Stocks Falling into Final Hour on Rising Global Growth Fears, Asian Tensions, Eurozone Debt Angst, Homebuilding/Financial Sector Weakness

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• VIX 14.17 +10.88%

• ISE Sentiment Index 78.0 -20.41%

• Total Put/Call 1.03 +19.77%

• NYSE Arms 1.64 +52.58%

Credit Investor Angst:

• North American Investment Grade CDS Index 89.23 +1.73%

• European Financial Sector CDS Index 179.28 -3.1%

• Western Europe Sovereign Debt CDS Index 103.86 -.45%

• Emerging Market CDS Index 262.89 -2.17%

• 2-Year Swap Spread 16.0 -.25 bp

• TED Spread 22.5 +1 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -18.0 +.25 bp

Economic Gauges:

• 3-Month T-Bill Yield .06% -1 bp

• Yield Curve 158.0 -4 bps

• China Import Iron Ore Spot $135.60/Metric Tonne -.37%

• Citi US Economic Surprise Index 8.40 -5.2 points

• 10-Year TIPS Spread 2.49 -3 bps

Overseas Futures:

• Nikkei Futures: Indicating a -130 open in Japan

• DAX Futures: Indicating +9 open in Germany

Portfolio: 

• Slightly Lower: On losses in my tech/biotech sector longs
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 25% Net Long

Today's Headlines

Bloomberg: 

• German March Car Sales Drop 17% on Europe Economy Concern. German new car sales fell the most in almost 2 1/2 years last month as renewed skepticism over the handling of the sovereign-debt crisis in Europe discouraged consumers from making large purchases. Registrations in March dropped 17 percent from a year earlier to 281,184 autos, the German Federal Motor Vehicle Office, or KBA, said today in a statement. The drop was the biggest since October 2010, a spokeswoman for the Flensburg- based KBA said in an e-mail. First-quarter sales fell 13 percent to 673,957 vehicles. German unemployment rose while business confidence and an index in consumers’ willingness to buy fell in March as a botched bank bailout in Cyprus increased concerns the euro region’s recovery will falter.

• Merkel’s Italian Holiday Fans Europe’s North-South Crisis Flames. German Chancellor Angela Merkel’s vacation in Italy threatened to inflame Europe’s north-south tensions after she was snapped in a bathing suit by paparazzi and challenged by a regional leader to heed the economic woes around her. Merkel’s deputy spokesman, Georg Streiter, had to respond to reporters’ questions in Berlin today about whether the chancellor had witnessed “anti-German” sentiment during her sojourn on the island of Ischia, and if she had felt insulted by the video message made by the Campania region governor. Saying she felt “very comfortable” on Ischia, Streiter made it clear Merkel was unhappy about being photographed without her consent.

• European Stocks Fall as U.S. Payroll Data Miss Estimates. European stocks declined the most in five weeks, paring yesterday’s biggest rally for the region’s benchmark index in almost a month, as U.S. manufacturing activity fell faster than estimated, and companies in the world’s largest economy added fewer workers than forecast. Vodafone Group Plc (VOD) retreated 3.1 percent after Verizon Communications Inc. denied it’s considering a bid for the U.K. company. Kazakhmys Plc fell to its lowest price in four years as metal prices retreated. Rexel (RXL) SA increased 1.9 percent in Paris after Goldman Sachs Group Inc. recommended buying the shares. The benchmark Stoxx Europe 600 Index (SXXP) retreated 0.9 percent to 294.8 at the close of trading after climbing 1.3 percent yesterday on better-than-estimated U.S. factory orders data. 

• Ruble Tumbles Most in 14 Weeks as Europe Woes Stoke Outflows. Net capital outflow totaled $25.8 billion in the first quarter as the crisis deepened in the euro region, Russia’s biggest trading partner. Finance Minister Anton Siluanov said the government may start buying foreign currency on the open market in the second half of the year to fill its Reserve Fund.

• China Flags Risks of Weakening Yen. China said a falling yen may cause Asian neighbors to weaken their currencies and intensify trade disputes, reiterating concerns as the Bank of Japan (8301) prepares to increase stimulus under new Governor Haruhiko Kuroda. “A weakening yen may cause a beggar-thy-neighbor effect,” as economies compete in electronics, automobiles and industrial products, China’s foreign-exchange regulator said today in its annual report on international payments. “If other Asian economies follow Japan’s suit, trade disputes and policy competition may intensify to hinder regional cooperation and economic integration.” 

