North American Investment Grade CDS Index 95.50 -.44%
European Financial Sector CDS Index 96.08 -2.18%
Western Europe Sovereign Debt CDS Index 169.25 bps +.99%
Emerging Market CDS Index 205.23 -.61%
2-Year Swap Spread 17.0 unch.
TED Spread 22.0 +1 bp
Economic Gauges:
3-Month T-Bill Yield .09% unch.
Yield Curve 267.0 +2 bps
China Import Iron Ore Spot $172.40/Metric Tonne +1.11%
Citi US Economic Surprise Index +42.90 -1.5 points
10-Year TIPS Spread 2.49% +4 bps
Overseas Futures:
Nikkei Futures: Indicating -20 open in Japan
DAX Futures: Indicating +41 open in Germany
Portfolio:
Slightly Higher: On gains in my Biotech and Medical longs
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 consolidates recent gains, despite rising Mideast unrest, rising energy prices, emerging market inflation fears, eurozone debt angst and Japan concerns. On the positive side, Road & Rail, REIT, Biotech, Networking, Paper, Ag and Defense shares are especially strong, rising .75%+. The Transportation Index is making a new multi-year high today. (IYR) has traded well throughout the day again. Small-caps are also outperforming again. Lumber is rising +1.34% and Copper is gaining +.47%. The Saudi sovereign cds is falling -2.24% to 119.55 bps and the US sovereign cds is declining -1.49% to 42.19 bps. The 10-year yield is stable, rising +2 bps to 3.45%. On the negative side, Airline and Semi shares are under mild pressure, falling more than .75%. (XLF) has undperformed throughout the day. Oil is rising +2.35% and the UBS-Bloomberg Spot Ag Index is gaining +2.17%. The US price for a gallon of gas is up +.02 today to $3.61/gallon. It is up .49/gallon in 44 days. The Spain sovereign cds is jumping +6.79% to 233.50 bps, the Japan sovereign cds is rising +2.62% to 99.63 bps and the Ireland sovereign cds is climbing +2.86% to 640.17 bps. Despite Goldman Sachs moving Chinese stocks to Overweight last night, the Shanghai Composite fell for the third day in a row, declining -.94%, and finished near session lows. Gains in european equities and tomorrow's jobs report could spur further stock gains tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, more economic optimism, window-dressing and buyout speculation.
U.S. Jobless Claims Fall, Consumer Confidence Improves. Fewer Americans filed claims for jobless benefits last week and consumer confidence stabilized, a sign the world’s largest economy is weathering the jump in commodity prices heading into the second quarter. The number of applications for unemployment insurance payments fell by 6,000 to 388,000 in the week ended March 26, a one-month low, Labor Department figures showed today in Washington. The Bloomberg Consumer Comfort Index rose to minus 46.9 last week from a seven-month low of minus 48.9. Business activity expanded in March at close to the fastest pace in two decades, a report from members of a Chicago purchasing managers group also showed, indicating strengthening sales in the U.S. and overseas are helping manufacturers like United Technologies Corp. (UTX)The group’s employment measure climbed to the highest level since 1983, and its index of order backlogs increased to a 37- year high. A report tomorrow is projected to show the February pickup in payrolls was sustained this month.
Sentiment Near August Low Means Stock Gains: Technical Analysis. The rebound in the Standard & Poor’s 500 Index isn’t over because when pessimism about the market was this high in August, equities rose in five of the next six months, said Bay Crest Partners LLC. The benchmark index for U.S. equities slipped as low as 1,249.05 on March 16 amid concern rising energy costs will hurt global economic growth and Japan’s 9.0-magnitude earthquake may tip the world’s third-biggest economy into recession. The next day, the weekly survey from the American Association of Individual Investors showed the ratio of bulls to bears fell to 0.71, the lowest since Aug. 26, Bloomberg data shows. Christian Bendixen, director of technical research at Bay Crest, said the increase in pessimism may reverse and help the S&P 500 climb to 1,425, or 7.3 percent above yesterday’s close of 1,328.26. The bearish sentiment on Aug. 26 coincided with a bottom for the S&P 500. The benchmark rose in five out of the following six months, rallying 28 percent to a 32-month high on Feb. 18. Since its 2011 low on March 16, the S&P 500 has climbed 6.3 percent.
