Thursday, November 17, 2011

Stocks Dropping into Final Hour on Rising Eurozone Debt Angst, Tech/Financial Sector Pessimism, Global Growth Fears, High Energy Prices


Broad Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Every Sector Declining
  • Volume: Slightly Above Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 35.53 +6.06%
  • ISE Sentiment Index 79.0 -19.39%
  • Total Put/Call 1.25 -8.76%
  • NYSE Arms 3.02 +72.34%
Credit Investor Angst:
  • North American Investment Grade CDS Index 134.73 +2.35%
  • European Financial Sector CDS Index 285.80 +6.80%
  • Western Europe Sovereign Debt CDS Index 356.0 +.51%
  • Emerging Market CDS Index 333.25 +2.93%
  • 2-Year Swap Spread 53.0 +2 bps
  • TED Spread 48.0 +1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .00% unch.
  • Yield Curve 169.0 -6 bps
  • China Import Iron Ore Spot $147.60/Metric Tonne +.27%
  • Citi US Economic Surprise Index 49.10 -.8 point
  • 10-Year TIPS Spread 1.92 -3 bps
Overseas Futures:
  • Nikkei Futures: Indicating -105 open in Japan
  • DAX Futures: Indicating -60 open in Germany
Portfolio:
  • Slightly Higher: On gains in my Index hedges and Emerging Markets shorts.
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short and 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 to session lows as it falls back near its 50-day moving average on rising Eurozone debt angst, US Super Committee rumors, rising global growth worries and rising tech/financial sector pessimism. On the positive side, Tobacco, HMO, Utility, Telecom and Drug shares are holding up relatively well, falling less than -1.0%. Gold is falling -2.31%, Oil is falling -2.4%, Lumber is rising +4.1% and the UBS-Bloomberg Ag Spot Index is declining -2.41%. On the negative side, Coal, Oil Service, Ag, Steel, Internet, Software, Computer, Semi, Disk Drive and Airline shares are under significant pressure, falling more than -3.0%. (XLK) has traded poorly throughout the day. Copper is down -3.8%. India's Sensex continues to trade very poorly, falling another -1.87% overnight, and is now down -20% ytd. Major European equity indices fell 1-2% today. The Germany sovereign cds is gaining +1.15% to 95.14 bps, the Spain sovereign cds is climbing +2.4% to 480.82 bps, the Brazil sovereign cds is jumping +3.55% to 173.17 bps, the Russia sovereign cds is rising +2.57% to 246.50 bps, the China sovereign cds is gaining ++2.12% to 146.95 bps and the Japan sovereign cds is gaining +2.22% to 114.99 bps. The TED spread continues to trend higher and is at the highest since June 2010. The 2-Year Swap spread is at the highest since May 2010 today. The FRA/OIS Spread is jumping +3.75 bps to 72.25 bps, which is the highest since May 2010. The 2yr Euro Swap Spread is at the highest since Nov. 2008. The 3M Euro Basis Swap is falling -5.08% to -129.37 bps, which is the worst since November 2008. The Libor-OIS spread is near the widest since July 2009, which is also noteworthy considering the recent strong equity advance off the lows. China Iron Ore Spot has plunged -23.1% since February 16th and -18.5% since Sept. 7th. The 10-year yield is falling -5 bps to 1.95% today despite some more positive US economic data. Ag-related stocks(such as CF, AGU, POT, MOS) are seeing large-volume declines today. I would not try to bottom-fish in these shares around current levels. As well, oil likely made another tradable top over the last 24 hours as its divergence from other economically-sensitive commodities became too great, the euro weakens and imminent Iran attack fears diminish. So far, stocks have just experienced a pullback after a strong surge off the lows, however I still think the risk of another meaningful turn lower in equities is substantial unless a positive catalyst emerges from Europe very soon. I expect US stocks to trade mixed-to-lower into the close from current levels on rising Eurozone debt angst, rising global growth worries, profit-taking, rising financial/tech sector pessimism, more shorting, high energy prices and technical selling.

2 comments:

farming investments said...

I would look at the bond market over the equity markets. If the 10year is below 2% and the 30 year below 3%, bonds are signaling quite clearly that whatever positive economic data may be coming out, it is just temporary. I continue to believe that the markets are not adequately pricing in the catastrophic, "Lehman-like" risk emanating from Europe either. The trend is equities is down, and investors would be well advised to be cautious and well hedged.

Anonymous said...

TO the OWS

There exists a system that has proven beyond doubt to cure the ills of inequality of wealth distribution that plague our capitalist society. It is called "socialism" and it is incredibly efficient in ensuring that everyone is the same - poor.

Please find a way to open up your mind and look around you with just the merest smidgen of worldview and historical perspective. Put down your laptops and smartphones, tear yourself away from your flat screen TV and think for just a moment and consider how much you HAVE rather than what someone else (who you know only through the 24/7 media lense) has. If you live in the U.S. in 2011 you have it better than 99.9% of all the homosapiens who have ever walked erect on this planet. If these dopes in Manhattan were capable of feeling anything other than righteously indignant envy (with a large dolloop of self pity) they might take a moment to Google "Great Depression" and look at the pictures of families living in shanty-towns and dust bowl shacks. There was no welfare, no Social Security, no safety net other than their family, community and church. Get some perspective you spoiled children (of all ages), put "The Grapes of Wrath" on your goddamn netflix and watch it on your iPad.

Shame on all of you. You want to talk about the 99%? How about the 90% of the worlds population that can only dream of having it as good as 100% of U.S citizens have it? Go to Africa, India, Russia, China and tell them how unfair it is here in the U.S., or better yet, tell the thousands upon thousands who risk their lives every year to cross oceans and deserts just for a CHANCE that they might live here, glad to take the jobs that are beneath you, and enjoy just a few of the many freedoms and opportunities that you take as a birthright.

"Wall street" is a ruthless meritocracy and here's an "inconvenient truth": noboby makes it because of who their daddy is. Those banks, investment banks and hedge funds that you love to hate are full of men and women of all races, creeds and colors who have one thing in common - brains, talent, drive, and a will to succeed. They facilitate the movement of capital to the fund all the start-ups that give you all of the things that provide you with a standard of living beyond anything anyone could have conceived of 50 years ago - you know Microsoft, Intel, Dell, Apple...all your laptops, iPads, iPhones, Blackberrys, Twitter, Facebook, etc., everything you are using now to batch and moan about how little you have and how unfair it all is that someone else has more.

This is still the land of opportunity where anyone with talent, brains and drive can not only make it but make it big. Want proof? Name another country where the basted offspring of a mixed-race union, a single mother and absentee father can grow up to be the LEADER OF THE FREE WORLD. Guess what? You can't.