Today's Headlines

Bloomberg:

• Oil Leading Putin Back to Debt as 20% Yields Seen: Russia Credit. The days when Russia could comfortably cancel weekly bond auctions are coming to an end as crude oil tumbles toward $40 a barrel. While the Finance Ministry scrapped the first sale of the year yesterday, citing “unfavorable market conditions,” the government will eventually need to start selling short-dated debt at yields as high as 20 percent if crude prices stay depressed, according to Raiffeisen Capital. The rate on five- year ruble notes surged 2.22 percentage points this month, the most in emerging markets, as oil slumped to the lowest since 2009. The surge in Russian borrowing costs -- the result of the plunging ruble, sanctions over Ukraine and plummeting oil -- prompted the ministry to pull four auctions in December alone. With the economy verging on a recession amid a stand-off over President Vladimir Putin’s actions in Crimea and east Ukraine, the budget deficit will increase to 3 percent of gross domestic product this year, Finance Ministry data show. “Russia’s key source of income is shrinking,” Oleg Popov, a money manager at Allianz Investments in Moscow, said by phone yesterday. “The government will be forced to borrow.”

• Ruble Falls Fourth Day on Oil as Russia Says Junk Rating Likely. The ruble weakened for a fourth day as Russia’s economy minister acknowledged the government risks losing its investment-grade rating amid a slump in oil that is tipping the economy into a recession. The currency lost 1.3 percent to 66.1170 per dollar by 6:32 p.m. in Moscow, bringing its four-day decline to 8.8 percent. The ruble trimmed a drop of as much as 2 percent after Finance Minister Anton Siluanov said Russia could convert as much as 500 billion rubles ($7.58 billion) of its $88 billion rainy-day Reserve Fund to support the currency, which he called “undervalued.” 

• Freeport Leads Plunge in Mining Stocks After Copper Slump. (video) Freeport-McMoRan Inc. (FCX), the largest publicly traded copper producer, and other suppliers of the metal plunged after the metal fell the most in six years. Freeport declined 9.5 percent to $19:05 at 9:51 a.m. in New York and traded at the lowest since April 2009. Glencore Plc (GLEN), the third-biggest producer, dropped 12 percent in London and First Quantum Minerals Ltd. slid 27 percent in Toronto. 

• Crude Oil Futures Gain on Speculation Losses Excessive. Crude oil advanced from the lowest level in more than 5 1/2 years on speculation that futures prices fell more than justified. Oil rebounded as much as 6.2 percent in New York and 5.1 percent in London. The market shrugged off an Energy Information Administration report that showed U.S. crude and fuel stockpiles increased last week. 

• European Stocks Fall as Drop in Miners, Oil Shares Outweigh ECB. European stocks fell from a five-week high as energy and mining shares followed commodity prices lower on global-growth concern. The Stoxx Europe 600 Index dropped 1.5 percent to 339.67 at the close of trading.

• Treasury Bond Yield Drops to Record Low Amid Fear of Global Deflation. Treasury 30-year bonds yields are tumbling to record lows as the collapse in oil and commodity prices fuels speculation the global economy may drop into a deflationary spiral and stifle growth. Global sovereign yields fell to records in the U.K., France, Canada and Japan as a report showed retail sales in the U.S. slumped in December by the most in almost a year, reflecting a broad-based retreat that may prompt economists to cut growth forecasts. The slide prompted traders to push back expectations for the timing of the first Federal Reserve interest-rate increase into December less than a month after speculating that rates could rise as soon as April. 

• Fed Saw Consumer Spending Rise Amid Concern on Lower Oil Prices. A Federal Reserve survey showed most regions saw “modest” or “moderate” economic growth driven by gains in consumer spending, while the energy-rich Dallas district slowed as oil prices plunged. “Consumer spending increased in most districts, with generally modest year-over-year gains in retail sales,” the Fed said today in its Beige Book, based on reports from its 12 districts gathered on or before Jan. 5. “Auto sales showed moderate to strong growth.” 

• Goldman Cuts Profit Estimates for Chemical Makers on Oil. Goldman Sachs Group Inc. cut earnings estimates at seven U.S. chemical makers to reflect a stronger dollar and product prices that are falling with crude oil.

