Stocks Slightly Lower into Final Hour on Russia/Ukraine Tensions, Emerging Markets Debt Angst, Profit-Taking, Transport/Gaming Sector Weakness
Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Mixed
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 11.81 +1.98%
- Euro/Yen Carry Return Index 145.77 +.33%
- Emerging Markets Currency Volatility(VXY) 7.16 +.14%
- S&P 500 Implied Correlation 55.05 -.79%
- ISE Sentiment Index 75.0 -21.98%
- Total Put/Call .93 +34.78%
Credit Investor Angst:
- North American Investment Grade CDS Index 62.10 -.44%
- European Financial Sector CDS Index 72.17 +.16%
- Western Europe Sovereign Debt CDS Index 34.95 -.58%
- Asia Pacific Sovereign Debt CDS Index 79.81 +1.02%
- Emerging Market CDS Index 254.26 +1.52%
- China Blended Corporate Spread Index 323.23 -.93%
- 2-Year Swap Spread 13.50 unch.
- TED Spread 19.75 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -9.75 -.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .03% unch.
- Yield Curve 219.0 +5.0 basis points
- China Import Iron Ore Spot $92.50/Metric Tonne +.43%
- Citi US Economic Surprise Index -2.10 +1.1 points
- Citi Emerging Markets Economic Surprise Index -22.60 -.5 point
- 10-Year TIPS Spread 2.19 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +22 open in Japan
- DAX Futures: Indicating -5 open in Germany
Portfolio:
- Slightly Higher: On gains in my biotech/medical/retail sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 75% Net Long
1 comment:
On Tuesday June 3, 2014, The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, as is seen in the Steepner ETF, STPP, steepening. Credit Investments continued to trade lower on the exhaustion of the world’s central banks’ monetary authority. Loss leading Aggregate Credit ETFs, AGG, of the day included EDV, TLT, EMB, LWC, MBB, LQD, and EMLC, reflecting that investors abandoned longer duration US Treasuries, EDV, and Emerging Currency Local Currency Debt, EMLC.
Sectors, Social Media, SOCL, Semiconductors, SOXX, Automobile Dealerships, such as PAG, SAH, ABG, KAR, AN, KMX, LAD, Major Airlines, such as DAL, SAVE, UAL, and Shipping, SEA, such as GLNG, KEX, GLOG, CMRE, TNP, TK, traded higher; while Uranium Miners, URA, Solar Energy, TAN, and Resorts and Casinos, BJK, Railroads, and Trucking Companies, traded lower.
Nations, Thailand, THD, and Philippines, EPHE, traded higher; while Australia, EWA, Gulf States, MES, and Peru, EPU, traded lower.
Far East Financials, FEFN, and China Financials, CHIX, traded higher.
Yield Bearing Equity Investments, Australia Dividends, AUSE, Gulf Dividends, GULF, Mortgage REITS, REM, and Japanese Credit, IX, traded lower.
Closed End Fund, GCE, traded lower.
Since the first of the year running through the end of May 2014, the wise credit investor has been long duration and long the worst of debt, as is seen in the ongoing Yahoo Finance Chart of the Flattner ETF, FLAT, and Distressed Investments, FAGIX, Junk Bonds, JNK, Build America Bonds, BABS, Long Term Corporate Bonds, LWC, The Zeroes, ZROZ, and Defensive Stocks, DEF.
The Guardian posts Mario Draghi Faces Moment Of Truth As Man With Power To Steady Eurozone The European Central Bank governor has charmed the markets with words. But this week he must make bold policy decisions to unite a region increasingly driven by economic disparities ... And Bloomberg posts Draghi Primes ECB as Inflation Scarcity Alarms Officials ... And Mark Dow of Yahoo’s Daily Ticker says “There’s no way out”: Not much ECB can do to help Europe’s economy,
Questions arise. Will the Benchmark Interest Rate, that is the Interest Rate on the US Ten Year Note, ^TNX, jump higher? Will European Credit, EU, tumble? Will Aggregate Credit, AGG, trade lower with Credit Investments across the board trading lower? Will the Euro, FXE, that took a hit in May 2014, on anticipation of Mario’s Move, take another hit? Will Equity Investments trade lower?
Equity Investments are headed lower for sure, as the ratio of World Stocks, relative to Aggregate Credit, that is VT:AGG, is topped out.
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