Broad Equity Market Tone:
- Advance/Decline Line: About Even
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.51 -1.49%
- Euro/Yen Carry Return Index 135.63 -.12%
- Emerging Markets Currency Volatility(VXY) 9.65 +2.66%
- S&P 500 Implied Correlation 50.58 -2.84%
- ISE Sentiment Index 81.0 -4.71%
Credit Investor Angst:
- North American Investment Grade CDS Index 81.0 +4.14%
- European Financial Sector CDS Index 139.44 -.33%
- Western Europe Sovereign Debt CDS Index 82.29 -.26%
- Emerging Market CDS Index 318.80 +3.29%
- 2-Year Swap Spread 18.75 +1.0 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -9.25 -.75 bp
Economic Gauges:
- 3-Month T-Bill Yield .04% -1 bp
- China Import Iron Ore Spot $137.90/Metric Tonne -2.34%
- Citi US Economic Surprise Index 36.60 -4.0 points
- Citi Emerging Markets Economic Surprise Index -29.50 +.2 point
- 10-Year TIPS Spread 2.17 -1 bp
Overseas Futures:
- Nikkei Futures: Indicating -5 open in Japan
- DAX Futures: Indicating -4 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and then covered some of them
- Market Exposure: 50% Net Long
Bloomberg:
- Egypt Clashes Resume as Mursi Backers Rally Against Killings. Thousands of Egyptians poured into
the streets after Friday prayers to protest this week’s deadly
crackdown on Islamists, sparking clashes across the country. Troops backed by tanks and helicopters surrounded Ramsis
Square, a focal point of rallies in central Cairo. The Muslim
Brotherhood, which called the protests, put the death toll at
60, while state-run Ahram Online said 27 people died, seven in
the capital. Security forces and demonstrators also clashed in
the provinces of Giza, Alexandria, Fayoum Ismailiya, Damietta,
Port Said and Gharbiya. The rallies were being held to protest the Aug. 14 killing
of about 578 people when police stormed sit-ins by supporters of
ousted President Mohamed Mursi and in the clashes that erupted
across the country.
- Syrian Refugees ‘Streaming’ Into Northern Iraq, UN Says. More
than 5,000 Syrians crossed into Iraq’s Kurdistan region yesterday in a
“sudden, massive movement,” the United Nations refugee agency said.
About 750 people initially crossed the Tigris River at Peshkhabour
crossing, followed by a wave of 5,000 to 7,000 people, Adrian Edwards, spokesman for the UN High Commissioner
for Refugees, told reporters in Geneva today, according to an
agency e-mail summarizing his comments.
Most of the Syrians were women, children and elderly people
from embattled Aleppo and other regions near Syria’s border with
Iraq, Edwards said, citing UN field officers at the scene.
- Crude Caps Longest Streak of Gains Since April. West Texas Intermediate crude capped
the longest streak of gains since April as clashes in Egypt
raised concern that Middle East supply will be cut. WTI for September delivery settled at $107.46 a barrel on the New York Mercantile Exchange, the highest level since Aug. 1. The volume of all futures traded was 1.5 percent below the
100-day average at 2:52 p.m. Futures advanced 1.4 percent this
week and are up 17 percent this year.
- Emerging Stocks Fall as India’s Sensex Leads World Losses. Emerging
stocks fell as Indian
shares plunged the most among global indexes, the rupee sank to
a record and a trading error roiled Chinese markets. Egypt’s
bond yields soared after a crackdown left hundreds dead. The MSCI
Emerging Markets Index slid 0.2 percent to 958.20 at 11:23 a.m. in New
York. The S&P BSE Sensex Index dropped the most among among the
94 world gauges tracked by Bloomberg and
the rupee weakened as much as 0.9 percent. A trading error at Everbright Securities Co. drove Chinese
shares to the biggest swings since the global financial crisis,
threatening to erode confidence in the second-worst performing
stock market after Greece during the past four years. Indian stocks
plunged amid concern that government efforts to stem the rupee’s slide
to a record low will curb economic growth. Egypt’s default risk soared
to the highest in more than a month. India’s S&P BSE Sensex
Index dropped 4 percent in Mumbai as State Bank of India tumbled to the
lowest level in four years. ICICI Bank Ltd. slumped 5.2 percent. The
rupee touched an unprecedented 62.0050 per dollar today before closing
0.3 percent weaker from Aug. 14 at 61.6550 in Mumbai, according to
prices from local banks compiled by Bloomberg.
