Weekly Scoreboard*

Indices

• S&P 500 1,091.60 +2.51%
  
• DJIA 10,211.07 +2.81%
  
• NASDAQ 2,243.60 +1.10%
  
• Russell 2000 648.31 +2.19%
  
• Wilshire 5000 11,285.79 +2.52%
  
• Russell 1000 Growth 486.73 +1.95%
  
• Russell 1000 Value 564.10 +3.07%
  
• Morgan Stanley Consumer 670.78 +2.24%
  
• Morgan Stanley Cyclical 842.72 +4.01%
• Morgan Stanley Technology 551.98 +1.42%
  
• Transports 4,319.88 +3.91%
  
• Utilities 367.77 +3.81%
  
• MSCI Emerging Markets 38.43 +1.62%
  
• Lyxor L/S Equity Long Bias Index 947.01 -.57%
  
• Lyxor L/S Equity Variable Bias Index 849.97 -.51%
  
• Lyxor L/S Equity Short Bias Index 920.04 +.19%
  

Sentiment/Internals

• NYSE Cumulative A/D Line +83,193 -1.15%
  
• Bloomberg New Highs-Lows Index -166 +90
  
• Bloomberg Crude Oil % Bulls 42.0 -2.3%
  
• CFTC Oil Net Speculative Position +17,457 -29.82%
  
• CFTC Oil Total Open Interest 1,322,308 -3.27%
  
• Total Put/Call 1.06 +10.42%
  
• OEX Put/Call 1.17 +28.57%
  
• ISE Sentiment 94.0 +17.65%
  
• NYSE Arms 1.22 -91.05%
  
• Volatility(VIX) 28.79 -19.19%
  
• G7 Currency Volatility (VXY) 13.24 -10.36%
  
• Smart Money Flow Index 8,767.99 -2.22%
  
• Money Mkt Mutual Fund Assets $2.840 Trillion unch.
  
• AAII % Bulls 34.48 -7.04%
  
• AAII % Bears 43.10 +5.51%
  

Futures Spot Prices

• CRB Index 255.92 +2.80%
  
• Crude Oil 73.78 +4.70%
  
• Reformulated Gasoline 204.97 +3.37%
  
• Natural Gas 4.78 -.49%
  
• Heating Oil 200.53 +3.61%
  
• Gold 1,230.20 +.62%
  
• Bloomberg Base Metals 183.36 +1.20%
  
• Copper 290.40 +4.52%
  
• US No. 1 Heavy Melt Scrap Steel 338.0 USD/Ton -8.81%
  
• China Hot Rolled Domestic Steel Sheet 4,234 Yuan/Ton -1.03%
• S&P GSCI Agriculture 294.78 +3.99%
  

Economy

• ECRI Weekly Leading Economic Index 123.20 -.65%
  
• Citi US Economic Surprise Index -14.20 -22.0 points
  
• Fed Fund Futures imply 84.0% chance of no change, 16.0% chance of 25 basis point cut on 6/23
• US Dollar Index 87.51 -.95%
  
• Yield Curve 250.0 +3 basis points
  
• 10-Year US Treasury Yield 3.23% +3 basis points
  
• Federal Reserve's Balance Sheet $2.314 Trillion -.17%
  
• U.S. Sovereign Debt Credit Default Swap 37.14 -11.79%
  
• Western Europe Sovereign Debt Credit Default Swap Index 127.17 -15.60%
  
• 10-Year TIPS Spread 1.99% +1 basis point
  
• TED Spread 47.0 +5 basis points
  
• N. America Investment Grade Credit Default Swap Index 126.15 +2.97%
  
• Euro Financial Sector Credit Default Swap Index 154.65 -4.44%
  
• Emerging Markets Credit Default Swap Index 285.55 -2.43%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 320.0 -14 basis points
  
• M1 Money Supply $1.727 Trillion +1.64%
• Business Loans 606.10 +.08%
  
• 4-Week Moving Average of Jobless Claims 463,000 +.5%
  
• Continuing Claims Unemployment Rate 3.5% -10 basis points
  
• Average 30-Year Mortgage Rate 4.72% -7 basis points
  
• Weekly Mortgage Applications 560.90 -12.22%
  
• ABC Consumer Confidence -43 +1 point
  
• Weekly Retail Sales +3.60% +90 basis points
  
• Nationwide Gas $2.70/gallon -.03/gallon
  
• U.S. Cooling Demand Next 7 Days 31.0% above normal
• Baltic Dry Index 3,423 -12.97%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 65.0 +18.18%
  
