Broad Market Tone:
- Advance/Decline Line: Slightly Lower
- Sector Performance: Mixed
- Volume: Light
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- VIX 32.14 -.43%
- ISE Sentiment Index 54.0 -59.4%
- Total Put/Call 1.08 +10.20%
- NYSE Arms 1.15 +315.78%
Credit Investor Angst:
- North American Investment Grade CDS Index 121.19 -1.41%
- European Financial Sector CDS Index 229.67 -4.26%
- Western Europe Sovereign Debt CDS Index 304.25 +.36%
- Emerging Market CDS Index 281.64 -2.35%
- 2-Year Swap Spread 30.0 unch.
- TED Spread 32.0 unch.
Economic Gauges:
- 3-Month T-Bill Yield .01% +1 bp
- Yield Curve 199.0 -7 bps
- China Import Iron Ore Spot $178.90/Metric Tonne +.36%
- Citi US Economic Surprise Index -59.6 -4.6 points
- 10-Year TIPS Spread 2.03% unch.
Overseas Futures:
- Nikkei Futures: Indicating -20 open in Japan
- DAX Futures: Indicating +19 open in Germany
Portfolio:
- Higher: On gains in my Tech and Biotech sector longs
- Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish, as the S&P 500 builds on recent gains despite Eurozone debt angst, global growth worries, more poor economic data, financial sector pessimism and rising food/energy prices. On the positive side, Oil Tanker, Homebuilding, Gaming, Education and Road & Rail shares are especially strong, rising over +1.25% on the day. Copper is gaining +1.19% and Lumber is gaining +.63%. The France sovereign cds is falling -3.96% to 158.66 bps, the Portugal sovereign cds is declining -5.77% to 960.90 bps, the UK sovereign cds is falling -5.44% to 79.20 bps and the Germany sovereign cds is falling -1.46% to 83.69 bps. Weekly retail sales rose +4.2% this week versus a +4.4% gain the prior week. On the negative side, Coal, Semi, Bank, I-Bank, Medical, Insurance and Airlines shares are lower on the day.
(XLF) has undperformed throughout the day. The 10-Year yield is falling -7 bps to 2.18%. Oil is rising +1.7% and Gold is gaining +2.8%. Rice is hitting a new multi-year high today, rising +32.0% in about 8 weeks. The average US price for a gallon of gas is unch. today at $3.61/gallon. It is up .47/gallon in about 7 months. The Greece sovereign cds is gaining +1.46% to 2,221.32 bps and the US sovereign cds is up +2.59% to 48.57 bps. The 2-Year Euro Swap Spread is rising 3.6 bps to 88.28 bps, which is back near a multi-year high. The Eurozone Financial Sector CDS Index is still near it recent all-time high. The Citi Eurozone Economic Surprise Index has plunged -109.0 points in about 3 weeks to -102.90. The UBS-Bloomberg Ag Spot Index is at a record high, which is also a large negative. The Shanghai Composite did not participate in the Asian equity rally again overnight, falling another -.38%, and is down -8.60% ytd. The ongoing trend higher in key cds remains a large negative. Volume was light again on today's stock advance. Oil Tanker and Hombuilding shares, which have been two of the worst-performing groups this year, led today's advance. As well, the euro continues to sit out the recent stock rally despite equity trader optimism over developments in the region. I continue to believe any sustainable equity advance must be accompanied by a meaningful decline in Eurozone debt angst, which has yet to be seen. As well, I continue to believe QE2 was an overall disaster and that any near-term stock rally on rising QE3 expectations will be short-lived as it would eventually ensure hard-landings in many key emerging markets economies. Food prices, even before any additional QE, are now above levels that sparked riots in some parts of the world and boosted inflation gauges globally earlier in the year. I expect US stocks to trade modestly higher into the close from current levels on short-covering, bargain-hunting, technical buying, less eurozone debt angst and more dovish Fed commentary.
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