- China Stocks Roiled as Bad Trades Spur Shanghai Swings.
China’s stocks were roiled by a
trading error at Everbright Securities Co. (601788) that spurred a 53
percent surge in volumes and sent the Shanghai Composite Index to its
biggest intraday gain since March 2009. The Shanghai gauge jumped
from a loss of as much as 1 percent to a gain of 5.6 percent in two
minutes during the morning session as 16 of the measure’s 20 biggest
companies by weighting rose by the 10 percent daily limit. The index
fell 0.6 percent at the close. Everbright’s trades were the main reason
for the jump, the China Securities Regulatory Commission said in
a statement. The exchange said trades will be settled as normal.
- Gold Rises as Silver Caps Biggest Weekly Gain Since 2008. Gold rose to the highest in almost
two months and silver capped the biggest weekly rally since 2008
on signs of higher physical demand for precious metals. Gold futures for December delivery added 0.7 percent to
settle at $1,371 an ounce at 1:48 p.m. on the Comex in New York.
Prices reached $1,379.20 after the close of regular trading, the
highest since June 18. The precious metal gained 4.5 percent
this week, the most since July 12.
- Europe Stocks Rise for Third Week as Growth Tops Forecast.
European stocks advanced for a third straight week as data showing the
euro area emerged from the longest recession on record outweighed
speculation the Federal Reserve will trim monetary stimulus. Italian
banks led gains as Banca Monte dei Paschi di Siena SpA and Unione di
Banche Italiane SCPA rallied at least 12 percent. GAM Holding AG jumped
the most in almost four years as the asset manager said first-half
profit more than tripled. Fresnillo (FRES) Plc and Randgold Resources
Ltd. increased at least 9
percent as prices for gold and silver rallied. The benchmark Stoxx Europe 600 Index increased 0.1 percent
to 306.36 this week, extending its 2013 advance to 9.5 percent.
- Europe Credit Prices 25% Risk of Sovereign Shock: Morgan Stanley.
Return of sovereign risk is the real threat to European credit, and
investors should buy CDS protection as there's a 25% chance of another
shock this year, Morgan Stanley analysts Andrew Sheets and Phanikiran
Naraparaju wrote in a client note. Morgan Stanley less concerned with
effects of higher U.S. rates or EM slowdown, re-escalation of euro-zone
risks remains damaging to current portfolio positioning, as they're
overweight financials and peripheral corporates.
Wall Street Journal:
- Deadly Showdown at Cairo Square. Protests Merge at Ramses Square, Spurring Gunfire, Teargas and a Grim Accounting; Dozens Seen Dead. Thousands of Islamist demonstrators who massed on central Cairo's
Ramses Square met with deadly force Friday afternoon, turning a nearby
mosque into a makeshift morgue where medics tried to revive shot
protesters and people clambered up bloodstained steps to view at least
31 bodies that were laid out inside. Skirmishes continued in the afternoon around the square, where Muslim
Brotherhood supporters converged in what they called a Day of Rage to
mourn those killed on Wednesday, when a government crackdown on
supporters of ousted President Mohammed Morsi sparked violence that left more than 600 people dead around the country.
- Fannie Could Curb Low-Down-Payment Loan Purchases. Fannie Mae is in discussions to curb its purchases of mortgages that require
a minimum down-payment of 3%, according to people familiar with the
discussions. Fannie never stopped accepting purchases of loans with 3% down payments, even
after lending standards were ratcheted up following the housing bust. But many
lenders stopped offering them, in part because they weren’t able to obtain
mortgage insurance for those loans, which Fannie requires. In recent months, however, a series of changes in the mortgage market have led
to an uptick in low-down-payment loans available for sale to Fannie. That
prompted a review of the company’s lending policies, and officials are said to
be working on a plan to limit the company’s purchases of these loans.
Zero Hedge:
Business Insider:
Reuters:
- Sensex slumps 770 points on capital control, U.S. stimulus fears. The Nifty slumped 4 percent on Friday, marking its biggest daily drop in almost two years, as blue chips including HDFC Bank were hit across the board on fears U.S. stimulus tapering would trigger foreign selling and as the rupee hit a record low. The Reserve Bank of India's measures late on
Wednesday to restrict how much its citizens and companies can invest
abroad also raised fears of outright capital controls that would further
undermine the confidence of foreign investors, hitting the rupee. The
volatility index which measures the cost of protection via options and
is seen by some investors as a "fear" gauge gained 26.4 percent, marking
its biggest single day percentage gain since June 17, 2009. The
outlook remains weak as Indian shares marked their fourth consecutive
weekly fall, totalling a decline of 7.7 percent, as the rupee has
tumbled despite various measures undertaken to prop up the currency.
