BETWEEN THE HEDGES

Tuesday, April 10, 2012

Stocks Falling into Final Hour on Rising Eurozone Debt Angst, Rising Global Growth Fears, Less Financial Sector Optimism, High Energy Prices

Posted by Gary .....at 4:22 PM

Broad Market Tone:

Advance/Decline Line: Substantially Lower
Sector Performance: Almost Every Sector Declining
Volume: Slightly Below Average
Market Leading Stocks: Performing In Line

Equity Investor Angst:

VIX 20.95 +11.38%
ISE Sentiment Index 66.0 -17.5%
Total Put/Call .96 -1.03%
NYSE Arms 1.89 -24.32%

Credit Investor Angst:

North American Investment Grade CDS Index 104.56 +2.42%
European Financial Sector CDS Index 257.55 +8.79%
Western Europe Sovereign Debt CDS Index 278.84 +2.23%
Emerging Market CDS Index 271.20 +4.0%
2-Year Swap Spread 31.25 +2.75 basis points
TED Spread 38.75 +.5 basis point
3-Month EUR/USD Cross-Currency Basis Swap -56.75 -2.75 basis points

Economic Gauges:

3-Month T-Bill Yield .08% unch.
Yield Curve 169.0 -3 basis points
China Import Iron Ore Spot $148.0/Metric Tonne unch.
Citi US Economic Surprise Index 4.50 -.1 point
10-Year TIPS Spread 2.25 +2 basis points

Overseas Futures:

Nikkei Futures: Indicating a -160 open in Japan
DAX Futures: Indicating -23 open in Germany

Portfolio:

Slightly Lower: On losses in my Tech, Retail and Biotech sector longs
Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short, then covered some
Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is very bearish, as the S&P 500 is trading near session lows and breaking below its 50-day moving average on rising Eurozone debt angst, less financial/homebuilding sector optimism, rising global growth fears, profit-taking, more shorting and high energy prices. On the positive side, Coal shares are slightly higher on the day. Weekly retail sales rose +4.1% versus a +3.6% gain the prior week. Oil is falling -1.13% and Lumber is rising +.19%. On the negative side, Oil Tanker, Paper, Disk Drive, Biotech, HMO, Homebuilding, Retail, Gaming, Networking, Bank and Construction shares are under significant pressure, falling more than -2.75%. Small-cap and Cyclical shares are underperforming again. Gold is gaining +1.22% and Copper is down -1.76%. The 10-year yield is falling -7 bps to 1.98%. Major Asian indices were mostly lower, led down by a -1.2% decline in Hong Kong. Major European indices plunged around -3.0% today, led down by a -5.0% decline in Italy. Spanish equities fell another -3.0% and are now down -13.2% ytd. As I have been cautioning for awhile, this remains a large red flag for the region. As well, the Bloomberg European Financial Services/Bank Index plunged another -4.3% today. This index is down -15.4% in about 3 weeks and is now convincingly below its 200-day moving average. The Germany sovereign cds rose +2.3% to 75.50 bps, the France sovereign cds is gaining +5.8% to 189.57 bps, the Italy sovereign cds is gaining +4.65% to 437.73 bps, the Spain sovereign cds is up +4.6% to 485.73 bps, the Russia sovereign cds is jumping +6.1% to 204.32 bps and the China sovereign cds is gaining 4.8% to 116.65 bps. Moreover, the European Inv Grade CDS Index is soaring +10.1% to 146.36 bps and the Emerging Markets Sovereign CDS Index jumped +7.0% to 295.50 bps. The Philly Fed ADS Real-Time Business Conditions Index continues to trend lower from its late-December peak despite investor perceptions that the US economy is accelerating. Moreover, the Citi US Economic Surprise Index has fallen back to mid-Oct. levels. Lumber is -6.0% since its Dec. 29th high despite the better US economic data, improving sentiment towards homebuilders, equity rally and decline in eurozone debt angst. Moreover, the weekly MBA Home Purchase Applications Index has been around the same level since May 2010. The Baltic Dry Index has plunged around -60.0% from its Oct. 14th high and is now down around -45.0% ytd. China Iron Ore Spot has plunged -18.5% since Sept. 7th of last year. Shanghai Copper Inventories are right near a new record and have risen +724.0% ytd. China's March copper imports fell -4.6% on the month. Overall, credit gauges continue to weaken too much as Europe's debt crisis appears to be in the early stages of reigniting. The Italian/German 10Y Yld Spread is up +17.0% in 5 days. German bond yields continue to fall rapidly, despite perceptions that their economy is strong and labor costs are starting to rise too much, which is another large red flag. Stocks are getting short-term oversold for the first time in awhile, however any bounce will likely prove short-lived unless the situation in Europe begins to calm very soon. For the recent equity advance to regain traction, I would expect to see further European credit gauge improvement, a further subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade mixed-to-lower into the close from current levels on rising Eurozone debt angst, less financial sector optimism, rising global growth fears, profit-taking and high energy prices.

