Wednesday, June 08, 2011

Stocks Falling into Final Hour on Rising Eurozone Debt Angst, Global Growth Worries, Rising Food/Energy Prices, Technical Selling

Broad Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Most Sectors Declining
  • Volume: Slightly Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 18.29 +1.22%
  • ISE Sentiment Index 81.0 -36.72%
  • Total Put/Call 1.06 -.93%
  • NYSE Arms 1.27 +8.06%
Credit Investor Angst:
  • North American Investment Grade CDS Index 96.85 +1.37%
  • European Financial Sector CDS Index 112.58 +5.67%
  • Western Europe Sovereign Debt CDS Index 192.58 +2.48%
  • Emerging Market CDS Index 219.97 +1.42%
  • 2-Year Swap Spread 20.0 unch.
  • TED Spread 21.0 -1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .03% unch.
  • Yield Curve 257.0 -2 bp
  • China Import Iron Ore Spot $171.70/Metric Tonne +.59%
  • Citi US Economic Surprise Index -108.70 +1.2 points
  • 10-Year TIPS Spread 2.20% -3 bps
Overseas Futures:
  • Nikkei Futures: Indicating -39 open in Japan
  • DAX Futures: Indicating -5 open in Germany
  • Slightly Lower: On losses in my Retail and Tech sector longs
  • Disclosed Trades: None
  • Market Exposure: 50% Net Long
BOTTOM LINE: Today's overall market action is bearish as the S&P 500 trades near session lows on global growth worries, emerging markets inflation fears, rising Mideast unrest, Japan nuclear concerns, rising eurozone debt angst and rising food/energy prices. On the positive side, Utility, Telecom and Tobacco shares are slightly higher on the day. On the negative side, Airline, Networking, Disk Drive, Semi, Oil Tanker, Alt Energy, Education, Homebuilding and Coal shares are especially weak, falling more than -1.75%. Small-cap and cyclical shares are underperforming. Tech shares have traded poorly throughout the day. Oil is rising +1.9%, Copper is falling -1.0% and the UBS-Bloomberg Ag Spot Index is gaining +1.0%. The US price for a gallon of gas is down -.01/gallon today to $3.75/gallon. It is up .61/gallon in less than 4 months. The Spain sovereign cds is jumping +5.0% to 253.66 bps, the Italy sovereign cds is climbing +6.6% to 157.83 bps, the Portugal sovereign cds is gaining +4.43% to 709.08 bps, the Greece sovereign cds is surging +6.4% to 1,488.39 bps, the Ireland sovereign cds is up +5.2% to 682.76 bps, the Belgium sovereign cds is rising +5.8% to 141.17 bps and the UK sovereign cds is rising +5.83% to 59.15 bps. The Portugal sovereign cds is hitting a new record high and the Greece/Ireland sovereign cds are right at their all-time highs. The euro currency faces significant downside risk over both the short and longer-term, in my opinion. The Bloomberg Anchored Ships Custom Index is surging to a new high over the last week, which is also a negative. The Citi Latin America Economic Surprise Index is close to a 52-week low. The rise in food/energy prices today, despite equity weakness and dollar strength, is also a large negative. The China Pork Wholesale Spot Price has risen another +2.9% over the last 7 days and is very close to its Feb. 2008 record high. It has risen +50.4% over the last year. I doubt China takes its foot off the break after the next hike and if it does it would eventually prove a large mistake. Inflation pressures in most emerging markets remain a larger problem than most investors perceive, in my opinion. Investor sentiment remains relatively subdued given the news, recent equity losses and economic data. However, stocks are getting pretty oversold near-term and should bounce soon. I expect US stocks to trade mixed-to-lower into the close from current levels on global growth worries, rising eurozone debt concerns, emerging markets inflation fears, rising Mideast unrest, rising food/energy prices, technical selling and more shorting.

1 comment:

Anonymous said...

Apple builds a spaceship....that marks the top of the stock.