Oil Advances, Heads for Third Quarterly Increase, on Libyan Supply Concern. Oil rose the most in two weeks in New York and was poised for its third quarterly gain amid concern that the Libyan conflict will prolong production cuts. Prices advanced as much as 2.4 percent after troops loyal to Libyan leader Muammar Qaddafi retook control of the oil port of Ras Lanuf and were shelling Brega, another energy hub to the east. Futures traded as high as $106.77 a barrel, poised to test a 30-month high of $106.95 reached in intraday trading March 7. “Events in the Middle East, particularly the fighting that continues to be going on in Libya, are providing support for the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We’re ranging just below our two-and-a-half-year highs, and the market seems to be searching for a catalyst to continue the rally.” Crude for May delivery climbed $2.09, or 2 percent, to $106.36 a barrel at 12:29 p.m. on the New York Mercantile Exchange. Futures have increased 16 percent from January through March, the strongest first-quarter gain since 2005. Brent oil for May settlement on the London-based ICE Futures Europe exchange rose $2.14, or 1.9 percent, to $117.27 a barrel. Prices are up 24 percent this quarter.
Corn, Soybeans Surge as Supplies Ebb, Heightening Food-Inflation Concerns. Corn rose the most allowed by the Chicago Board of Trade as concerns mounted that food-price inflation will accelerate after the latest U.S. government forecasts on supplies and acreage. Soybeans and wheat also jumped. U.S. corn stockpiles at the beginning of March dropped to 6.52 billion bushels, the lowest for the date since 2007, the Department of Agriculture said today. Last month, the prices of corn, soybean, wheat and rice climbed to the highest since 2008, when surging food costs spurred riots from Haiti to Egypt. Today, cattle rose to a record for a second straight day, and cotton jumped. “What’s unique about 2011, unlike 2008, is that corn and soybeans are equally tight, cotton is tight and wheat isn’t comfortable either,” said Hussein Allidina, the head of commodity research at Morgan Stanley in New York. “The takeaway is that prices are not high enough to ration demand.”
Facebook is Tool for Trial Lawyers Scouring Juror Profiles to Unearth Bias. Facebook, Twitter Inc. and other services have become a major resource for both prosecutors and defense attorneys, letting them glean more insight than they can get from jury questionnaires, said Joseph Rice, chief executive officer of Jury Research Institute in Alamo, California. “Social media has given us an incredible tool, because it’s something jurors voluntarily engage in, and they post information about their activities or affiliations or hobbies,” Rice said. That reveals “their life experience or attitude that may have an impact on how they view the facts of the case.”
Portugal Misses 2010 Deficit Target, Raising Chances of European Bailout. Portugal reported a budget deficit of 8.6 percent of gross domestic product last year, missing a government target of 7.3 percent and causing a jump in borrowing costs that increases the risk of a bailout. The revisions won’t affect the government’s goal for a 4.6 percent shortfall in 2011, the national statistics agency said today in an e-mailed statement. The agency also revised the 2009 budget gap to 10 percent from 9.3 percent, after European Union accounting changes prompted Portugal to add more than 2 billion euros ($2.8 billion) to the 2010 deficit. The yields on the country’s two, five and 10-year bonds rose to euro-era records.
Fed Releases Discount-Window Loan Records Under Order. The Federal Reservereleased thousands of pages of secret loan documents under court order, almost three years after Bloomberg LP first requested details of the central bank’s unprecedented support to banks during the financial crisis. The records reveal for the first time the names of financial institutions that borrowed directly from the central bank through the so-called discount window. The Fed provided the documents after the U.S. Supreme Court this month rejected a banking industry group’s attempt to shield them from public view. “This is an enormous breakthrough in the public interest,” said Walker Todd, a former Cleveland Fed attorney who has written research on the Fed lending facility.