• Mortgage-Bond Slump Builds After Worst Start to Year Since 1997. Government-backed U.S. mortgage bonds are off to their worst start relative to Treasuries since at least 1997 as investors in the $5.5 trillion market brace for a surge in homeowner refinancing. Returns on mortgage securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae were 0.6 percentage point less than those on similar-duration government debt this month through yesterday, according to Bank of America Merrill Lynch index data. Ginnie Mae securities, which package Federal Housing Administration loans, have underperformed Treasuries by 0.9 percentage point.

• Obama Sets Plan to Cut Methane Leaks From Oil, Gas Industry. The Obama administration said it plans to require the oil and gas industry to cut methane emissions by as much as 45 percent over the next decade, the president’s latest step to curb greenhouse gases tied to climate change. The U.S. Environmental Protection Agency will issue rules this year targeting new production and transmission systems to reduce methane leaks by 40 percent to 45 percent by 2025, the administration said Wednesday. The EPA also will expand voluntary programs with states and industry on equipment already in use, a step that falls short of what environmentalists sought. 

• JPMorgan(JPM) CEO Dimon Says Banks ‘Under Assault’ by U.S. Regulators. Jamie Dimon, grappling with multibillion-dollar legal costs and rising capital requirements at JPMorgan Chase & Co. (JPM), lashed out at U.S. regulators for putting his bank “under assault.” “We have five or six regulators or people coming after us on every different issue,” Dimon, 58, said today on a call with reporters after New York-based JPMorgan reported fourth-quarter results. “It’s a hard thing to deal with.”

Wall Street Journal:

• In a Record Year for Skyscrapers, China is Miles Above Everyone Else. In China, polluted skies aren’t the limit – at least for skyscrapers. The world built a record 97 buildings that were 200 meters (656 feet) or taller in 2014, and for the seventh year in a row, the Middle Kingdom completed the greatest number of them, according to a new report (pdf) from the U.S.-based Council on Tall Buildings and Urban Habitat. China’s output of 58 skyscrapers was a 61% increase from its previous record of 36 buildings in 2013, according to the report. Tianjin, the eastern sister city of Beijing, completed the most 200-meter-plus skyscrapers, totaling six. That’s more than all such skyscrapers built in the Philippines, the world’s No. 2 builder behind China with five. Within China, there was a four-way tie for second place between Chongqing, Wuhan and Wuxi, all with four buildings each. If you were to stack all of China’s new skyscrapers on top of each other, they would reach 13,548 meters (44,449 feet) into the sky — close to the upper altitude limit for most commercial airliners. The Philippines, meanwhile, built a total of 1,143 meters’ worth of skyscrapers. Asia dominated sky-high construction in 2014, with 76% of all 200-meter-plus buildings being completed in the East. The United Arab Emirates and Qatar tied for third after China and the Philippines.

ZeroHedge: 

• OPEC Who? US Crude Oil Production Hits Record High. (graph)

• The Dead Mortgage Cat Bounce Is Over. (graph)

• Dear Jamie Dimon: This Is Why US Banks Are "Under Assault".

• 5 Key Takeaways From The ECJ's Kinda Sorta 'Thumbs Up' To Draghi.

• Crude Crumbles On Unexpectedly Large Inventory Build. (graph)

• Forget Commodities, There's Another 'C' Word Flashing Red For Stocks. (graph)

• Dow Drops 600 Points In 24 Hours As 30Y Yield Crashes To Record Low. (graph)

• US Retail Sales Drop Most Since June 2012 (And Don't Blame Gas Prices). (graph)

Business Insider:

• Russia Is Constructing An Arctic Stronghold 30 Miles From The Finnish Border.

• Here Are The Countries Feeling The Pain Of The Copper Crash.

• Charlie Hebdo Is Printing 2 Million More Copies Of Its New Issue After It Sold Out In Minutes.

• Russian Bank Chair: 'The Entire Economy Will Be Under Control Of The State'.

• If The Stock Market Closes Higher This Year, It'll Do Something It's Never Done Before.

• Commodity Prices Just Crashed To A 12-Year Low. (graph)

• Russian Economy Minister Cites Lenin Saying 'The Era Of Peace Is Over'.

