North American Investment Grade CDS Index 88.97 -1.69%
European Financial Sector CDS Index 88.08 +.72%
Western Europe Sovereign Debt CDS Index 189.58 +1.61%
Emerging Market CDS Index 207.74 +.91%
2-Year Swap Spread 19.0 +1 bp
TED Spread 26.0 unch.
Economic Gauges:
3-Month T-Bill Yield .00% unch.
Yield Curve 260.0 +2 bps
China Import Iron Ore Spot $180.70/Metric Tonne -.99%
Citi US Economic Surprise Index -31.30 -4.6 points
10-Year TIPS Spread 2.48% unch.
Overseas Futures:
Nikkei Futures: Indicating -39 open in Japan
DAX Futures: Indicating -61 open in Germany
Portfolio:
Slightly Higher: On gains in my Biotech, Medical and Tech sector longs
Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short
Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite more commodity sector weakness, a mixed jobs report, rising eurozone debt angst, more Mideast unrest and heightened terrorism worries. On the positive side, Construction, HMO and Biotech shares are especially strong, rising more than 1.0%. Cyclicals are outperforming. The US dollar is building on recent gains. The UBS-Bloomberg Ag Spot Index is falling another -.66% and oil is down another -1.22%. The 10-year yield is unch. at 3.16%. The US Muni CDS Index is is falling another -3.98% to 122.88 bps and the Greece sovereign cds is declining -3.82% to 1,336.13 bps despite today's rumors. On the negative side, Oil Service, Networking, REIT, Retail and Education shares are down on the day. (IYR) has been heavy throughout the day. Commodity-related equities continue to trade poorly. The US price for a gallon of gas is falling -.01/gallon today to $3.98/gallon. It is up .86/gallon in 80 days. Copper is dropping another -.59% and is still sitting right near its 200-day moving average. The Spain sovereign cds is rising +2.17% to 241.49 bps, the Belgium sovereign cds is climbing +2.44% to 142.83 bps and the US sovereign cds is rising +2.18% to 43.2 bps. The commodity complex does not trade like a meaningful bottom is yet in place. Moreover, leadership changes are messy and more forced selling is likely over the coming weeks as many funds were heavily-weighted long commodity-related securities. The CDS market is not confirming the currency market's worries over a Greek pullout of the eurozone. I suspect this story is related to Greek bargaining rather than preparations for a real pullout. However, longer-term the eurozone is highly unlikely to exist in its current form, in my opinion. Today's equity rally is of poor quality, but early next week, after the market's digest the Greek news over the weekend, will provide a better indication of whether or not the major averages can make another stab at 52-week highs. I expect US stocks to trade mixed-to-lower into the close from current levels on profit taking, more shorting, technical selling, global growth concerns, Mideast unrest, terrorism concerns, commodity sector weakness, rising eurozone debt angst and emerging markets inflation fears.
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