The Guardian:
- Barack Obama's lost youth. The president's approval rating is falling faster among young people than any other group. Will Republicans capitalise on it?
FAZ:
- Merkel Rejects Debt Cut for Greece. Debt cut for Greece could
create uncertainty elsewhere in Europe, Merkel said in an interview.
Style Underperformer:
Sector Underperformers:
- 1) Coal -2.77% 2) REITs -2.31% 3) Utilities -1.52%
Stocks Falling on Unusual Volume:
- IBN, SBRA, HDB, PBR, PTR, DK, IOC, ING, CMCSK, TTM, POWR, PRGO, JWN, JOSB, SFUN, RYAAY, DTSI, DFP, K, GIS, AEH, IPI, AU, BYI, DXYN, UVV, ITC, ITUB, DDS, M, VTR and MPW
Stocks With Unusual Put Option Activity:
- 1) ITB 2) HOT 3) JWN 4) EEM 5) LEN
Stocks With Most Negative News Mentions:
- 1) GIS 2) RIG 3) GM 4) AOL 5) SPG
Charts:
Style Outperformer:
Sector Outperformers:
- Homebuilders +2.12% 2) Airlines +1.22% 3) Alt Energy +.95%
Stocks Rising on Unusual Volume:
- TASR, OSIR, AZPN, P, QIHU, SRPT, GDP, BZH, PHM and ANAC
Stocks With Unusual Call Option Activity:
- 1) XLY 2) P 3) AMAT 4) ACT 5) VRNG
Stocks With Most Positive News Mentions:
- 1) NDSN 2) XLNX 3) AZPN 4) JBLU 5) AMAT
Charts:
Evening Headlines
Bloomberg:
- Violence Convulses Egypt as Obama Calls Off War Games. A
main government installation near
Cairo was attacked and 11 security personnel were gunned down in
new eruptions of violence following the military-backed government’s
deadly suppression of an Islamist protest. The U.S. canceled joint war
games with Egypt to signal its outrage over a death toll that increased
to almost 600. Hundreds loyal to ousted Islamist President Mohamed Mursi
attacked the governor’s offices in Giza near Cairo, some hurling
firebombs and firing guns, governorate spokesman Amin Abdel-Moneam said yesterday by phone. Clashes also erupted elsewhere
across the riven nation as the violent breakup of two pro-Mursi
protest camps deepened the fault lines Islamists and their
rivals have drawn. Forces were told to use live bullets to fend
off assaults on buildings or troops, the government said in an
e-mailed statement. Islamists denied carrying out any attacks.
- WTI Oil Trades Near Two-Week High Amid Unrest in Egypt. West
Texas Intermediate crude traded
near the highest price in two weeks as an escalating conflict in Egypt
fanned concern that oil shipments through the country may be disrupted. Futures were little changed in New York after rising for a fifth day yesterday, capping the longest stretch of gains since
April. A government installation near Cairo was attacked and 11
security personnel were gunned down in the latest episode of
violence that has killed more than 600 people.
- China Conducts Live-Fire Exercises as Tensions Simmer With Japan. China performed live-fire military
exercises in the East China Sea as part of drills the army said
were routine, as tensions simmered with Japan over islands in
the area claimed by both countries. The military is conducting 10 days of exercises off the
coast of Liaoning province, China Central Television reported on
its website today, citing the People’s Liberation Army. Four
Chinese ships entered Japanese waters around the islands,
Japan’s coast guard said in an e-mailed statement.
- China Shanghai Composite Surges as Exchange Said to Investigate. The measure rallied from an early drop of 1 percent and
rose 3.2 percent to 2,148.39 at the break as of 11:30 a.m. local
time, according to the exchange website and data compiled by
Bloomberg. The Shanghai bourse is looking into the spike, said a
technical services official at the exchange, who declined to be
identified because of its rules. The bourse said its operations
are normal, according to a statement posted to its official
microblog. There was no news to spur such a rally in the market,
said Gerry Alfonso at Shenyin & Wanguo Securities Co.
