun, a researcher at the State Council's Development Research Center, wrote in a commentary.
Evening Recommendations
Citigroup:
  • Upgraded (OPEN) to Buy, target $82.
Night Trading
  • Asian equity indices are -.25% to +2.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 135.50 -20.5 basis points.
  • Asia Pacific Sovereign CDS Index 142.75 -5.25 basis points.
  • FTSE-100 futures +.76%.
  • S&P 500 futures -.47%.
  • NASDAQ 100 futures -.50%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (HAR)/.44
  • (RL)/1.47
  • (CSC)/.69
  • (NWSA)/.29
  • (CSCO)//.38
  • (AAP)/1.38
  • (JACK)/.40
  • (M)/.50
Economic Releases
10:00 am EST
  • Wholesale Inventories for June are estimated to rise +1.0% versus a +1.8% gain in May.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,350,000 barrels versus a +950,000 barrel increase the prior week. Distillate supplies are estimated to rise by +1,050,000 barrels versus a +409,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +900,000 barrels versus a +1,701,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.3% versus a +1.0% gain the prior week.
2:00 pm EST
  • The Monthly Budget Deficit for July is estimated at -$135.0B versus a -$165.0B in June.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The JOLTs Job Openings report for June, weekly MBA mortgage applications report, 10-Year Treasury Note Auction, Jefferies Indusgtrial/Aerospace/Defense Conference, Morgan Keegan Security/Defense Conference and the Morgan Keegan Tech Conference could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by financial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

0 comments

Tuesday, August 09, 2011

Stocks Rising Into Final Hour on Short-Covering, Bargain-Hunting, Less Financial Sector Pessimism, Falling Energy Prices

Posted by Gary .....at 3:29 PM

Broad Market Tone:
  • Advance/Decline Line: Lower
  • Sector Performance: Most Sectors Declining
  • Volume: Heavy
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • VIX 42.80 -10.83%
  • ISE Sentiment Index 167.0 +80.43%
  • Total Put/Call 1.32 -2.94%
  • NYSE Arms 1.35 -6.65%
Credit Investor Angst:
  • North American Investment Grade CDS Index 112.68 +3.45%
  • European Financial Sector CDS Index 198.45 +9.44%
  • Western Europe Sovereign Debt CDS Index 290.83 -.34%
  • Emerging Market CDS Index 297.60 +2.54%
  • 2-Year Swap Spread 25.0 -4 bps
  • TED Spread 24.0 -1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .04% +2 bps
  • Yield Curve 208.0 -2 bps
  • China Import Iron Ore Spot $177.80/Metric Tonne -.17%
  • Citi US Economic Surprise Index -71.50 +1.0 point
  • 10-Year TIPS Spread 2.18% unch.
Overseas Futures:
  • Nikkei Futures: Indicating +40 open in Japan
  • DAX Futures: Indicating -42 open in Germany
Portfolio:
  • Higher: On gains in my Retail, Medical, Biotech and Tech sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of 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 near session highs despite rising eurozone debt angst, US tax hike concerns, some FOMC statement disappointment, more homebuilder pessimism, emerging market inflation fears and global growth worries. On the positive side, Coal, Alt Energy, Networking, Biotech, HMO, Insurance, Construction, REIT, Restaurant and Airline shares are especially strong, rising more than +1.0%. Cyclicals are outperforming. Oil is dropping another -3.2%. The US sovereign cds is falling -4.37% to 53.77 bps. Weekly retail sales rose +4.8% versus a +4.3% gain the prior week. On the negative side, Homebuilding, Utility, Computer, Computer Service, Gaming, Education and Food shares are lower on the day. (XHB) has traded poorly throughout the day. Gold is +3.0% and Copper is down -.98%. Rice is surging +3.07% and is near a multi-year high, soaring about +27.0% in about 6 weeks. The US price for a gallon of gas is falling -.01/gallon today to $3.65/gallon. It is up .51/gallon in about 6 months. The 10-year yield is falling too rapidly again, plunging -27 bps to 2.05%. The Brazil sovereign cds is soaring +13.28% to 157.28 bps, the Russia sovereign cds is rising +9.07% to 197.67 bps, the UK sovereign cds is rising +4.88% to 82.73 bps, the Japan sovereign cds is climbing +6.7% to 101.06 bps, the France sovereign cds is rising +1.54% to 161.65 bps and the Germany sovereign cds is rising +4.67% to 82.86 bps. The Brazil sovereign cds is very close to a multi-year high. The France sovereign cds is making a new record high again today and has risen +70.0 bps in 13 days. The German sovereign cds is hitting another multi-year high and is only 10.0 bps from its Feb. 09 high of 93.0 bps. The Eurozone Financial Sector CDS Index is now only 9.0 bps from its March 09 record high. The 3-Month Euribor-OIS spread is jumping another +8 bps to a multi-year high of 62.0 bps. Despite some key Asian indices holding up well overnight, Hong Kong fell another -5.66% and is now down -16.1% ytd, while South Korea fell another -3.64% and is down -12.2% ytd. Germany and Spain were unable to rally today with the rest of Europe, despite US strength. Russia(-1.6%) and the Ukraine(-5.42%) also had poor performances today despite strong bounces in other markets. The surge in many key emerging markets cds remains a big negative. As well, a number of key European cds rose again today as the pressure on the financial sector mounts. As well, the euro currency couldn't rally meaningfully today despite the recent US debt downgrade, the equity rally, more dovish FOMC comments and the ECB's recent actions. The cds and equity markets continue to telegraph rising worries among investors over the implications to Germany and France of recent ECB actions. It is a big positive that US equities were able to bounce strongly over the last hour despite the Fed disappointing most investors and the massive decline in the 10-year yield. If overseas market cooperate overnight I would expect to see this rally extend itself in the near-term. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, falling energy prices, a bounce in the euro, less financial sector pessimism and bargain-hunting.

3 comments
Subscribe to: Posts (Atom)