U.S. Government Pensions Gain 5.5% as Stock Market Rises. U.S. state and local government pension-fund assets rose in value by 5.5 percent in the last three months of 2010 as stock market gains helped recoup losses incurred since the financial crisis. The assets of the hundred largest government employee retirement systems grew by $138 billion to $2.64 trillion by the end of 2010 from three months earlier, the U.S. Census Bureau reported today.
Buffett Misses Chance to Show Moral Courage: Alice Schroeder. What were they thinking? How could Warren Buffett excuse David Sokol’s trading in stock while Sokol was pitching the company toLubrizol Corp. (LZ)Berkshire Hathaway Inc. (BRK/A) as an acquisition candidate? Buffett and Sokol both say that nothing “unlawful” was going on (Sokol even went so far as to tell CNBC he did nothing inappropriate). Their explanation is that, because a deal with Lubrizol hadn’t actually been struck and wasn’t likely when Sokol bought his shares, it was all right for Sokol to profit from his knowledge of a possible deal. On Wall Street, we call this kind of trading front-running, and everybody knows that it is wrong.
Wall Street Journal:
Saudi's New Super Light Crude Blend to Hit Market in April - Source. The newly produced blend of super light crude by Saudi Arabia won't become available until early April, despite speculation that the oil has already been purchased in the Mediterranean, someone familiar with the matter told Dow Jones Newswires on Thursday.
Handicapping the Economic Recovery by Alan S. Blinder. Japan, Europe, oil and the deficit all pose problems. But chances are growth will continue.
Few Banks Seek Funds for Small Businesses. The Obama administration announced with much fanfare last fall that it would set aside $30 billion for a program to revive small-business lending. But only 7% of banks have participated in it. About 526 community banks have requested $7.6 billion in funds from the program, which is available to the nation's nearly 7,700 lenders that have less than $10 billion in assets. That is far short of the amount allocated by the Treasury Department. The program, the centerpiece of September's Small Business Jobs Act, included enticements such as low interest rates to encourage banks to get money into the hands of small-business owners. But relatively few community banks, which had until March 31 to apply for the program, signed up. Earlier this week, the Treasury Department extended Thursday's deadline to May 16. The extra time mightn't be enough to win the banks over. Many say they have plenty of capital but little demand from small businesses. Banks have also long complained that increased scrutiny from regulators has made it difficult to underwrite risky small-business loans. A government program, especially one with strings attached, isn't the solution, they say.
Irish Banks Need $33.9 Billion. Four of Ireland's most important banks could need up to a total of €24 billion ($33.9 billion) in new capital to stay viable, the Irish Central Bank said Thursday.
Al Qaeda in the Arabian Peninsula (AQAP) has declared Yemen's Abyan province an "Islamic Emirate" and banned women from going outside, according to Eurasia Review and accounts from Yemeni journalists.
Apple(AAPL) and Partners to Meet iPad 2 Demand Amid Earthquake Effects. A series of new reports indicate that Apple and its suppliers are working hard to ensure a steady flow of iPad 2 units to the market amid strong demand and continuing effects from the Japanese earthquake earlier this month. According to DigiTimes, Apple has agreed to absorb additional part costs brought about by the earthquake in exchange for assurances that suppliers will continue providing "smooth shipments" of the needed components.
Kansas City Star:
Kansas City Fed Regional Manufacturing Activity Increases, Employment Inches Higher, Survey Says. Manufacturing activity in the Federal Reserve's Tenth District "accelerated rapidly" in March, hitting a record high for the second straight month, according to a survey released this morning. The survey, which covers a seven-state area including Kansas and western Missouri, also noted that the manufacturing employment index edged higher this month from February to a new record. The report from the Federal Reserve Bank of Kansas City saw growth in most year-over-year factory indexes, such as order backlog and shipments.
The Daily Beast:
Al Qaeda's Libya Pilgrimage. As debate rages in Washington over whether to arm anti-Gaddafi rebels, an exclusive report by The Daily Beast indicates al Qaeda forces are gearing up to join the rebels and seize power in Libya.