• Rail Freight Carloads 191,758 -14.82%
  
• Iraqi 2028 Government Bonds 82.45 -1.03%
  

Best Performing Style

• Mid-Cap Value +3.74%

Worst Performing Style

• Large-Cap Growth +1.95%

Leading Sectors

• Coal +8.23%
• REITs +7.46%
• Oil Tankers +6.95%
• Steel +6.48%
• Paper +6.14%

Lagging Sectors

• Internet +.36%
• I-Banks +.14%
• Education -.26%
  
• HMOs -.68%
• Disk Drives -.70%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Rising to Session Highs into Final Hour on Tech Sector Optimism, Falling Sovereign Debt Angst, Diminishing Energy Sector Fear

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Rising
  
• Volume: Below Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 29.71 -2.78%
  
• ISE Sentiment Index 113.0 +34.52%
  
• Total Put/Call 1.01 +1.0%
  
• NYSE Arms 1.16 +681.42%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 126.15 bps -.76%
  
• European Financial Sector CDS Index 157.64 bps -3.86%
  
• Western Europe Sovereign Debt CDS Index 127.17 bps -2.80%
  
• Emerging Market CDS Index 287.33 bps +.44%
  
• 2-Year Swap Spread 39.0 +2 bps
  
• TED Spread 47.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .07% -1 bp
  
• Yield Curve 249.0 -5 bps
  
• China Import Iron Ore Spot $143.10/Metric Tonne -.07%
  
• Citi US Economic Surprise Index -14.20 -17.4 points
  
• 10-Year TIPS Spread 1.97% -3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +105 open in Japan
• DAX Futures: Indicating +4 open in Germany

Portfolio:

• Slightly Higher: On gains in my Technology, Medical and Biotech long positions
  
• Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 pushes to session highs despite recent gains, a euro decline and disappointing economic data. On the positive side, Education, Airline, Semi, Software, Paper and Oil Tanker stocks are especially strong, rising 1.0%+. Cyclical and small-cap shares are outperforming. Copper is bouncing another +1.2% today. The BP(BP) cds is falling -13.4% to 401.47 bps. On the negative side, Retail, Homebuilding, Bank and Utility shares are under pressure, falling 1.0%+. The TED spread continues to grind to new 52-week highs, which remains a big negative. As well, the yield on 3-Month Treasuries is now down to February levels and the 10-year yield is falling too much today. The Citi US Economic Surprise Index is rolling over, which usually indicates economists will soon ratchet down their forecasts. This also corresponds with the recent deterioration in the ECRI weekly leading index. I suspect upcoming inflation readings will come in meaningfully below current estimates. The tone of trading today is better than the major averages would suggest. Action in tech sector shares is much improved. Leader (AAPL) is at session highs and is trying to break back above its 50-day moving average. The recent bounce in the major averages looks to continue short-term. I expect US stocks to trade modestly higher into the close from current levels on short-covering, tech sector optimism, less energy sector fear, declining sovereign debt angst and lower energy prices.

Today's Headlines

Bloomberg:

• Spanish Lenders Lead Decline in Bank Bond Risk, Debt Swaps Show. Spanish banks led a decline in the cost of insuring against default on financial company bonds as Caja Madrid and Bancaja began a merger process and Banco Santander SA eased profit concerns. Credit-default swaps on Caja Madrid dropped 29 basis points to 437 and Bancaja decreased 29 to 501, while contracts on Santander, Spain’s biggest lender, declined 31.5 basis points to 182.5, according to CMA DataVision. Banco Bilbao Vizcaya Argentaria SA fell 39 basis points to 221. The Markit iTraxx Financial Index of swaps on the senior debt of 25 banks and insurers dropped 9 basis points to 169 and the subordinated index declined 9 basis points to 257, JPMorgan Chase & Co. prices show. Swaps on corporate bonds also fell with contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high- yield credit ratings down 6.5 basis points at 599 and the Markit iTraxx Europe Index of 125 companies with investment-grade ratings 2.5 lower at 130, according to JPMorgan.
• U.S., China Object to 'Strange Meal' Draft UN Climate Pact. The U.S., China and Brazil joined dozens of nations criticizing a draft climate treaty issued in Bonn, where two weeks of United Nations talks conclude today. The negotiating text pares back alternatives from a document published in May, eliminating some potential targets to limit global warming and greenhouse gas emissions. In the closing forum of the talks, delegates criticized the document, and urged the chair who produced it, Zimbabwe’s Margaret Mukahanana-Sangarwe, to revise it. “I think there is something wrong with your kitchen,” said Mohammad Al Sabban, Saudi Arabia’s lead negotiator. “The recipe we have discussed over the last two weeks has been taken by you, and you gave us a very strange meal.”
• Loan Market Slump Forces Companies to Hold Off Debt Refinancing. Leveraged loans erased 77 percent of this year’s gains in a monthlong drop, causing companies to sideline proposed refinancing transactions that would rely on institutional investors.
• U.S. Economy: Retail Sales Fall for First Time Since September. Sales at U.S. retailers unexpectedly dropped in May for the first time in eight months, indicating the rebound in consumer spending is cooling as Americans boost savings. Purchases fell 1.2 percent, led by a record plunge in demand at building-material stores that may reflect the end of a government rebate on sales of energy-saving appliances, according to figures from the Commerce Department issued today in Washington.
• Dropping Swaps Plan for Volcker Rule May Not Reduce Bank Risk. A Congressional plan to ban proprietary trading by banks may still allow them to take risks with private derivatives in transactions initiated by customers. The Volcker rule, named for former Federal Reserve Chairman Paul Volcker, won’t stop Wall Street firms from betting on the direction of a market as long as the trade originated with a customer, said Brian Yelvington, head of fixed-income strategy at broker-dealer Knight Libertas LLC. If Congress passes the Volcker rule, a firm seeking to wager that a market will rise or fall may just avoid hedging the opposite side of a client order.