- Asian Stocks Drop as Bond Risk Gains; Kiwi Drops on Quake. Asian stocks fell, paring this
week’s advance, after an unexpected drop in U.S. jobless claims
fueled speculation the Federal Reserve will cut stimulus. Bond risk rose, while copper led gains among industrial metals. The MSCI Asia Pacific Index dropped 0.6 percent at 11:18 a.m. in Tokyo, paring a weekly advance to 0.1 percent. Standard & Poor’s 500 Index (SPX) futures added 0.1 percent. Credit risk in Japan rose the most in almost seven weeks.
Government bonds slumped, with 10-year yields at the highest level in
at least a month for 18 of 24 developed markets tracked by Bloomberg.
Copper and zinc both rallied 0.8 percent. The New Zealand dollar
weakened 0.2 percent after an earthquake near Wellington.
- Rebar Pares Third Weekly Gain on Concern Fed May Taper Stimulus. Steel reinforcement-bar futures
fell, paring a third weekly gain, on speculation that the Federal Reserve scaling back stimulus may slow global growth. Rebar
for January delivery fell as much as 0.5 percent to 3,802 yuan ($622) a
metric ton on Shanghai Futures Exchange, and traded 3,808 yuan at 11:13
a.m. local time. Futures have risen 1.4 percent this week, trimming
this year’s drop to 4.5 percent.
- Rubber Pares Weekly Advance on Stronger Yen Ahead of U.S. Data. Rubber declined for a second day,
paring a second weekly advance, as the Japanese currency
strengthened against the dollar ahead of data that may add to
signs of an improvement in the U.S. economy. Rubber for delivery in
January on the Tokyo Commodity Exchange fell as much as 1.1 percent to
261.6 yen a kilogram ($2,685 a metric ton) and was at 264.1 yen at 11:20
a.m. local time. Futures have gained 1.1 percent this week, paring this
year’s loss to 13 percent.
- Dell(DELL) Results Underscore Challenges Facing Turnaround Plan. Dell Inc. reported results that
underscore the challenges facing the company amid a decline in
personal-computer sales, whatever the outcome of a vote next
month on Michael Dell’s $24.9 billion plan to go private. Net income for the fiscal second quarter fell 72 percent to
$204 million, or 12 cents a share, from $732 million, or 42
cents, a year earlier. Revenue for the quarter ended Aug. 2 was
little changed at $14.5 billion. Analysts on average predicted
profit of $275 million on $14.2 billion in sales. The plunge in earnings bolsters the case made by Chief
Executive Officer Dell and Silver Lake Management LLC that
shareholders should accept their proposal to restructure Dell as
a private company.
Wall Street Journal:
- President Obama Treads Lightly in Response as Egyptian Crisis Deepens. U.S. Officials Question Whether Long-Term Ally Can Remain Stable State. The deadly fight in Egypt's streets has led U.S. officials to
question whether America's long-standing ally can remain a fundamentally
stable state.
Worries that Egypt is headed to an
extended armed insurrection, and that the U.S. has little power to stop
it, help explain President Barack Obama's cautious response to this
week's bloody crackdown by Egyptian security forces on Muslim
Brotherhood supporters, U.S. officials say. In response to violence that
has left hundreds dead on the streets of Cairo, Mr. Obama on Thursday
canceled a coming U.S.-Egyptian military exercise to
show displeasure at the actions of the country's military leaders—but
stopped short of cutting off aid more broadly.
- Critics Decry Risks Posed by Link Between China's Banks and Bonds. The
Market 'Is Like a Child Compared to That in Other Countries'. Worried
about a boom in lending by the country's fast-growing "shadow
banks," China created a cash crunch in June to squeeze their source of
funding. One unintended consequence, though, was a selloff in the
country's $4 trillion bond market.
The selloff—triggered by banks selling bonds to raise cash—bolstered
critics of China's financial system, who point to its bond market as an
underrecognized risk to the country as it struggles to control surging
lending amid a weakening.
- 'Alternative' Investments Draw Flak. Investors Flock to New Risky Products, and Regulators Are Raising Concerns.
Individual investors are pouring tens of billions of dollars into a
new generation of complex investment products, and regulators are
raising concerns that not all buyers understand the costs and risks.
Outside scrutiny is intensifying on securities firms' sales practices
and whether so-called alternative products—ranging from certain types
of mutual funds to vehicles that invest in highly indebted companies—are
suitable for all of the Americans flocking to them.