Gaddafi Will Stay in Libya 'Until the End' - Spokesman. Libyan leader Muammar Gaddafi and his sons are in the country and are determined to stay "until the end", a government spokesman said on Thursday. Asked if the Libyan leader and his sons were still in the country, government spokesman Mussa Ibrahim said: "Rest assured, we are all here. We will remain here until the end. This is our country. We are strong on every front."
Libya's Gaddafi Not Close to Breaking Point - US.Libyan leader Muammar Gaddafi is not close to a military breaking point even though coalition strikes have seriously degraded his fighting power, the top U.S. military officer told Congress on Thursday.
Wal-Mart(WMT) CEO Bill Simon Expects Inflation. U.S. consumers face "serious" inflation in the months ahead for clothing, food and other products, the head of Wal-Mart's U.S. operations warned Wednesday.
Japanese Prime Minister Naoto Kan said Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear plant must be decommissioned, citing Kazuo Shii, head of the nation's Communist Party.
Libyan Forces Gain on Rebels as Qaddafi's Foreign Minister Defects to U.K. Troops loyal to Muammar Qaddafi forced Libyan rebels to retreat as the U.S. and U.K. said they would consider arming opposition forces and Libya’s foreign minister resigned and flew to London. Libyan foreign minister Moussa Koussa quit Qaddafi’s government, according to a statement from the U.K. foreign office. “He traveled here under his own free will. He has told us that he is resigning his post,” the statement said. The rebels, after advancing toward Qaddafi’s hometown of Sirte, withdrew in the face of artillery and rocket attacks as pro-Qaddafi forces retook control of the oil port of Ras Lanuf. The BBC and New York Times, citing reporters near the Libyan front line, said yesterday rebels were streaming away from Brega and heading northeast, back toward Ajdabiya. U.S. President Barack Obama and U.K. Prime Minister David Cameron have said they wouldn’t rule out sending arms to opposition forces. The U.S. is looking “very closely” at whether to give more assistance to opposition groups in Libya, though no decision has been made, White House press secretary Jay Carney said yesterday at a briefing.
Oil Heads for Third Quarterly Gain as Libya Disruptions Counter U.S. Glut. Oil rose, heading for a third quarterly gain in New York, as concern the Libyan conflict will prolong production cuts countered signs of rising supplies in the U.S., the world’s largest crude consumer. Prices advanced as much as 0.5 percent today after troops loyal to Libyan leader Muammar Qaddafi forced rebels to retreat as the U.S. and U.K. said they would consider arming opposition forces. Crude stockpiles climbed to a record last week at the delivery point for U.S. futures and fuel consumption fell, according to an Energy Department report yesterday. “Investors are torn between the inventory levels in the U.S. and event risk in the Middle East,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “Inventory levels are continuing to build and demand continues to fall, which suggest to me that the market has ample supply.” Crude for May delivery advanced as much as 50 cents to $104.77 a barrel in electronic trading on the New York Mercantile Exchange. It was at $104.67 at 10:55 a.m. Singapore time. Yesterday, the contract fell 52 cents to settle at $104.27. Futures have increased 15 percent between January and March, the strongest first quarter since 2005.
Japan Weighs Entombing Nuclear Plant on Reaction Risk. Japan is considering pouring concrete into its crippled Fukushima atomic plant as the United Nations' nuclear watchdog agency warned that a potential uncontrolled chain reaction could cause further radiation leaks.