• China Turns Graveyard From Goldmine Hurting Ship Makers: Freight. For shipbuilders such as STX Group, China was once a goldmine. Now it’s a graveyard. China’s lower appetite for commodities undermined the group’s plan to sell its shipping line, wiping out a combined $435 million of investor wealth at the South Korea-based conglomerate’s three main companies this week. That also threatens the group’s ability to repay $1.2 billion of debt by the end of the year.

• U.S. Company Add 158,000 Workers to Payrolls, ADP Says. Companies added fewer workers than projected in March, held back by limited hiring in construction, according to a private report based on payrolls. The 158,000 increase in employment was the smallest since October and followed a revised 237,000 gain the prior month, figures from the Roseland, New Jersey-based ADP Research Institute showed today. The median forecast of 39 economists surveyed by Bloomberg called for a 200,000 advance. Payrolls at construction companies stagnated last month as the boost from rebuilding efforts following superstorm Sandy faded, Zandi said. Concern over the impact of changes in health- care law may have also curbed hiring at companies with around 50 employees, he said.

• Slowing Service Industries Point to Cooler U.S. Growth: Economy. Service industries expanded in March at the slowest pace in seven months and companies added fewer workers than forecast, indicating the U.S. economy is starting to cool. The Institute for Supply Management said its non- manufacturing gauge declined to 54.4 from a one-year high of 56. The index was in line with its average over the past year. Private employment rose 158,000 last month, the smallest gain since October, according to the ADP Research Institute. 

• Commodities Fall as Oil Drops on U.S. Inventories Report. Commodities fell to the lowest level in almost a month as crude dropped after data showed U.S. oil stockpiles climbed to a 22-year high. The Standard & Poor’s GSCI Index of 24 raw materials declined as much as 1.7 percent to 640.62. “Fundamentals have been bearish for crude,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “We have some economic reports that are pretty disappointing.” West Texas Intermediate oil for May delivery declined $1.94, or 2 percent, to $95.25 a barrel at 1:12 p.m. on the New York Mercantile Exchange. The contract fell as low as $94.87.

• Yen Climbs on Speculation BOJ Will Disappoint; Sterling Advances. The yen climbed versus all of its 16 most-traded peers amid speculation a decision tomorrow by the Bank of Japan (8301) will signal its monetary-easing efforts will fall short of its goals and fail to reignite inflation. The dollar weakened against the euro as a gauge of U.S. service industries dropped more than forecast.

• Bullard Favors Slowing QE in $10-$15 Billion Increments. Federal Reserve Bank of St. Louis President James Bullard said he favors reducing the central bank’s monthly asset purchases by $10 billion to $15 billion increments in response to changes in the economy. “I would be very comfortable moving in small amounts -- $10 or $15 billion at a time,” Bullard said on Bloomberg Radio’s “Hays Advantage” with Kathleen Hays. “We are getting much closer.”

MarketWatch:

• Fed's Williams: May start tapering QE this summer. The Federal Reserve could start tapering its $85 billion -a-month asset purchase plan by the summer, said John Williams, president of the Federal Reserve Bank of San Francisco on Wednesday. The central bank has said it would continue the purchase program until it sees substantial improvement in the labor market. "Assuming my economic forecast holds true, I expect we will meet the test for substantial improvement in the outlook for the labor market by this summer," Williams said. "If that happens we could start tapering our purchases then. If all goes as hoped, we could end the purchase program sometime late this year," he added.

CNBC: 

• Why China's Economy Might Topple. Over the next decade, China's growth will slow, probably sharply. That is not the view of malevolent outsiders. It is the view of the Chinese government. The question is whether it will do so smoothly or abruptly. On the answer depends not only China's own future, but also that of much of the world. 

• Auto Lending Bubble Inflates, And the Fed May Be Responsible. Thanks largely to the U.S. Federal Reserve, Jeffrey Nelson was able to put up a shotgun as down payment on a car.

• Bank Website Attacks Reach New Highs.