Today's Headlines

Posted by Gary .....at 3:10 PM

Bloomberg:

Spanish Bonds Fall Even as Rajoy Unveils More Budget Cuts. Spain’s efforts to calm investors with 10 billion euros ($13 billion) of budget cuts in education and health failed to stem concerns the nation may be the fourth euro member to need a bailout. The yield on Spain’s 10-year benchmark bond surged 20 basis points to 5.95 percent today as Economy Minister Luis de Guindos declined to rule out a rescue for Spain and Bank of Spain Governor Miguel Angel Fernandez Ordonez said the nation’s lenders may need additional capital if the economy weakens more than expected. Prime Minister Mariano Rajoy yesterday unexpectedly announced the 10 billion-euro package, less than two weeks after unveiling the most austere budget in more than three decades. Rajoy is targeting basic public services for the first time since his election in December in a bid to convince investors he can bring order to the nation’s finances. “There are growing fears that the Spanish economy is caught in a pernicious circle,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said in an e- mailed response to questions. “The weakness of government finances, the fragility of banks and worries about the scale of the recession all feed on each other.”
Monti's Overhaul of Italy Can't Stop Pain From Spain. Prime Minister Mario Monti’s efforts to overhaul the economy and protect Italy from the region’s debt crisis may be overwhelmed by Spain’s deepening fiscal woes and the fading effect of European Central Bank three-year lending.
European Stocks Retreat After U.S. Jobs Report Trails Estimates. European stocks tumbled to a two- month low amid mounting concern about the region’s debt crisis and as a U.S. report showed employers in the world’s largest economy added fewer jobs in March than forecast. UniCredit SpA (UCG), Intesa Sanpaolo SpA and Banca Popolare Di Milano Scarl (PMI) dropped more than 6.5 percent. Banco Santander SA (SAN) declined as Spanish bond yields rose and the country’s government increased its efforts to bring the country’s deficit under control. Vedanta Resources Plc (VED) led a retreat in mining companies as copper fell in London and the metal producer reported lower iron-ore sales. The Stoxx Europe 600 Index dropped 2.5 percent to 252.57 at the close in London, its lowest since Jan. 30. European markets were closed yesterday for the Easter Monday holiday. The volume of shares changing hands in the gauge’s companies was 7.6 percent higher today than the average of the last 30 days. “Last week’s poor jobs report raises doubts about the strength of the U.S. expansion,” Dan Morris, a global strategist at JPMorgan Asset Management in London, wrote in a report to clients. “There are some uncomfortable parallels between the current macroeconomic environment and that of July last year when equity markets began their precipitous fall. Investors are worried again about the euro-zone crisis.”
French Business Confidence Stalls, Factory Output Drops: Economy. French business confidence stagnated and factory output dropped, underlining the challenge the victor in the country’s presidential election will face in reviving economic growth. A gauge of sentiment among factory executives was unchanged at 95 in March after dropping in February, the Bank of France said today. Manufacturing production fell 1.2 percent in February, a third month of declines, the national statistics office, Insee, said in Paris.
Corporate Bond Risk Rises in Europe on Renewed Recovery Concerns. The cost of insuring against default on European corporate debt rose on concern that a slowdown in U.S. job creation is hampering the global recovery. The Markit iTraxx Crossover Index of credit-default swaps on 50 companies with mostly high-yield credit ratings climbed 27 basis points to 667 at 10 a.m. in London, the highest since Jan. 19, according to BNP Paribas SA. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 7 basis points to 139.5. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 11.5 basis points to 247.5 and the subordinated index climbed 17 to 398. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments jumped 5.5 basis points to 276.5.
VIX Rises a Record Eighth Day as Europe Concerns Increase. The Chicago Board Options Exchange Volatility Index (VIX) advanced for a record eighth day as surging Spanish and Italian bond yields intensified concern about the European debt crisis. The gauge known as the VIX, which measures the cost of Standard & Poor’s 500 Index options, rose 9 percent to 20.51 at 1:10 p.m. New York time today. The VIX, which tumbled as much as 70 percent since reaching a 29-month high on Aug. 8, advanced 22 percent in the seven trading sessions before today.
Best Buy's(BBY) Dunn Resigns as CEO; Mikan to Serve in Interim. Best Buy Co. (BBY) said Chief Executive Officer Brian Dunn resigned and board member G. Mike Mikan is taking the position on an interim basis as the company focuses on smaller stores and Internet sales.
Shadow Banks on Trial as China’s Rich Sister Faces Death. Operating outside the banking system or government regulation, the informal networks provide an important source of economic growth, capital for private companies and return for investors seeking to beat inflation. Premier Wen Jiabao, in an unusual move, weighed in on the case at a March 14 news conference. His comments highlighted a public debate over the importance of shadow banking to the Chinese economy, government efforts to bring it under control -- and whether capital punishment is an effective means to do so. “Chinese companies, especially small ones, need access to funds,” Wen said when asked about Wu’s case. “Banks have yet to be able to meet those companies’ needs, and there is a massive amount of idle private capital. We need to bring private finance out into the open.”