Sokol Resigns From Berkshire(BRK/A) After Investing in Takeover Target. David Sokol, once a candidate to succeed Warren Buffett as the head of Berkshire Hathaway Inc. (BRK/A), resigned after helping to negotiate the acquisition of a company whose shares he had purchased. Sokol, 54, bought about 96,000 Lubrizol Corp. (LZ) shares before recommending the company as a takeover target, Buffett, Berkshire’s chairman and chief executive officer, said today in a statement. Buffett said he didn’t ask for the resignation and that Sokol’s stock purchases were legal. “What Sokol did was, the only word that comes to mind, shabby, and I am shocked he did it,” Jeff Matthews, author of “Pilgrimage to Warren Buffett’s Omaha” and founder of hedge fund Ram Partners LP, said in an e-mail. “Buffett says it wasn’t illegal, but it is not how you do deals, and especially not how you do them at Berkshire.” Sokol bought 96,060 Lubrizol shares on Jan. 5, 6 and 7, less than two weeks before recommending the company as a Berkshire acquisition, Buffett said today. In their first discussion about Lubrizol, Sokol mentioned he was a shareholder, Buffett said in the statement. “It was a passing remark and I did not ask him about the date of his purchase or the extent of his holdings,” Buffett said.
Pimco's Gross Says the U.S. 'Out-Greeking the Greeks' on Fiscal Policies. Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said Treasuries “have little value” because of the growing U.S. debt burden. The amounts the U.S. owes on its bonds, combined with obligations for Social Security, Medicare and Medicaid total about $75 trillion, Gross said in his monthly investment outlook, published on the Pimco website. The U.S. will experience inflation, currency devaluation and low-to-negative interest rates relative to consumer-price gains if it doesn’t reform its entitlement programs, Gross said in the report. Gross “has been selling Treasuries because they have little value within the context of a $75 trillion total debt burden,” he said. “This country appears to have an off- balance-sheet, unrecorded debt burden of close to 500 percent of GDP. We are out-Greeking the Greeks.”
Fed's Stimulus Exit May Not Wait for Global Turmoil to Pass, Bullard Says. The Federal Reserve may need to begin an exit from record levels of monetary accommodation even amid global uncertainties in Japan and the Middle East, St. Louis Federal Reserve President James Bullard said. “The process of normalizing policy, even once it begins, will still leave unprecedented policy accommodation on the table,” Bullard said at a London dinner hosted by UBS AG, Switzerland’s biggest bank. Fed policy makers “may not be willing or able to wait until all global uncertainties are resolved to begin normalizing policy.”
Dendreon's(DNDN) Prostate Cancer Drug Supported for Coverage by Medicare. Dendreon Corp. (DNDN)’s prostate cancer drug Provenge should be covered by the U.S. government for use in older men, regulators said. The $93,000 treatment regimen is “reasonable and necessary” for men with advanced, castrate-resistant prostate tumors who have minimal or no symptoms of the disease, the Centers for Medicare & Medicaid Services said today. The proposal matches the approved prescribing information and suggests that doctors may even expand use in some cases, said Michael Yee, an analyst at RBC Capital Markets in San Francisco.
Gold Heads for Longest Quarterly Winning Streak Since 1979 on Haven Demand. Gold headed for a 10th straight quarterly rise, the longest in three decades, as turmoil in the Middle East, fighting in Libya and Japan’s nuclear crisis increased demand for an investment haven. Bullion for immediate delivery traded little changed at $1,424.88 an ounce at 1:10 p.m. in Melbourne, taking the quarterly gain to 0.3 percent. The June-delivery contract in New York was also little changed at $1,425.40, heading for a 0.3 percent quarterly rise. “There is a lot of uncertainty around the globe in terms of political events,” David Lennox, a Sydney-based resource analyst at Fat Prophets, said by phone today. Fighting could escalate in Libya, while there is uncertainty surrounding Bahrain and the nuclear crisis in Japan, he said.
Sands China Faces Hong Kong Probe. Las Vegas Sands Corp. unit Sands China Ltd. said Thursday it is being investigated by Hong Kong's securities regulator for alleged breaches of provisions of the Securities and Futures Ordinance.
Radiation Traces Found in U.S. Milk. The U.S. government said Wednesday that traces of radiation have been found in milk in Washington state, but said the amounts are far too low to trigger any public-health concern.
Why The Dollar May Make a Comeback. One of the favorite bets in the market right now is short the U.S. dollar. But could the greenback be in for a turn higher?