- Fed's Bullard Floats Idea of Small Cuts to Bond Buying. Measured Reduction in Purchases Would Be Important Market Signal. The Federal Reserve could hedge its bets by making small moves rather
than large, aggressive ones when it starts pulling back on its $85
billion-a-month bond-buying program, said James Bullard, president of
the Federal Reserve Bank of St. Louis.
Barron's:
- AMAT(AMAT) Slips: FYQ3 Misses, Q4 View Light; Names Dickerson CEO. Chip equipment maker Applied Materials
(AMAT) this afternoon reported fiscal Q3 revenue that missed analysts’
estimates, and named a replacement for its chief executive officer. Revenue
in the three months ended in July fell to $1.98 billion, yielding EPS
of 18 cents a share. Analysts had, on average, been expecting $2.06
billion and 19 cents per share.
Fox News:
- ObamaCare pushing Americans into part-time work, critics say. The warnings about ObamaCare from Big Labor and other critics may be
coming true, as more evidence surfaces that President Obama’s health
care overhaul is causing employers to prepare to push people into
part-time work to avoid additional costs tied to the law. The Affordable Care Act requires mid-sized and large employers to
sponsor health insurance for all full-time employees, which it defines
as those who work 30 hours a week or more. Big labor unions, which had
been in favor of the new law, are now sounding the alarm against it.
They argue the sticker shock from the premium hikes is leading
businesses to offset the impact by capping hours on employees, despite a
recently announced one-year delay in that insurance mandate. If workers
don’t clock 30 hours a week, the reasoning goes, employers won't have
to offer health insurance. This sets a dangerous precedent that could
affect millions of families across the United States, analysts say.
CNBC:
Zero Hedge:
Business Insider:
New York Times:
- Easy Credit Dries Up, Choking Growth in China. A painful credit crisis is now spreading
across Shenmu and cities nearby, as thousands of businesses have closed,
fleets of BMWs and Audis have been repossessed and street protests have
erupted. Now the leading purveyors of Western fashions are deserted, monthly
sales at restaurants are down as much as 97 percent and the marble
entrance to the Fortune Garden Club is shuttered. All but one of the
city’s car dealerships have failed.
Nasdaq:
- Jos A Bank's(JOSB) 2nd-Quarter Guidance Disappoints on Sales Weakness. Men's retailer Jos. A. Bank Clothiers Inc. expects fiscal second-quarter results will fall far short of
expectations, as a highly promotional marketing campaign failed to resonate with consumers and led to a surprise sales
decline. Shares dropped 4.9% to $41.92 in after-hours trading.
Real Clear Politics:
- Does the President Own Obamacare? If House Republicans had somehow erased chunks of the Affordable Care
Act -- the employer mandate, the ability to screen who gets subsidies
and the annual cap on out-of-pocket costs for a year -- the Democrats
would have blasted those moves as unconscionable acts of sabotage. But
the GOP didn't sneak in those changes. President Barack Obama did.
The employer mandate discourages job creation and encourages
employers to cut back employees' weekly hours. The lowering of
verification standards for subsidies is a backdoor way to buy the
business of young people who otherwise might not qualify. Delaying the
copayment cap should keep health care premiums from shooting up in 2014.
These delays, however, don't fix the inevitable problems; instead,
they string out the gloom of uncertainty that has cast a pall over the
American economy. They just put off the day of reckoning until 2014, a
midterm election year. So what do you think the president will do then?
Reuters:
- Nordstrom(JWN) sales rise less than expected, forecasts cut.
Nordstrom Inc on Thursday reported lower than expected revenue in its
second fiscal quarter as comparable sales at its department stores
slipped, prompting the luxury department store chain to lower its
full-year sales and profit forecast. The luxury retailer reported that comparable sales in the quarter ending Aug. 3 rose 4.4 percent from the year-ago period,
below the 6.8 percent increase analysts were expecting,
according to Thomson Reuters I/B/E/S. Overall sales rose 6.4
percent to $3.1 billion. It was the second quarter in a row that Nordstrom - long
favored by investors for its growth and discipline - had
reported disappointing sales and lowered its sales forecast. Shares were down 2.3 percent to $58 in after-hours trading.
- Evacuations start at some Gulf of Mexico operations as storm threatens. Workers
for some Gulf of Mexico oil and gas operators were being evacuated from
offshore facilities on Thursday as a low-pressure system threatened to
strengthen into a cyclone but production was not interrupted. The U.S. National Hurricane Center said a weather
disturbance in the northwestern Caribbean Sea had become less
organized overnight and had a 50 percent chance of becoming a
tropical cyclone in the next 48 hours, down from a 70 percent
chance.