• 'Too Big to Fail' for Banks Not Solved Yet: Fed Gov. Tarullo. (video)

Zero Hedge: 

• Italy Goes "Cyprus" On Sicilian Mafia, Seizes Record $1.7 Billion In Cash And Assets.

• Ex-Goldman Prop Trader Who Concealed $8.3 Billion Market Moving E-Mini Position, Turns Himself In To FBI.

• Non-Manufacturing ISM Joins All Other Economic Misses, Prints At Lowest Since August, Biggest Miss In A Year. (graph)

• Hagel Deploys Missile Defense System Amid "Real, Clear Danger" From North Korea.

• European Stocks Plunge, Catch Down To Credit. (graph)

Business Insider:  

• ART CASHIN: We Are Witnessing The Tulip Bubble In Real-Time.

• ANALYST: US Military Expects North Korean Missile Launch.

• There's Been A Surge In The Number Of Homeless Students In Detroit.

• The New Cover Of 'Money' Looks Like Bad News For Housing.

• Obama Senior Adviser Complains That The Drudge Report 'Hurts What We're Trying To Do'.

• The Stock Market's Valuation Rarely Gets This High. (graph)

Reuters:  

• Portugal govt defeats no confidence motion, warns of instability. Portugal's austerity-minded government defeated on Wednesday a no confidence motion, which nevertheless united all the opposition in parliament, showing growing resistance against further budget tightening under an EU/IMF bailout. 

• Hagel tells U.S. military to brace for further belt-tightening.

• Copper falls to 8-month low on demand concerns.

• U.S. crude stocks rise to highest since 1990-EIA.  

 AFP:

• US missile shield sent to Guam after N. Korea threat. The United States is to deploy a THAAD missile defense battery to defend its bases on the Pacific island of Guam, the Pentagon said Wednesday following threats from North Korea. The news that the ground-based system would be in place in the coming weeks came after two Aegis anti-missile destroyers were sent to the western Pacific to intercept any North Korean strike against US or allied targets.

Financial Times: 

• Bundesbank launches Deutsche(DB) probe. The Bundesbank has launched an investigation into claims that Deutsche Bank hid billions of dollars of losses on credit derivatives during the financial crisis, according to people familiar with the situation. Investigators from Germany’s central bank are scheduled to fly to New York next week as part of an inquiry into allegations that misvaluing credit derivatives allowed Deutsche to hide up to $12bn in losses, helping it avoid a government bailout.

Handelsblatt:

• Euro-Skeptic Says Germany Rushing Cyprus Vote. German FDP lawmaker Frank Schaeffler wants Bundestag President Norbert Lammert to ensure proper involvement of Germany's lower house in approving aid for Cyprus, citing letter to Lammert. Schaeffler says German law stipulates bailout must be approved in two-stage procedure, while Schaeuble has said it's legally possible to go through both stages in one plenary sitting. That view violates "wording and spirit of the parliamentary involvement" in Germany, Schaeffler said in the letter.

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.45%

Sector Underperformers:

• 1) Gold & Silver -4.69% 2) Homebuilders -3.50% 3) Hospitals -2.50%
  

Stocks Falling on Unusual Volume:

• WNR, MPC, CLMT, VOD, RBS, BBVA, FTE, LGCY, ISLA, OZRK, GIII, OSK, HBI, CROX, ERJ, WAIR, SEP, ARCC, GIII, KRA, ADT, FANG, DKL, HEES, MNTX, CPSS, SQI, CSTE, AMBA, LNG, ADUS, DK, EFT, SEE, PBF, PSX, NTI, VMI, CRL, TWO, ALGN, NFLX, RLGY, MTH, GDX, CQP, INFI, ARIA, SEE, TEX, CVI, HFC, WGO, RNF, THC, ALDW, AMBA, PBF, GPN and ARII

Stocks With Unusual Put Option Activity:

• 1) TSLA 2) XHB 3) EWW 4) AMAT 5) PSX
  

Stocks With Most Negative News Mentions:

• 1) OZRK 2) EV 3) ADT 4) LVS 5) GS
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth -.54%

Sector Outperformers:

• 1) Steel +.94% 2) HMOs +.19% 3) Computer Hardware +.15%
  

Stocks Rising on Unusual Volume:

• NIHD, CALL, CONN, OMPI and UNXL

Stocks With Unusual Call Option Activity:

• 1) DF 2) ADT 3) EWY 4) TMO 5) HK
  

Stocks With Most Positive News Mentions:

• 1) AN 2) ATML 3) WAG 4) ALK 5) ROK

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Wednesday Watch

Evening Headlines 
Bloomberg: 

• Spain Says 2014 Taxes to Depend on EU Verdict on Deficit Targets. Spain’s government is waiting for the result of negotiations with the European Union on its budget deficit goals before deciding on its tax policy for 2014. ’’Tax decisions for 2014 haven’t been taken yet and will obviously depend on negotiations with the European Commission and other EU partners,’’ Budget Minister Cristobal Montoro said during a conference in Madrid yesterday. ’’It will all depend on the deficit targets that are established and on their underlying economic assumptions.’’

• EU Financial Transaction Tax Seen Costing Britain $6 Billion. The European Union’s planned tax on financial transactions could add 3.95 billion pounds ($6 billion) to the cost of issuing U.K. government debt, according to a report commissioned by the City of London Corporation.

• Verizon(VZ) Denies Report That It’s Considering a Bid for Vodafone(VOD). Verizon Communications Inc. denied that it’s considering a bid for Vodafone Group Plc, disputing a report that said it was discussing a plan with AT&T Inc. to make a joint offer for the U.K. carrier. 

• Euro Remains Lower Before ECB Meeting; Aussie Dollar Advances. The euro remained lower following a drop yesterday amid speculation the European Central Bank will use its meeting tomorrow to signal future economic stimulus.

• Asia Soaring Wages Stoke Inflation as Factory Costs Rise.

• Suntech Unit Bankruptcy Had Roots in Deadbeat Customers. Suntech Power Holdings Co. (STP), forced to put its Chinese solar unit into bankruptcy last month, began that slide into insolvency in 2009 when customers linked to the founder couldn’t pay their bills and the company booked the sales as revenue anyway, regulatory filings show. 

• Asian Stocks Drop a Third Day, led by Raw-Material Shares. Asian stocks dropped for a third day as a decline in shares of raw-material producers offset a surge in Japanese equities as the central bank began a two-day policy meeting. The MSCI Asia Pacific Index (MXAP) slid 0.2 percent to 133.58 as of 11:27 a.m in Tokyo, reversing an earlier advance of as much as 0.3 percent.

• Kim Vows Increased Climate-Change Role to Help Ease Poverty. World Bank President Jim Yong Kim vowed to boost the lender’s contribution to easing the effects of climate change as part of a new goal to eliminate extreme poverty by 2030. Helping mitigate shocks, including those caused by global warming, is one of the conditions needed to reach the poverty reduction target, Kim said in a speech at Georgetown University in Washington today. Also required is sustained fast growth in regions such as sub-Saharan Africa and reduced income inequality, he said. 

• WTI Crude Drops as U.S. Oil Stockpiles Gain. West Texas Intermediate fell for the second time in three days after an industry-funded report showed U.S. crude stockpiles increased the most in four weeks and a government order prevented the restart of a pipeline to the Texas Gulf Coast. Futures slipped as much as 0.7 percent in New York after climbing 0.1 percent yesterday.

• Iron Ore Prices Seen Falling Through Q3 2014 on Supply, NAB Says. New iron ore supply outpaces increases in steel output and will probably push prices lower through third quarter of 2014, National Australia Bank says in report today. Prices to fall to $115/t in final quarter this year vs $127/t in second quarter, analysts James Glenn and Rob Brooker say. Forecasts $100/t in third and final quarters of 2014.

• Obama Control-Tower Shutdowns Spur Mounting Airport Suits. Airports that serve Ohio State University and the headquarters of State Farm Mutual Automobile Insurance Co. joined a lawsuit offensive to stop the U.S. from shutting air-traffic control operations as part of government- wide spending cuts. Since the first suits were filed in federal appeals courts in Manhattan and Washington last week, at least eight more airports brought cases challenging closures scheduled to begin April 7. They include the Central Illinois Regional Airport in Bloomington, where State Farm is based, which handled more than 579,000 passengers in 2011, and the Ohio State University airport in Columbus. “I’ve never seen an issue galvanize people like this,” Spencer Dickerson, executive director of the Alexandria, Virginia-based Contract Tower Association, said in an interview. “The administration made the closing of control towers the poster-child for sequestration.”  