Obama Deployed CIA Agents To Libya To Aid and Supply Rebels Weeks Ago. More details are coming out about Obama's secret orders, including a "decline to comment" out of the White House. CIA operatives have been working in Libya along with MI6 agents and other spies to gather information for use in airstrikes. They are also finding out details about the rebels who may come to power after Qaddafi.
California's Credit Rating Hinges On Cash Management. California's credit rating will likely depend on how the state handles its cash, rather than on any overall financial improvement, Standard & Poor's said today.
Forbes:
Fed Rejects AIG's(AIG) $15.7 Billion Bid For Maiden Lane Securities. American International Group was willing to take a $15.7 billion pile of the toxic mortgage-backed securities it unloaded on the Federal Reserve Bank of New York during the crisis of 2008, but on Wednesday the Fed gave the insurer a stiff arm and said it will sell the portfolio piece by piece.
CNN Money:
JPMorgan's(JPM) Dimon: No Mortgage Writedowns. The head of JPMorgan Chase said Wednesday that banks would not consider writing down mortgages for homeowners who can't make payments, an idea at the center of talks aimed at fixing the mortgage mess. "Principal writedown for people who couldn't pay their mortgages? Yeah, that's off the table," JPMorgan Chase (JPM, Fortune 500) CEO Jamie Dimon said when asked about the idea after an appearance before a U.S. Chamber of Commerce forum in Washington.
Feds Question BofA(BAC) Merrill on Rajaratnam Relationship. Federal investigators have questioned executives at Bank of America’s Merrill Lynch brokerage unit about the firm’s relationship with Galleon founder Raj Rajaratnam, who is accused of committing securities fraud by earning millions of dollars of illegal profits by trading on insider information, the FOX Business Network has learned.
Rasmussen Reports:
Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-one percent (41%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -17 (see trends).
Politico:
Budget Deal Close With $33 Billion in Cuts. Budget talks came to life Wednesday but not without tension between the White House and Senate Democrats, worried that the administration was too quick to agree to $33 billion in spending cuts to try to move Speaker John Boehner toward what remains a very uncertain deal. Vice President Joe Biden and White House Budget Director Jack Lew came to the Capitol in the evening for a meeting with the party leadership requested by Senate Majority Leader Harry Reid (D-Nev.). Democrats fear that unless the administration takes a stronger stand now, President Barack Obama will only be nibbled to death and be weaker when he faces the Republicans again this spring over the bigger fight of raising the debt ceiling.
Real Clear Politics:
Mideast Nonsense: Can We Start Being Honest? If there were an award for stating the obvious when it comes to the Middle East, it would go to the New York Times. On its front page last Friday, the newspaper ran a story headlined, "Islamist Group is Rising Force in New Egypt." What group would that be? Why, the Muslim Brotherhood, of course. We have been repeatedly assured by certain pundits and members of the Obama administration that the Brotherhood are a small minority with no major influence in Egypt. They further assure us that those Cairo protesters clamoring for "democracy" that led to the downfall of President Hosni Mubarak would be the ones to chart the country's future. Each time another myth is busted, the deniers of what is happening throughout the region simply create a new myth, one they desperately cling to against all evidence to the contrary.
Reuters:
High Prices Help Mosaic(MOS) Offset Mine, Shipping Woes. Higher prices for phosphate and potash fertilizers offset a drop in volumes and operational challenges, helping Mosaic Co post a better-than- expected quarterly profit. The company's revenue jumped 30 percent to $2.21 billion, although Wall Street had expected $2.34 billion, according to Thomson Reuters I/B/E/S. That pushed shares down almost 1.5 percent in after-hours trading.
Euroclear SA's U.K. and Ireland chief executive officer Yannic Weber said the proposed merger between Deutsche Boerse AG and and NYSE Euronext(NYX) could inhibit competition for settlement services, citing remarks by Weber at a conference in London. The merger could also reinforce the "vertical silo" model, in which an exchange controls both trading of derivatives and post-trade services such as clearing and settlement, citing Weber.