- U.S. Fed balance sheet expands for second week. The U.S. Federal Reserve's
balance sheet grew for a second straight week on a rise in its
holdings of U.S. Treasuries and mortgage-backed securities, Fed
data released on Thursday showed.
The Fed's balance sheet liabilities, which are a broad gauge
of its lending to the financial system, stood at $3.603 trillion
on Aug. 14, up from $3.542 trillion on Aug. 7.
- US retailer CDS pressured by headwinds. US retailers could see the cost of
insuring their debt against default rise in coming months if
recent results are anything to go by, as a slowdown in consumer
spending starts to bite.
Telegraph:
- China fires warning shot over price-fixing. The gaze of the Chinese authorities is set to move beyond the pharmaceuticals
and baby-milk sector to a broad sweep of industries, according to a senior
official at the country’s pricing regulator.
Les Echos:
- French Banks' Fund Mgmt Arms Have EU27b Withdrawn in 2Q. Units of
Credit Agricole, Societe Generale, BPCE, BNP Paribas hit with
withdrawals, citing its own calculations. Asset manager BNP Paribas IP
hardest hit, with EU19b in withdrawals.
Business Standard:
China Securities Journal:
- China's Biggest Cities Should Keep Property Curbs. China
shouldn't ease property purchase curbs in 1st-tier cities which still
have supply pressure, citing Gu Yunchang, vice-president of the China
Real Estate Association.
- China Isn't Ready to Scrap Home Purchase Curbs. The Chinese
property market would be hurt if real estate purchase curbs were loosed
on a "large scale" without alternative effective and market-oriented
policies in place, a commentary written by reporter Zhang Min says.
Price surges would be "unavoidable" if curbs are pulled back, the
commentary says.
Qiushi:
- China NDRC Sees Risks of Overdue Local Govt Debt Rising. There is
"relatively large" pressure on China's central government fiscal
revenue and expenditure, National Development and Reform Commission
Chairman Xu Shaoshi writes in an article published in Qiushi magazine.
Risks are growing that local governments won't be able to repay debt on
time, Xu wrote. China should continue its proactive fiscal policy and
prudent monetary policy, Xu writes.
Evening Recommendations
Night Trading
- Asian equity indices are -1.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 142.0 +6.0 basis points.
- Asia Pacific Sovereign CDS Index 111.25 +3.25 basis points.
- NASDAQ 100 futures +.12%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Preliminary 2Q Non-farm Productivity is estimated to rise +.6% versus a +.5% gain in 1Q.
- Preliminary 2Q Unit Labor Costs are estimated to rise +1.2% versus a -4.3% decline in 1Q.
- Housing Starts for July are estimated to rise to 900K versus 836K in June.
- Building Permits for July are estimated to rise to 945K versus 911K in June.
9:55 am EST
- Preliminary Univ. of Mich. Consumer Confidence for August is estimated to rise to 85.2 versus 85.1 in July.
Upcoming Splits
Other Potential Market Movers
- The Eurozone trade data could also impact trading today.
BOTTOM LINE: Asian
indices are mostly lower, weighed down by technology and industrial
shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Broad Equity 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:
- Volatility(VIX) 14.63 +12.19%
- Euro/Yen Carry Return Index 135.53 -.06%
- Emerging Markets Currency Volatility(VXY) 9.47 +1.28%
- S&P 500 Implied Correlation 52.31 +6.36%
- ISE Sentiment Index 85.0 -42.57%
- Total Put/Call .94 +17.5%
Credit Investor Angst:
- North American Investment Grade CDS Index 79.19 +4.92%
- European Financial Sector CDS Index 139.90 +4.53%
- Western Europe Sovereign Debt CDS Index 82.50 unch.
- Emerging Market CDS Index 308.90 +2.63%
- 2-Year Swap Spread 17.75 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -8.5 +.25 bp
Economic Gauges:
- 3-Month T-Bill Yield .05% unch.
- Yield Curve 243.0 +12 bps
- China Import Iron Ore Spot $141.20/Metric Tonne -1.12%
- Citi US Economic Surprise Index 40.60 +1.6 points
- Citi Emerging Markets Economic Surprise Index -29.70 -.5 point
- 10-Year TIPS Spread 2.18 -4 bps
Overseas Futures:
- Nikkei Futures: Indicating -197 open in Japan
- DAX Futures: Indicating -14 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