The Bakken: 

• Breakeven targets, future ND production in low oil price reality. According to the DMR, breakeven price points—the price at which new drilling would cease—vary across the Williston Basin. With McKenzie county being in the heart of the Bakken, new drilling wouldn’t cease until oil prices dropped to $30 per barrel. Counties that are on the outer-edge of the Bakken—such as McLean and Divide—will be the first to discontinue drilling new wells with breakeven prices at $77 and $73 per barrel, respectively. The price at which production from existing wells would be shut-in occurs when the oil prices drop to $15 per barrel. Production projections show that as the oil prices decrease, the number of rigs will too. But, the review showed that by the third quarter of 2015, if oil prices reach $25 per barrel, the state’s bopd will still be around the 1 million bopd mark. If oil prices were to reach $25 per day by the third quarter of 2016, the state would still be able to produce 800,000 bopd, and 700,000 bopd by third quarter 2017. To view the presentation in its entirety, click here.

MNI:

• ECB Governing Council member Ignazio Vasco says in interview with MNI that "there is a macroeconomic risk that we may get to a downward spiral of stagnation and low inflation, or outright deflation."

Bear Radar

Style Underperformer:

• Large-Cap Value -1.81%

Sector Underperformers:

• 1) Steel -5.55% 2) Banks -3.51% 3) Energy -3.01%

Stocks Falling on Unusual Volume:

• FLML, NEWM, BAP, SCCO, IOC, ANFI, FCX, CFR, FXCM, CVRR, BWA, ALTR, PRGS, FNGN, IHS, SJR, SWN, ERJ, WBAI, AA, AXDX, SNDK, JPM, FLS, MDLY, ALLY, SEM, C, TMHC, SCHW, FL, HFC, PSX, AWI, TSLA, NEWM, VIAB and EVEP

Stocks With Unusual Put Option Activity:

• 1) XLB 2) XHB 3) FCX 4) HOG 5) KRE

Stocks With Most Negative News Mentions:

• 1) PBR 2) KBH 3) FFIV 4) TSLA 5) JPM
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth -.65%

Sector Outperformers:

• 1) REITs -.01% 2) Biotech -.03% 3) Utilities -.12%
  

Stocks Rising on Unusual Volume:

• SEMI, SRNE, HLSS, ADVS, XON, ZLTQ, GME and FCE/A

Stocks With Unusual Call Option Activity:

• 1) ZIOP 2) SGMS 3) WY 4) EXAS 5) VNDA
  

Stocks With Most Positive News Mentions:

• 1) IDXX 2) BEBE 3) CSX 4) AXL 5) MRCY
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Wednesday Watch

Evening Headlines 
Bloomberg:

• World Bank Cuts Global Growth. The World Bank cut its forecast for global growth this year, as an improving U.S. economy and low fuel prices fail to offset disappointing results from Europe to China. The world economy will expand 3 percent in 2015, down from a projection of 3.4 percent in June, according to the lender’s semiannual Global Economic Prospects report, released today in Washington. The report adds to signs of a growing disparity between the U.S. and other major economies while tempering any optimism that a plunge in oil prices will boost output. Risks to the global recovery are “significant and tilted to the downside,” with dangers including a spike in financial volatility, intensifying geopolitical tensions and prolonged stagnation in the euro region or Japan. “The global economy today is much larger than what it used to be, so it’s a case of a larger train being pulled by a single engine, the American one,” World Bank Chief Economist Kaushik Basu told reporters on a conference call. “This does not make for a rosy outlook for the world.” 

• Russia ETF Investors Back Out as Oil Drop Deepens. The largest exchange-traded fund tracking Russian stocks is opening the year with the highest redemptions in a month amid the widest price swings since 2009 as oil extends its rout and the ruble plummets. Shares in the $1.4 billion Market Vectors Russia ETF (RSX) ended unchanged at $14.77 after dropping as much as 2.7 percent. Asset managers pulled $36.9 million from the fund on Monday, the biggest outflow since mid-December, data compiled by Bloomberg show. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks fell 1 percent after the dollar-denominated RTS Index declined to the lowest in four weeks. The ruble tumbled 3.2 percent against the dollar. 

• Russians Hit by Ruble Crisis Drop Swiss Playground for Holidays at Home. The number of Russians staying in Swiss hotels declined in 2014 as the ruble plummeted and President Vladimir Putin’s government urged vacations at home. That’s being felt in the Alpine town of St. Moritz, location of the 1928 and 1948 Olympic games.