• Kerry: North Korean Reactor Restart Provocative Act. U.S. Secretary of State John Kerry said it would be a “serious step” if North Korea violates its obligations by following through on a threat to restart nuclear facilities shut by a 2007 disarmament accord. The U.S. is committed to defending itself and its allies and “will not be subject to irrational or reckless provocation” by North Korea, Kerry said yesterday after meeting in Washington with South Korean Foreign Minister Yun Byung Se. “If they restart their nuclear facility at Yongbyon, that is in direct violation of their international obligations,” Kerry said. “It would be a provocative act.”

Wall Street Journal: 

• Seoul Seeks Ability to Make Nuclear Fuel. South Korea is pressing the Obama administration for U.S. permission to produce its own nuclear fuel, a move that nonproliferation experts said could trigger a wider nuclear-arms race in North Asia and the Middle East. The negotiation between Seoul and Washington, though part of a broader, long-term civilian nuclear cooperation agreement, is taking place as nuclear pressures swell on both sides of the Korean peninsula. North Korea has expanded its atomic-weapons capability in recent months. It announced Tuesday that it was reopening a reactor complex used to harvest weapons-grade plutonium. Those actions have fueled calls in South Korea for the government in Seoul to respond by developing its own atomic-weapons capability.

• SEC Embraces Social Media. New Way to Make Disclosures Gets Go-Ahead if Investors Are Told Where to Look.

• Poll: Americans’ Top Conspiracy Theories, Revealed. PPP’s conspiracies poll released Tuesday includes looks at long-held theories, as well as contemporary items that play a role in political debates today.

• Silver Bears Pounce as Manufacturing Sputters. Silver prices plunged deeper into bear-market territory, as weak manufacturing data from the world's major economies stoked investor fears that the metal's gradual decline this year is turning into a rout. Silver has shed over 20% of its value since October and its losses this year surpass most other commodities, including gold.

• The Strange Maths of Tesla’s $500/month Model S. Great news for those who have been coveting the 2013 Car of the Year but can’t quite pony up the $60,000+ price tag: the Tesla Model S now has a lease option, announced today after some online hype from founder Elon Musk.

• Arkansas Water System to Ask Exxon(XOM) to Move Its Pipeline. Arkansas officials plan to ask Exxon Mobil Corp. to move a portion of its Pegasus Pipeline to ensure safe drinking water, after thousands of barrels of oil last week spilled from the pipeline into a small-town neighborhood. 

• Half of Hedge Funds Think Their Competitors Are Cheating. Hedge-fund employees seem to agree with federal authorities that their industry needs to clean up its act. Almost half of hedge-fund professionals believe their competitors are engaged in illegal activity and more than a third say they have felt pressure to break rules at work, according to an online survey released Tuesday. Meanwhile, 30% of respondents said they had witnessed misconduct on the job.
  

Fox News:

• Senators vow to oppose UN arms trade treaty. Republican senators -- joined by at least one Democrat -- ripped the international arms trade treaty approved Tuesday by the U.N. General Assembly, calling it a "non-starter" and vowing to oppose Senate ratification. The treaty approved Tuesday was the first of its kind. The resolution was approved at the U.N. by a vote of 154 to 3 with 23 abstentions. But in the U.S. Senate, which must ratify the treaty in order for the United States to be a party to it, opposition is much stronger. 

MarketWatch.com:

• SEC social media ruling could invite scams. Commentary: Look for fraudsters to try and move markets.

• Hollande is missing in action during Cyprus crisis. Commentary: ‘Latin empire’ needed to counterbalance Germany.

Zero Hedge: 

• The 'Walking Dead' Housing Recovery - Zombie Foreclosures.

• Three Macro Monetary Morphine Charts.

• The Four Traits Of Monetary Union Collapse.

• Oil Tanker Market In "State Of Panic" As Charter Rates Plunge, Cargoes Rejected. (graph)

• Biderman Nominates Krugman For 'The Big Lie' Award. (video)

Business Insider: 

• There Are Already Signs That US Economic Momentum Is Sputtering Out.

• There's A Fundamental Shift Going On In The US Labor Market.