Wall Street Journal:

IMF Poised to Lower View on China's Trade. The International Monetary Fund is poised to sharply reduce its long-term forecast of China's current-account surplus, the broadest measure of a nation's trade, which would strengthen Beijing's defense against the U.S. argument that the Chinese currency is "substantially undervalued." Several individuals informed of the debate said the IMF would significantly lower its long-term current account surplus in the update of its flagship publication, the World Economic Outlook, to be released April 17, from the forecast of more than 7% of gross domestic product in the September WEO.
Santorum Suspends Presidential Campaign. Rick Santorum abruptly suspended his White House campaign Tuesday, clearing the way for front-runner Mitt Romney to claim the Republican presidential nomination.

Barron's:

Sony(SNE) Drops 8%: Deeper FY12 Loss Seen On Tax Adjustment. Shares of Sony (SNE) are down $1.58, almost 8%, at $18.53 after the company this morning warned its fiscal year ended in March will come in lower than expected because of a ¥300 billion non-cash charge to reflect the adjustment of certain assets. The expected net loss of ¥520 billion, or U.S. $6.4 billion, is worse than the ¥220 billion the company had forecast on February 2nd, and worse than the $2.7 billion loss the Street has been expecting.

Dow Jones:

Small Business Confidence Retreats In March - NFIB. Small U.S. business owners became slightly less confident in March, data released Tuesday showed, as rising prices and slowing sales curbed six months of budding optimism about the economy. The National Federation of Independent Business's small-business optimism index fell to 92.5 from 94.3 in February. March's reading ended what had been six consecutive months of increases. "What could have been a trend in job growth is more likely a blip," said NFIB Chief Economist Bill Dunkelberg, who authored the report. "The mood of owners is subdued--they just can't seem to shake off the uncertainties out there," he said. Businesses surveyed by the NFIB cited building inflation pressures as "the number one business problem," with worker compensation costs rising to their highest level since 2008. A net 21% of the respondents expect to raise their prices in the coming months, NFIB said. A positive trend in profits that had materialized in earlier months appeared to " fizzle." According to the report, only one of the index's 10 subcomponents rose during March. The subindex of expected business conditions in the next six months fell 2 percentage points to -8% last month, coinciding with a downturn in earnings trends, which fell four points to -23%. The sole index that showed positive growth was the "inventories too low" subcomponent, which only advanced by one point, to 3%.

