Stocks Falling Into Final Hour on U.S. Jobs Report, Rising Eurozone Debt Angst, Rising Financial Sector Pessimism, Emerging Markets Inflation Fears

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Almost Every Sector Declining
  
• Volume: Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 34.03 +6.98%
  
• ISE Sentiment Index 72.0 -12.2%
  
• Total Put/Call 1.48 +39.62%
  
• NYSE Arms 3.10 +40.96%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 122.0 +6.1%
  
• European Financial Sector CDS Index 234.09 +8.71%
  
• Western Europe Sovereign Debt CDS Index 307.0 +1.0%
  
• Emerging Market CDS Index 281.08 +5.32%
  
• 2-Year Swap Spread 31.0 unch.
  
• TED Spread 32.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .02% +1 bp[
  
• Yield Curve 180.0 -16 bps
  
• China Import Iron Ore Spot $180.80/Metric Tonne +.22%
  
• Citi US Economic Surprise Index -57.70 -9.6 points
  
• 10-Year TIPS Spread 2.04% unch.
  

Overseas Futures:

• Nikkei Futures: Indicating -151 open in Japan
• DAX Futures: Indicating -36 open in Germany

Portfolio:

• Slightly Lower: On losses in my Retail, Tech and Biotech sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is very bearish, as the S&P 500 trades meaningfully lower to session lows on rising Eurozone debt angst, more financial sector pessimism, poor US economic data, more shorting, profit-taking, emerging markets inflation fears, global growth worries and technical selling. On the positive side, Telecom shares are holding up relatively well, falling less than -1.0%. Oil is down -2.6% and Lumber is gaining +1.82%. On the negative side, Defense, Alt Energy, Oil Service, Steel, Computer, Disk Drive, Networking, Bank, I-Banking, Hospital, Construction, Homebuilding, Gaming, Education and Road & Rail shares are under meaningful pressure, falling more than -3.5%. Small-caps and cyclicals are substantially underperforming again. (XLF) has traded very poorly throughout the day. The 10-year yield is falling too much again, declining -13 bps to 2.0%. Gold is rising +2.9%, the UBS-Bloomberg Ag Spot Index is up +.52% and Copper is down -1.02%. Rice is making another new multi-year high today, gaining -1.45%, and has risen +36.0% in about 8 weeks. The average US price for a gallon of gas is +.02/gallon today to $3.65/gallon. It is up .51/gallon in about 7 months. The China sovereign cds is gaining +3.9% to 113.60 bps, the Russia sovereign cds is gaining +3.54% to 193.67 bps, the Brazil sovereign cds is jumping +7.28% to 153.08 bps, the Greece sovereign cds is gaining +2.12% to 2,340.13 bps, the Germany sovereign cds is rising +2.7% to 78.04 bps, the France sovereign cds is rising +4.56% to 170.84 bps, the Spain sovereign cds is gaining +4.14% to 391.19 bps, the Italy sovereign cds is jumping +3.18% to 396.51 bps and the Portugal sovereign cds is gaining +1.93% to 975.37 bps, the Belgium sovereign cds is rising 2.84% to 256.26 bps. Moreover, the European Investment Grade CDS Index is rising +5.88% to 146.65 bps. The Italy sovereign cds is making a new closing record high today. The Eurozone Financial Sector CDS Index is back near its all-time high. The Citi Eurozone Economic Surprise Index has plunged -108.4 points in about 3 weeks to -102.30. The UBS-Bloomberg Ag Spot Index is still near its recent record high, gaining today despite equity losses. The ongoing breakdown in the yield curve, to March 09 levels, is also a large negative. The Shanghai Composite continues to trade poorly, falling another -1.1% overnight, and is down -3.21% for the week and -9.96% ytd. Ukraine shares plunged another -6.97% today and are now down -33.43% ytd. Germany's DAX also continues to trade very poorly as it fell another -3.4% today and is now down -19.9% ytd. As well, the euro currency remains heavy. Gauges of eurozone debt angst are back near their recent highs overall, which is a large concern. Today's sharp equity decline was a bit too orderly and several key gauges of investor angst were relatively subdued. A full test of the recent lows is an increasing possibility over the coming weeks. I expect US stocks to trade mixed-to-lower into the close from current levels on rising Eurozone debt angst, rising financial sector pessimism, global growth worries, emerging markets inflation fears, more shorting, profit-taking and technical selling.