• Asia Stares at Deflation With Rising Debt, Morgan Stanley Says. Asia’s rapid accumulation of debt in recent years is holding back central banks from easing monetary policy to fight the risk of deflation, endangering private investment needed to boost faltering growth, according to Morgan Stanley. Debt to gross domestic product ratio in the region excluding Japan rose to 203 percent in 2013 from 147 percent in 2007, with most of the increase coming from companies, analysts led by Chetan Ahya in Hong Kong wrote in a report yesterday. The ratio is close to or has exceeded 200 percent in seven of 10 nations including China and South Korea, they said.

• China Bulls Cash Out as Stock Rally Overshoots Target. After watching Chinese stocks surge 37 percent in just three months, some of the world’s biggest banks are souring on the booming market. Citigroup Inc. (C) became the latest to cut its outlook on Jan. 12, lowering its rating to neutral from overweight amid concern valuations are turning unattractive. The downgrade follows predictions in the last two weeks from HSBC Holdings Plc (HSBA), Bocom International Holdings Co. and UBS AG that gains in mainland-listed shares will falter. The Shanghai Composite Index closed yesterday at 3,235.30, or 7 percent higher than where analysts tracked by Bloomberg predict the gauge will be in 12 months, the biggest gap among global equity measures. 

• Japan Passes Record Defense Budget in Bid to Defend Isles. Japan will step up spending on amphibious vehicles and purchase its first unmanned surveillance aircraft as it seeks to bolster defense of remote islands amid a territorial dispute with China. Prime Minister Shinzo Abe’s cabinet today approved a record defense budget of 4.98 trillion yen ($42 billion) for the fiscal year starting April, up 2 percent from the previous year and just above the previous record of 4.96 trillion yen reached in 2002.

• Most Asian Stocks Drop as Commodities Slump, Yen Extends Advance. Most Asian stocks declined as the yen gained a fourth day against the dollar and commodity prices slumped. About five shares dropped for every three that rose on the dollar-denominated MSCI Asia Pacific Index (MXAP), which added 0.1 percent to 137.94 as of 9:53 a.m. in Tokyo. The yen rose 0.3 percent to 117.61 per dollar, bringing its gain since Jan. 9 to about 1.7 percent. Copper sank to its lowest since 2009 as Brent oil fell 1.8 percent to $46.59 a barrel overnight. 

• Copper Tumbles Most in Six Years as World Bank Cuts Forecasts. Copper fell the most in almost six years to below $5,400 a metric ton as a cut in the World Bank’s global growth forecast further fueled speculation demand for raw materials won’t be enough to eliminate a supply glut. Copper tumbled as much as 8.7 percent in London and fell to the daily trading limit in Shanghai.

• Oil at $40, and Below, Gaining Traction on Wall Street. Brace for $40-a-barrel oil. The U.S. benchmark crude price, down more than $60 since June to below $45 yesterday, is on the way to this next threshold, said Societe Generale SA and Bank of America Corp. And Goldman Sachs Group Inc. says that West Texas Intermediate needs to remain near $40 during the first half to deter investment in new supplies that would add to the glut.

• Oil Drop May Prompt Breitburn Debt Deal on Credit-Line Pinch. Breitburn Energy Partners LP, the oil and gas producer that canceled a bond deal three months ago, may try again to raise debt to pay down its $2.5 billion credit line. Tumbling crude prices mean it won’t come cheap. The company is considering tapping the loan market as it faces a potential reduction of the credit line when its ability to borrow, based partly on the value of its reserves, is reset in April, according to Jim Jackson, Breitburn’s chief financial officer.

• Suncor Cuts Jobs, Spending as Oil Rout Rattles Canada. The company will spend C$1 billion ($836 million) less this year than originally forecast in November, following Canadian Natural Resources Ltd. (CNQ) in revising its budget lower this week. Suncor also plans to reduce operating expenses by C$600 million to C$800 million in two years, according to a company statement today. “Cost management has been an ongoing focus, with successful efforts to reduce both capital and operating costs well underway before the decline in oil prices,” Steve Williams, Suncor’s chief executive officer, said in the statement. “In today’s low crude price environment, it’s essential we accelerate this work.”

• Iron Ore, Coal Forecasts Cut by Citigroup as Energy Costs Sink. Citigroup Inc. reduced price forecasts for iron ore and coal as cheaper oil and declines in producers’ currencies combine to cut supply costs, signaling how the collapse in energy may feed through to other commodities. Iron ore will average $58 a metric ton in 2015 and $62 a ton in 2016, down from estimates of $65 for both years, analysts including Ivan Szpakowski wrote in a report dated today. The bank’s forecasts for coking coal and thermal coal were also reduced for the same period, according to the report.