• Hollande Is Reeling After 'Unpardonable' Hypocrisy From His Former Tax Chief.

New York Times:

• A Debate in the Open on the Fed. Federal Reserve officials regularly air their views in public speeches, but they rarely engage in public debates. On Tuesday night, two of the officials who disagree most sharply about the Fed’s current policy did just that. The exchange between Charles L. Evans, an outspoken advocate for the Fed’s efforts to stimulate the economy, and Jeffrey M. Lacker, the Fed’s most persistent internal critic, suggested their differences are as much a matter of temperament as economics.

Washington Post:

• Obama administration pushes banks to make home loans to people with weaker credit. The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place. President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

Telegraph: 

• Europe's leaders paralysed as EMU jobless rate hits record high. Eurozone unemployment reached a record 12pc in February and looks certain to ratchet higher as fiscal cuts deepen and manufacturing continues to struggle, raising the spectre of social explosion across southern Europe.

Yonhap News Agency: 

• NK-Kaesong entry ban. North Korea said Wednesday it will ban South Korean workers from entering the inter-Korean industrial park in Kaesong, only allowing South Koreans currently staying at the North's border town to return home. The abrupt entry ban came after Pyongyang threatened to shut down the Kaesong Industrial Complex and launch a pre-emptive nuclear war on Seoul and Washington over South Korea-U.S. joint military drills and U.N. sanctions for its latest nuclear test. There are 861 South Koreans and seven foreign workers staying at the Kaesong complex, home to 123 labor-intensive factories. The complex, the crowning achievement of the June 2000 inter-Korean summit meeting, also employs some 54,000 North Korean workers. The complex, located just north of the DMZ, is significant because it is the only economic link between the two Koreas after Seoul suspended most exchanges with the communist country after the sinking of one of its naval ships in the Yellow Sea in March 2010.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.75% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 119.0 -3.0 basis points.

• Asia Pacific Sovereign CDS Index 96.75 -1.25 basis points.

• FTSE-100 futures -.33%.

• S&P 500 futures -.02%.

• NASDAQ 100 futures +.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (MON)/2.56

• (CAG)/.56

• (LNCR)/.61

• (JOSB)/.97

• (SCHN)/.25

• (AYI)/.62 

Economic Releases
8:15 am EST

• The ADP Employment Change for March is estimated to rise to 200K versus 198K in February.

10:00 am EST:

• The ISM Non-Manufacturing Composite for March is estimated to fall to 55.5 versus 56.0 in February.

10:30 am EST:

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,050,000 barrels versus a +3,256,000 barrel increase the prior week. Gasoline supplies are estimated to fall by -1,000,000 barrels versus a -1,596,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,100,000 barrels versus a -4,513,000 decline the prior week. Finally, Refinery Utilization is estimated to rise +.3% versus a +2.2% gain the prior week.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bullard speaking, Fed's Williams speaking, Australia trade data and the weekly MBA mortgage applications report could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Rising into Final Hour on Less Eurozone Debt Angst, Short-Covering, Healthcare/Financial Sector Strength

Today's Market Take:

Broad Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• VIX 13.08 -3.68%

• ISE Sentiment Index 92.0 +92.45%

• Total Put/Call .85 -15.84%

• NYSE Arms 1.02 -15.82%

Credit Investor Angst:

• North American Investment Grade CDS Index 88.13 -2.05%

• European Financial Sector CDS Index 184.73 -5.03%

• Western Europe Sovereign Debt CDS Index 104.33 -.65%

• Emerging Market CDS Index 269.17 -1.50%

• 2-Year Swap Spread 16.25 -.75 bp

• TED Spread 21.5 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -18.25 +1.0 bp

Economic Gauges:

• 3-Month T-Bill Yield .07% unch.

• Yield Curve 162.0 +2 bps

• China Import Iron Ore Spot $136.10/Metric Tonne -.87%

• Citi US Economic Surprise Index 13.60 +1.4 points

• 10-Year TIPS Spread 2.52 unch.

Overseas Futures:

• Nikkei Futures: Indicating a +197 open in Japan

• DAX Futures: Indicating -8 open in Germany

Portfolio: 

• Slightly Higher: On gains in my Biotech/Medical/Retail sector longs and emerging markets shorts
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 50% Net Long