Broad Market Tone: - Advance/Decline Line: Lower
- Sector Performance: Most Sectors Rising
- Volume: Below Average
- Market Leading Stocks: Underperforming
Equity Investor Angst: - VIX 30.59 +1.43%
- ISE Sentiment Index 89.0 -2.20%
- Total Put/Call 1.03 -9.65%
- NYSE Arms .91 -21.35%
Credit Investor Angst:- North American Investment Grade CDS Index 124.47 +1.03%
- European Financial Sector CDS Index 235.12 +.63%
- Western Europe Sovereign Debt CDS Index 333.33 -.07%
- Emerging Market CDS Index 288.04 +1.93%
- 2-Year Swap Spread 36.0 unch.
- TED Spread 45.0 +1 bp
Economic Gauges:- 3-Month T-Bill Yield .00% unch.
- Yield Curve 177.0 -4 bps
- China Import Iron Ore Spot $122.90/Metric Tonne +1.71%
- Citi US Economic Surprise Index 21.60 +2.9 points
- 10-Year TIPS Spread 2.14 +2 bps
Overseas Futures: - Nikkei Futures: Indicating +18 open in Japan
- DAX Futures: Indicating +38 open in Germany
Portfolio:
- Slightly Higher: On gains in my Tech, Retail, Biotech and Medical sector longs
- Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added some back
- Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish, as the S&P 500 reverses morning losses despite rising Eurozone debt angst, rising global growth worries and rising energy prices. On the positive side, Medical, Homebuilding, Oil Service and Software shares are especially strong, rising more than +.75%. The UBS-Bloomberg Ag Spot Index is falling -.56% and Lumber is rising +2.16%. On the negative side, Coal, Alt Energy, Oil Tanker, Paper, Semi, Networking and Airline shares are under pressure, falling more than -.75%.
Cyclicals and small-caps are underperforming. (XLF) has underperformed throughout the day. Oil is rising +1.32%, copper is flat and Gold is surging +2.3%. The 10-year Yield is falling -3.0 bps to 2.00%. Spanish stocks fell -1.4% today and are back below their 50-day moving average. The Germany sovereign cds is up +1.1% to 87.33 bps, the France sovereign cds is rising +2.42% to 182.17 bps, the Italy sovereign cds is up +2.38% to 507.0 bps, the Belgium sovereign cds is up 1.34% to 285.50 bps and the Israel sovereign cds is up +2.88% to 169.08 bps. Moreover the European Investment Grade CDS Index is up +4.5% to 163.59 bps and the Emerging Markets Sovereign CDS Index is jumping 8.95% to 265.83 bps. Rice is still close to its multi-year high, rising +27.0% in about 4 months. The Italian 10-year yield jumped +29 bps to 6.66% today, which is the highest since Aug. 1997. The Italian/German 10-Year Yield Spread is soaring another +33.01 bps to 487.65 bps, which is another new all-time high. The TED spread continues to trend higher and is near the highest since June 2010. The Libor-OIS spread is now at the widest since July 2010. The 2-Year Euro Swap spread is still very near cycle highs, which is also noteworthy considering the recent strong equity advance. China Iron Ore Spot has plunged -34.90% since February 16th and -30.93% since Sept. 7th. Gains in oil and gold are likely much more related to all the rumors regarding a potential attack on Iran rather than perceptions of global demand improvement, which is another large negative. Despite more negative headwinds, the broad US equity market still trades fairly well and looks higher in the short-term on fund year-end performance-chasing, seasonality and better US economic data. However, the rapidly deteriorating fundamentals in Europe will likely mute upside traction and will likely weigh meaningfully on the major averages again over the coming months. I expect US stocks to trade mixed-to-higher into the close from current levels on fund performance-chasing, short-covering, bargain-hunting and technical buying.
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