• Gundlach Says U.S. Growth May Disappoint on Oil Decline. Jeffrey Gundlach, co-founder of $64 billion investment firm DoubleLine Capital, said the U.S. economy may grow at a slower rate this year than economists expect as falling oil prices hurt investment and hiring in the energy industry. While cheaper oil fueled growth in the final months of 2014, the decline has a “sinister” side that will ripple through the economy and prompt downward revisions to forecasts by the middle of the year, Gundlach said today in a webcast. Stock markets may not continue their rally and yields on 10-year Treasuries may go lower before rising again, he said.

Wall Street Journal: 

• Back to the Future? Oil Replays 1980s Bust. Rise of Shale Extraction Speeds Output and Changes Equation for OPEC, U.S. Producers.

• Commercial Mortgage-Backed Securities Make Comeback. Some Warn Market Could Be Getting Overheated. A hunt for yield and a gradually improving property market are bolstering a key engine of U.S. commercial property lending, helping borrowers to refinance but also reigniting fears the market is getting overheated. In all, lenders made $94 billion in loans bundled together and sold off as bonds to investors in 2014, the most since 2007 for the product known as commercial mortgage-backed securities, according to trade publication Commercial Mortgage Alert.

• Shunning ObamaCare. Of my company’s 5,453 eligible employees, only 420 actually enrolled. The other 5,033 opted to pay a penalty. 

Fox News:

• White House hit for using security as ‘excuse’ for no-show at Paris rally. While the White House points to security concerns as the chief reason why President Obama skipped the anti-terrorism rally in Paris over the weekend, some suggest the Secret Service and his advance team could have made it happen -- if they really tried. Instead, critics say the security explanation is being used as an “excuse.” Brad Blakeman, who served on the advance team for George W. Bush’s campaign, said the Secret Service is the “scapegoat” here. “The president can go wherever he wants to go,” Blakeman said.

Zero Hedge:

• Volatility Storms Back With A Vengeance In 950 Point Intraday Dow Swing. (graph)

• At Last The ‘Experts’ Wake Up To Oil.

• Meet The Person Who Will Determine If The Market Is "Fair.

• Despite 'Gas Tax Cut', Airlines See Tumbling Traffic, Outsource US Jobs.

• The Mystery Of The Missing Consumer Analysts.

• Behold China's $300 Billion Accounting 'Fudge' (Or Where The Corrupt Money Flows). (graph)

• Copper Carnage Continues - Bloodbath At China Open. (graph)

Business Insider: 

• Elon Musk Just Said Tesla(TSLA) Sales Are Tanking In China, Sending Stock Down 6%.

• Here Are All The Charts Behind Jeff Gundlach's 2015 Outlook.

• GUNDLACH: Here's The Bear Case For Stocks In 3 Charts.

• Boko Haram's Insurgency Is Now One Of The Deadliest Conflicts On Earth.

• Obama Is About To Call For A Ton More Competition Among Broadband Service Providers.

Reuters: 

• Stryker(SYK) expects strong dollar to hit 2015 profit. Orthopedic device maker Stryker Corp said on Tuesday it expects the strong U.S. dollar to have a bigger negative impact on its 2015 earnings than it previously forecast, shaving about 20 cents from its per-share profit. The maker of artificial hip and knee joints previously forecast a currency impact of 10 cents to 12 cents on its 2015 earnings.

• Fed's Kocherlakota 'uneasy' about low longer-term rates. A top U.S. Federal Reserve official said on Tuesday he was "uneasy" about the low long-term yields on Treasury bonds because the situation indicates there are fewer safe assets for investors, and it suggests rates could be persistently low in the future. 

• Texas economic growth to lag rest of country -Fed economist. Growth in the Texas economy in 2015 will lag behind the national average due to falling energy prices that are dragging down the country's largest natural gas and oil producer, a Federal Reserve economist said on Tuesday. 

• CSX(CSX) profit up, expects double-digit earnings growth in 2015. CSX Corp, the third-largest U.S. railroad, on Tuesday reported a higher quarterly profit that was in line with analyst expectations and said it expected a strong increase in its freight business and double-digit earnings growth during 2015. 