Die Welt:
U.K. Prime Minister David Cameron said Europe needs to overhaul economic structures and cut red tape or risk falling farther behind other regions in the world.
Economic Observer:
China plans to limit the number of automobiles in large cities with population of more than 10 million people during the five-year period from 2011 to 2015.
China ordered Monsanto Co.(MON) to stop producing and marketing of the two corn seeds in the country. It didn't give a reason for the halt.
Evening Recommendations Think Equity:
Rated (WDC) Buy, target $42.
Night Trading
Asian equity indices are -.25% to +.50% on average.
Asia Ex-Japan Investment Grade CDS Index 106.50 -3.0 basis points.
Initial Jobless Claims for last week are estimated to fall to 380K versus 382K the prior week.
Continuing Claims are estimated to fall to 3705K versus 3721K prior.
9:45 am EST
The Chicago Purchasing Manager report for March is estimated to fall to 69.7 versus 71.2 in February.
10:00 am EST
Factory Orders for February are estimated to rise +.5% versus a +3.1% gain in January.
Upcoming Splits
(FTI) 2-for-1
Other Potential Market Movers
The Fed's Lacker speaking, Fed's Tarullo speaking, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, the NAPM-Milwaukee, (TRI) investor day and the (TX) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
North American Investment Grade CDS Index 95.92 -.23%
European Financial Sector CDS Index 99.92 +5.33%
Western Europe Sovereign Debt CDS Index 167.58 bps -.10%
Emerging Market CDS Index 206.64 -.88%
2-Year Swap Spread 17.0 unch.
TED Spread 21.0 unch.
Economic Gauges:
3-Month T-Bill Yield .09% unch.
Yield Curve 265.0 -1 bp
China Import Iron Ore Spot $170.50/Metric Tonne +1.19%
Citi US Economic Surprise Index +44.40 -1.7 points
10-Year TIPS Spread 2.45% -1 bp
Overseas Futures:
Nikkei Futures: Indicating +112 open in Japan
DAX Futures: Indicating +24 open in Germany
Portfolio:
Higher: On gains in my Tech, Retail, Biotech and Medical longs
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 builds on recent gains, despite rising Mideast unrest, US housing worries, emerging market inflation fears, more hawkish Fed commentary, eurozone debt angst and Japan concerns. On the positive side, Education, Gaming, Construction, HMO, Hospital, Biotech, Paper, Oil Tanker and Telecom shares are especially strong, rising 1.75%+. (XLF) and (IYR) have traded well throughout the day. Small-caps and cyclicals are outperforming again. Oil is falling -.45%. The Japan sovereign cds is falling -1.93% to 97.08 bps, the Brazil sovereign cds is declining -2.01% to 113.0 bps and the Israeli sovereign cds is down -1.57% to 151.76 bps. The fact that the 10-year yield is falling 4 bps to session lows, despite more economic optimism and additional supply is noteworthy. On the negative side, Homebuilder, Oil Service and Road & Rail shares are lower on the day. Lumber is falling -1.01% and copper is down -1.67%. The US price for a gallon of gas is unch. today at $3.59/gallon. It is up .47/gallon in 43 days. The Ireland sovereign cds is rising +2.01%, the Greece sovereign cds is rising +1.43% to 996.67 bps and the Portugal sovereign cds is rising +.99% to 572.23 bps. The Shanghai Composite has not participated in the global equity rally over the last few days. Quarter-end window dressing and expectations for a strong jobs report on Friday are aiding the bulls again today. One of my longs, (VRX), is hitting a new multi-year high today on volume after announcing their intent to acquire (CEPH). While the stock is overbought short-term, I still see substantial upside in the shares over the longer-term. Another one of my longs, (AAPL), is lagging again today on estimate cuts. The stock has been consolidating huge gains since the bear market lows, over the last few months, in an orderly fashion. For the first time in awhile expectations are coming in ahead of a quarterly report. The stock is becoming more attractive in the short-term as a result, in my opinion. I still see tremendous upside in the shares from current levels over the long-term. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower energy prices, more economic optimism, window-dressing and buyout speculation.