Business Insider:

Zero Hedge:

InvestmentWeek:

German Bonds Yielding Less Than Japan For First Time. Yields on tranches of German debt fell below the amount paid by Japan for the first time ever mid-afternoon, as investors considered the likelihood of another round of stimulus in Europe. As Spanish bond yields rose ever nearer to 6%, and the country's equity market hit a 3-year low, investors were seen buying up German debt, driving down yields to new lows. The payout on 2-year bunds fell to 0.109%, below that of even Japan which yields 0.111% on its 2-year note. It is the first time since Bloomberg began collating data in 1990 that it has yielded less than Japan. The record low came as Spanish rates soared, with the yield on the country's 10-year debt hitting 5.972%, the highest level since mid-December. Investors are spooked by what is being seen as a worsening of the debt crisis, and are now betting intervention from the European Central Bank will not be enough to tackle the problems seen in peripheral Europe.

US News:

How 'Shadow Inventory' Hurts the Housing Market. A shadow inventory explosion? Roger Staiger, an adjunct faculty member of the John Hopkins Carey Business School, warns that the numbers cited by the National Association of Realtors are too low. He believes the shadow inventory is going to get much, much bigger. "I'm predicting another 2 million homes to be foreclosed," says Staiger. "I would say there are about 3 million homes close to foreclosure or in distress, meaning owners are 90 days delinquent on payments."

Reuters:

China Removes Bo Xilai From Elite Central Committee - Sources. China's Communist Party has decided to expel former leadership contender Bo Xilai from the elite Central Committee, sources said on Tuesday, citing a decision likely to disclose details of a scandal that has shaken a looming leadership succession.
China Says Bo Xilai's Wife Suspected of Murder - Xinhua. The wife of the former high-flying Communist Party chief of China's Chongqing city is suspected in the murder of British national Neil Heywood, Chinese state media reported on Tuesday.
Copper Near 3-Month Low; Nerves Fray on Growth Worries. China March copper imports fell 4.6 pct on month. The data showed that the use of copper for financing purposes by traders in China's cash-strapped market was still popular, although suggested that weak end-use demand may be feeding through to imports, analysts said, keeping a lid on prices.
Commodity Exporters Should Brace For Lower Prices: IMF. The IMF said some commodity-exporting nations should save their windfalls from current higher prices to protect their economies in the event of a price downswing. Other exporting countries should use commodities profits to reduce their debt, the IMF said in analytical chapters of its World Economic Outlook report. Commodity-exporting countries should prepare for lower prices given weaker global economic activity and lower demand, the International Monetary Fund said on Tuesday. "Given weak global activity and heightened downside risks to the near-term outlook, commodity exporters may be in for a downturn," the IMF said. "If downside risks to global economic growth materialize, there could be even greater challenges facing commodity exporters, most of which are emerging and developing economies," the IMF said.
CEOs Worried Fed Setting 'Inflationary Fire' - Fisher. Chiefs of U.S. companies big and small are worried the Federal Reserve's bond-buying programs could lead to uncontrolled inflation, a top Fed official known for his opposition to further monetary stimulus said on Tuesday. "To a person that I speak to, I am pleaded with, 'please no more liquidity'," Dallas Federal Reserve Bank President Richard Fisher told students at the University of Oklahoma's Price College of Business. There is "real concern that with our expanded balance sheet that we are just a little bit of an ember in what could become an inflationary fire."
US Gasoline Prices Rise, Demand Drops - MasterCard. U.S. gasoline demand fell once again last week, down 0.8 percent from the previous week, as prices rose to just under $4 a gallon, MasterCard said in its weekly Spending Pulse report on Tuesday. Gasoline demand in the week to April 6, which covered the Easter and Passover holiday weekend, fell 2.4 percent compared with the same week last year, MasterCard said. A gallon of gasoline cost $3.94 at the pump last week , 2 cents higher than the previous week. This was 5.9 percent more expensive than a year earlier. MasterCard data also showed the four-week moving average for demand dropped for the 55th straight week, down 4.7 percent from a year earlier.