• Investors cut hedge fund bets in January - data. Investors' interest in hedge funds fell in January as they pulled out more cash than they invested, data showed on Tuesday, part of an annual rejig of portfolios. The SS&C GlobeOp Capital Movement Index, which calculates monthly hedge fund subscriptions minus redemptions, fell 2.95 percent in January, the sharpest drop in a year. That compared with a rise of 0.39 percent in December.

Liquidity crunch a catalyst for big China slowdown – analysts The mini liquidity crunch is the early warning sign of a substantial economic correction long overdue, amid rising leverage and a broken growth model, say bearish analysts.


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Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.75% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 119.0 -1.0 basis point.

• Asia Pacific Sovereign CDS Index 75.75 +1.0 basis point.

• S&P 500 futures -.37%.

• NASDAQ 100 futures  -.34%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (JPM)/1.32

• (WFC)/1.02

• (FUL)/.64

Economic Releases
8:30 am EST

• Retail Sales Advance for December are estimated to fall -.1% versus a +.7% gain in November.

• Retail Sales Ex Autos for December are estimated unch. versus a +.5% gain in November.

• Retail Sales Ex Autos and Gas for December are estimated to rise +.5% versus a +.6% gain in November.

• The Import Price Index for December is estimated to fall -2.7% versus a -1.5% decline in November. 

10:00 am EST

• Business Inventories for November are estimated to rise +.3% versus a +.2% gain in October. 

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,275,000 barrels versus a -3,062,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +3,562,500 barrels versus an +8,115,000 barrel gain the prior week. Distillate supplies are estimated to rise by +2,375,000 barrels versus a +11,205,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.1% versus a -.5% decline the prior week.

2:00 pm EST

• Fed's Beige Book
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Plosser speaking, EU OMT Ruling, Japan Machine Tool Orders, 30Y T-Note auction, weekly MBA mortgage applications report, (DPZ) investor day and the (NRG) investor meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Reversing Sharply Lower into Final Hour on Global Growth Fears, Rising Emerging Markets/US High-Yield Debt Angst, Earnings Worries, Homebuilding/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Slightly Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 21.58 +9.85%

• Euro/Yen Carry Return Index 144.77 -1.02%

• Emerging Markets Currency Volatility(VXY) 10.41 -.29%

• S&P 500 Implied Correlation 67.34 +2.38%

• ISE Sentiment Index 63.0 -35.05%

• Total Put/Call .85 -19.05%

• NYSE Arms 1.66 +25.01% 

Credit Investor Angst:

• North American Investment Grade CDS Index 71.40 +.76%

• America Energy Sector High-Yield CDS Index 733.0 +3.02%

• European Financial Sector CDS Index 67.53 -2.46%

• Western Europe Sovereign Debt CDS Index 27.86 -.07%

• Asia Pacific Sovereign Debt CDS Index 76.23 +2.03%

• Emerging Market CDS Index 399.02 +1.55%

• China Blended Corporate Spread Index 365.05 -.43%

• 2-Year Swap Spread 22.75 unch.

• TED Spread 23.75 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -15.25 -1.0 basis point

Economic Gauges:

• 3-Month T-Bill Yield .03% +1.0 basis point

• Yield Curve 136.0 unch.

• China Import Iron Ore Spot $68.74/Metric Tonne -2.22%

• Citi US Economic Surprise Index 31.0 +.2 point

• Citi Eurozone Economic Surprise Index .2 +.1 point

• Citi Emerging Markets Economic Surprise Index -14.20 +2.0 points

• 10-Year TIPS Spread 1.53 -4.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating -152 open in Japan

• DAX Futures: Indicating -102 open in Germany

Portfolio: 

• Slightly Lower: On losses in my retail/medical/biotech/tech sector longs

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.92%

Sector Underperformers:

• 1) Hospitals -1.85% 2) Coal -1.25% 3) Oil Tankers -1.22%

Stocks Falling on Unusual Volume:

• HLSS, AIV, ANW, BRX, ASPS, TFM, BGFV, WWW, RESI, GT, DFRG, TIF, FMI, PII, ISRG, BKE, CUDA, BITA, ATHM, NSM, BIS, FCX, SNN, VMI and RESI

Stocks With Unusual Put Option Activity:

• 1) XLV 2) KBH 3) WFC 4) DXJ 5) CSX

Stocks With Most Negative News Mentions:

• 1) WWW 2) JUNO 3) ECOM 4) OCN 5) FIVE
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume