Tuesday, May 20, 2014

Stocks Falling into Final Hour on Rising Global Growth Fears, Surging Eurozone Debt Angst, Yen Strength, Biotech/Retail Sector Weakness

Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Almost Every Sector Declining
  • Volume: Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 13.08 +5.31%
  • Euro/Yen Carry Return Index 144.75 -.33%
  • Emerging Markets Currency Volatility(VXY) 7.18 +.84%
  • S&P 500 Implied Correlation 58.16 +3.51%
  • ISE Sentiment Index 95.0 -12.84%
  • Total Put/Call .91 +16.67%
  • NYSE Arms 1.92 +81.54% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 66.43 +2.10%
  • European Financial Sector CDS Index 81.70 +2.96%
  • Western Europe Sovereign Debt CDS Index 38.84 +4.31%
  • Asia Pacific Sovereign Debt CDS Index 87.27 +1.77%
  • Emerging Market CDS Index 269.80 +2.25%
  • China Blended Corporate Spread Index 358.99 unch.
  • 2-Year Swap Spread 15.5 unch.
  • TED Spread 20.25 -.5 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -6.5 -.25 basis point
Economic Gauges:
  • 3-Month T-Bill Yield .03% +1.0 basis point
  • Yield Curve 218.0 -1.0 basis point
  • China Import Iron Ore Spot $97.50/Metric Tonne -1.02%
  • Citi US Economic Surprise Index 3.30 +.3 point
  • Citi Emerging Markets Economic Surprise Index -23.30 +1.3 points
  • 10-Year TIPS Spread 2.15 -1.0 basis point
Overseas Futures:
  • Nikkei Futures: Indicating -95 open in Japan
  • DAX Futures: Indicating -30 open in Germany
Portfolio: 
  • Lower: On losses in my biotech/medical/retail/tech sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
  • Market Exposure: Moved to 25% Net Long

1 comment:

theyenguy said...

On Tuesday, May 20, 2014, investors greed turned somewhat more to fear, specifically fear that the world central banks’ monetary policies, no longer sustain investment gains and global economic growth, and have made money good investments bad.

Global debt deflation commenced, as currency traders strongly sold the Australian Dollar, FXA, which turned Major World Currencies, DBV, parabolically lower with the result that Gulf States, MES, Australia, EWA, KROO, New Zealand, ENZL, Indonesia, IDX, IDXJ, Thailand, THD, Malaysia, EWM, South Africa, EZA, Norway, NORW, Brazil, EWZ, BRF, Turkey, TUR, Chile, ECH, Egypt, EGPT, Emerging Africa, GAF, Columbia, GXG, and the US Small Caps, IWM, IWC, led Nation Investment, EFA, and Small Cap Nation Investment, SCZ, lower.

With the Australian Dollar, FXA, now following the Euro, FXE, lower, investors are derisking out of debt trade investments, and delveraging out of currency carry trade investments in Global Industrial Producers, FXR, Industrial Miners, PICK, Small Cap Industrials, PSCI, Transports, XTN, Metal Manufacturers, XME, such as CMC, WOR, GHM, SCHN, GSM, STLD, RS, HAYN, CVR, MLI, CSTM, CRS, Steel Producers, SLX, Aerospace and Defense, PPA, Global Energy Producers, IPW, and Timber Producers and Paper Manufacturers, WOOD.

And investors resumed the sell of Solar Manufacturers, TAN, Biotechnology, IBB, US Infrastructure, PKB, Retail Stocks, XRT, such as PETM, URBN, TJX, CBK, BKE, EXPR, DEST, GES, DSW, CHS, GCO, ROST, DXLG, ANF, PLCE, TGT, BBY, DKS, Regional Banks, KRE, Small Cap Pure Value Stocks, RZV, and Small Cap Pure Growth Stocks, RZG.

The sell of Far East Financials, FEFN, Japanese Banks, SMFG, MTU, MFG, Australia’s Bank, WBK, Regional Banks, KRE, Investment Bankers, KCE, and Stockbrokers, IAI, led Global Financials, IXG, lower.

With the May 20, 2014, sell of Transportation Stocks, XTN, we have Dow Theory confirmation of a bear market, as the Airlines, Truckers, and Railroads, are joining the Industrials, XLI, in trading lower. The market direction trading pairs, XTN, XLI, and IYJ, IYT, are indicating a stock market reversal in World Stocks, VT, is in place.

Competitive currency devaluation coming from the hands of the currency traders, has commenced the destruction International Energy Investments, such as, RDS-B, SSL, E, TOT, STO, and Mining Investments, such as BHP, VALE, RIO, CENX, AA, HW, GSM, as well as the destruction of Yield Bearing Investments.

The May 20, 2014, trade lower in Gulf Dividends, GULF, Australia Dividends, AUSE, Water Resources, PHO, Global Real Estate, DRW, Global Telecom, IST, Smart Grid, GRID, Leveraged Buyouts, PSP, European Small Cap Dividends, DFE, and Dividends Excluding Financials, DTN, from their highs was an epic economic event: the investor, specifically the fixed income investor is going extinct.

The trade lower of Call Write Bonds, CWB, and the turn lower of Defensive Shares, DEF, such as Transports, XTN, International Energy, IPW, Global Agriculture, PAGG, Consumer Staples, KXI, Global Real Estate, DRW, and Global Telecom, VOX, from their rally highs, communicates the failure of credit and the termination of profitable equity investing. Of note, Zero Hedge reports Caterpillar Retail Sales Plunge By 13%, Most Since February 2010; Caterpillar, CAT, traded 3.5% lower on the day.

The see saw destruction of fiat investments, that is Equity Investments, such as World Stocks, VT, Nation Investment, EFA, Global Financials, IXG, Dividends Excluding Financials, DTN, as well as Credit Investments, AGG, has commenced, as the bond vigilantes have control of the Benchmark Interest Rate, ^TNX, which traded lower to 2.51%, but remains above support at 2.49%.