Financial Times:

Eurotrashing, Again. Risk is ‘off’ again, clearly. At this point we should default to Bob Janjuah, the Nomura bear who has just published a fresh take on central bank bubble blowing. A taste:
JPMorgan's(JPM) Giant Unwitting Catalyst Trade.

Open Europe:

Spanish Banks May Be Forced to Seek Eurozone Bailout. The increasing exposure of its banks to potentially toxic loans, the difficulty in curbing Spanish regions' spending and the risk of reforms not taking effect quickly enough, all raise serious questions as to whether the Spanish economy will make it through without some sort of external help.

Finanz und Wirtschaft:

China's real estate market may already be a burst bubble, citing an interview with James Chanos, founder of Kynikos Associates Ltd. If the Chinese government slows the building boom, it's not clear what will fill the gap to support the economy, Chanos said.

Expansion:

Deputy Budget Minister Miguel Ferre said Spain will have to consider increasing sales tax should an amnesty for tax-evaders fail to raise sufficient revenue. "Spain is in an emergency situation," citing Ferre.

Bear Radar

Posted by Gary .....at 1:52 PM

Style Underperformer:

Small-Cap Growth -2.02%

Sector Underperformers:

1) Oil Tankers -4.11% 2) Homebuilders -3.76% 3) HMOs -3.03%

Stocks Falling on Unusual Volume:

BCS, SNE, DE, OII, KMX, IMO, DLLR, TNGO, LVLT, E, AES, AU, PBCT, CRESY, VPHM, TSPT, OPTR, HALO, DXPE, HMIN, FAST, ORIG, VVUS, TITN, PCLN, CONN, ITMN, COHR, PENN, SLXP, INWK, KFRC, BEAV, EWO, PEJ, RSP, PYZ, EWP, JKJ, JKI, CCH, AOL, CNC, CNK, SNI, MOH, MAIN, WCG, BPI, SZYM, RGR, URI, GBX and WNR

Stocks With Unusual Put Option Activity:

1) TSL 2) LNC 3) HYG 4) WHR 5) KSS

Stocks With Most Negative News Mentions:

1) BBY 2) F 3) LUV 4) AA 5) GS

Charts:

Bull Radar

Posted by Gary .....at 11:13 AM

Style Outperformer:

Large-Cap Growth -.42%

Sector Outperformers:

1) Semis -.02% 2) Drugs -.10% 3) Restaurants -.20%

Stocks Rising on Unusual Volume:

CRK, IOC, CREE, AKRX, WPRT, TPL and PVR

Stocks With Unusual Call Option Activity:

1) IAG 2) SVU 3) VVUS 4) SQNM 5) TSPT

Stocks With Most Positive News Mentions:

1) AA 2) JEC 3) FDO 4) AAPL 5) BA

Charts:

Tuesday Watch

Posted by Gary .....at 12:42 AM

Evening Headlines
Bloomberg:

Spain Confronts Crisis Threat as Rajoy Seeks Deficit Cuts. Spanish Prime Minister Mariano Rajoy stepped up efforts to reassure investors he can bring the country’s deficit under control as his government fights to avoid becoming the fourth euro-area member to require a bailout. Rajoy met with his health and education ministers yesterday to discuss cuts of more than 10 billion euros ($13 billion), the Spanish government said in an e-mailed statement. The government reiterated its pledge to reduce the deficit to 3 percent of gross domestic product next year, and will accelerate its sale of stakes in lenders under government administration, according to the statement late yesterday. Spanish bonds slumped last week, with 10-year yields posting their biggest weekly gain since January, as investors’ concern mounted that Rajoy’s government may join Greece, Ireland and Portugal in requesting an international rescue. Spain’s premier spoke on April 4 of “extreme difficulty” as the country barely covered its minimum target at a debt auction. “As a result of Spain’s challenges, sentiment towards its sovereign bonds is now the bellwether for Europe’s debt crisis,” Mansoor Mohi-uddin, chief currency strategist at UBS AG (UBSN), wrote in an e-mailed note on April 7. “If investor appetite wanes, then currency markets will start to price in either ECB rate cuts to help restore sentiment, or Madrid requires external assistance from its European Union partners.”
Financial Bonds Sag as Europe Tensions Smolder: Credit Markets. Bonds from financial companies are lagging behind industrial securities for the first time since November as a failed bond auction in Spain and rising French borrowing costs drive concern that Europe's sovereign-debt crisis may reignite. Relative yields are rising from the lowest levels in seven months as optimism fades that Europe will be able to avoid a default that would infect bank balance sheets worldwide.
China's Stocks Drop as Trade Data Stoke Concerns About Economy. China’s stocks fell, dragging the benchmark index to the lowest level in more than a week, as trade data stoked concerns about the slowing economy. China Cosco Holdings Co. led declines for shipping companies as export growth decelerated in March. Tianjin FAW Xiali Automobile Co. dropped the most in two weeks after sales slumped last month. Jiangxi Copper Co., the nation’s biggest producer of the metal, slid 1.6 percent on concern demand for metals may weaken after the U.S. added fewer jobs. “The economy isn’t in very solid shape and growth may trend down further in coming months,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “The market may be under selling pressure because of growth concerns.” The Shanghai Composite Index (SHCOMP) dropped 22 points, or 1 percent, to 2,263.78 at the 11:30 a.m. local-time break.
Las Vegas Deficit Leads Fitch to Drop Credit Outlook to Negative. Las Vegas’s credit outlook was lowered to negative from stable on $561.2 million of debt by Fitch Ratings, which cited budget deficits and the lingering housing crisis. The company assigned AA ratings, its third-highest, to $19.9 million of limited tax general-obligation bonds expected to be priced April 17 in a negotiated sale. It also affirmed its AA rating on $353 million of outstanding limited tax general- obligation bonds and AA- rating on $188.3 million of 2009 certificates of participation.
Evan Greenberg Says Businesses Face Regulatory 'Assault'. Ace Ltd. (ACE) Chairman and Chief Executive Officer Evan Greenberg said regulators in the U.S. and Europe are stymieing private-sector growth as he expands the Swiss insurer’s operations in Asia and Latin America. “In the U.S. and much of Europe, we face an unrelenting assault on business by government,” Greenberg said in an annual letter to shareholders posted today on the Zurich-based company’s website. “Rather than creating an environment of certainty where business thrives, government is discouraging risk-taking and investment.”
VIX Posts Longest Streak of Gains Since 2003. The benchmark gauge for U.S. options prices rose for a seventh day, the longest streak since August 2003, as concern about employment growth and earnings spurred investors to guard against losses in stocks.
Profit Growth Stalls as European Slump Hampers Recovery. U.S. corporate profit growth stalled in the U.S. last quarter as companies from McDonald’s Corp. (MCD) (MCD) to 3M Co. (MMM) (MMM) saw gains in the world’s largest economy eroded by a slump in Europe. Earnings at Standard & Poor’s 500 Index companies, excluding financials, are seen gaining 0.6 percent in the first and the second quarter from a year earlier, according to analysts’ estimates compiled by Bloomberg, the slowest growth rate since 2009.
Obama's Fantasy Budget Suggests Tax Hike Surprise. If a big, automatic tax increase is Obama’s plan for the start of his second term, it’s not a good plan. But it is more alarming to think that he has no plan at all.
Bernanke Calls on Regulators to Limit Risks of Shadow Banking. Federal Reserve Chairman Ben S. Bernanke called for new steps to curb “shadow banking” operating beyond standard oversight while saying the economy has far to go before fully recovering from the credit crisis. “The heavy human and economic costs of the crisis underscore the importance of taking all necessary steps to avoid a repeat of the events of the past few years,” Bernanke said yesterday in a speech in Stone Mountain, Georgia.

Wall Street Journal:

JAC: Brazil Auto Sales Won't Rise In 2012 On Credit Pullback. Brazil auto sales likely will stay flat this year as the country's banks pull back on vehicle financing, auto importer Sergio Habib said Monday. Habib, whose importer SHC is helping finance the construction of an auto factory for China's Jianghuai Automobile Co. in Brazil, said banks have been reducing the maturity of auto loans, hurting sales. Despite the drop in the benchmark interest rate, which Brazil's central bank has been slashing since August and stands at 9.75%, the length of the financing matters more to Brazilian consumers, Habib said. "This year the market won't grow," he said.
Syria Fight Spills Over Borders. Shots Kill, Injure Civilians in Turkey and Lebanon, Jeopardizing Cease-Fire Plan.
China Sends Another Warning to Banks. In a fresh sign of official displeasure with the nation's state-run banking system, China's bank regulator has warned lenders they will be "severely punished" for charging excessive fees. In a notice on its website dated Friday, the China Banking Regulatory Commission said it began an investigation into bank fees on April 1, adding that banks that are found to be charging high fees for routine services will be punished. It didn't elaborate on how it defines high fees or what the punishment would be.
A History Lesson on Capital Gains Taxes.

Business Insider:

Zero Hedge:

CNBC:

China Swings to Surprise Trade Surplus in March. China swung to a surprise trade surplus of $$5.35 billion in March as exports grew faster than expected and import growth eased from a 13-month peak, customs data showed on Tuesday. Import and export growth were both down sharply from February's Lunar New Year distorted surge, and within sight of the government's target of 10 percent expansion for 2012. The data reinforced the view of most analysts that China's trade-sensitive economy is set for a soft landing, with GDP growth likely to have eased for a fifth successive quarter to 8.3 percent in the first three months of 2012 and remaining on course for its slowest year of expansion in a decade. Import growth of 5.3 percent in March compared with economists' expectations of 9.0 percent and February's 39.6 percent growth, while export growth of 8.9 percent compared with a consensus call for 7.2 percent, still a marked easing from February's 18.4 percent rate.
Kansas Prepares for Gold-Rush Style Oil Boom.
Easing Inflation in Asia? Not So Fast Say Analysts. Depending on where you look, Asia's inflation is either benign or stubbornly hot.

Rasmussen Reports:

Generic Congressional Ballot: Republicans 45%, Democrats 40%.

AFP:

Brazil's Rousseff tells Obama of 'currency war' worries. Brazil's President Dilma Rousseff has voiced concern to US President Barack Obama that the easy money policies of developed countries threaten the growth of emerging economies like Brazil. The comments from the leader of Brazil, the world's sixth largest economy, came Monday on her first visit to the White House -- for talks that yielded little in the way of concrete announcements. "Such expansionist monetary policies... ultimately lead to a depreciation in the value of the currencies of developed countries, thus impairing growth outlooks in emerging countries," Rousseff said.

Kyodo News:

North Korea Also Plans to Fire Rocket From Eastern Site. North Korea has "detailed plans" to launch a rocket from its eastern Musudan-ri base, separate from the western Tongchang-ri site, citing the head of the Tongchang-ri facility.

Hexun.com:

China's 2012 consumer price rise may move between 3%-5%, citing Wang Jian, secretary general of the China Society of Macroeconomics.

Evening Recommendations

None of note

Night Trading

Asian equity indices are -1.0% to +.25% on average.
Asia Ex-Japan Investment Grade CDS Index 165.50 +4.0 basis points.
Asia Pacific Sovereign CDS Index 135.0 +2.25 basis points.
FTSE-100 futures -.90%.
S&P 500 futures +.13%.
NASDAQ 100 futures +.18%.

Morning Preview Links

Earnings of Note
Company/Estimate

(AA)/-.04
(SVU)/.35

Economic Releases
7:30 am EST

The NFIB Small Business Optimism Index for March is estimated to rise to 95.0 versus 94.3 in February.

Upcoming Splits

None of note

Other Potential Market Movers

The Fed's Kocherlakota speaking, Fed's Lockhart speaking, Fed's Fisher speaking, JOLTs Job Openings report for February, IBD/TIPP Economic Optimism Index for April, 3Y T-Note Auction, G-7 Meeting and the weekly retail sales reports could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial 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 50% net long heading into the day.

Monday, April 09, 2012

Stocks Falling into Final Hour on Less US Economic Optimism, Less Financial Sector Optimism, Rising Global Growth Fears, Profit-Taking

Posted by Gary .....at 3:29 PM