Wall Street Journal:

• Morgan Stanley(MS), J.P. Morgan(JPM) to Lead GM IPO. Morgan Stanley and J.P. Morgan Chase & Co. are expected to win the lead underwriting roles for General Motors' initial public offering, people familiar with the matter said Friday.
• Hedge Funds Try New Way to Avoid Big Redemptions. Many hedge funds are adopting a new way to avoid a repeat of the massive redemptions that crushed managers during the 2008 financial crisis. Some investors like the changes, while others don't. So-called investor-level gates are popping up all over the $2 trillion industry, replacing more traditional fund-level gates, according to investors.

CNBC:

• Obama Renews Call for $30 Billion Plan to Boost Hiring.

Business Insider:

• New Google(GOOG) News Spotted. Google (GOOG) is testing a new Google News homepage, SEL's Matt McGee reports. The changes, according to Matt:
• Check Out Just How Damaged German Banks Would Get If The PIIGS Default.
• The Inventory Adjustment That Boosted GDP is Now Over. (graph)
  

Zero Hedge:

• ECRI Leading Economic Index Drops to 44 Week Low. (graphs) David Rosenberg's favorite leading indicator, the Economic Cycle Research Institute (ECRI) Leading Index, fell to 123.2 in the week ended June 4, down from 124 the week before, a -3.5% annualized contraction: the first time this has gone negative in over a year. This is the lowest level since July 31, 2009, when it was at 122.4.
• SEC Associate Director King to Join High-Frequency Trader GETCO. Now that is has achieved complete regulatory capture, and the SEC has been purchased for 30 pieces of silver, Sky-Net is on the verge of sentience. Going forward nobody except the HFT computers will be trading with each other. The computerized market has now made a complete mockery of regulation, and it cost it about 1 day worth of frontrunning based profits. We fully expect the SEC to find "absolutely nothing wrong" with market structure when it concludes its probe into HFT manipulation. In all seriousness, just what is Getco so worried about if it needs to conduct such a blatant example of "regulatory capture"?
• Japan's New PM Warns Country at "Risk of Collapse" Under Massive Debt Load.
• S&P Warns it Could Cut Largest Spanish Deposit Bank Counterparty Credit Ratings.
  

Forbes:

• European Bank Shares Send Greek Default Signal. European bank stocks are sending an ominous signal: They are trading as if a default by Greece is not a question of "if" but one of "when"? While Greece has been touting its efforts to cut its massive deficit in recent days, the issue for Greece is that the moves it is taking are unlikely to help the country this year, says Stephen Pope, chief global equity strategist at Cantor Fitzgerald in London. Pope expects that Greece's deficit as a percentage of gross domestic product is likely to surge this year to 150% from 120% currently. The deficit-cutting measures "cannot be implemented this year," says Pope. "It is just kicking the tin can further" into the future. Pope says if all the PIIGS countries –an acronym which refers to Portugal, Ireland, Italy, Greece and Spain—had to restructure their debts, it would result in about 900 million to 1 billion euros in writedowns. "The banks can't handle that," says Pope.

CNNMoney.com:

• iPhones for BlackBerries at UBS. Up to one third of the the bank's 18,000 BlackBerries could migrate to Apple's smartphone.
• Questioning Keynes. In the 1930s, British economist John Maynard Keynes spearheaded a revolution in economic thinking: The free market is imperfect. And because of these imperfections, it's the government's job to intervene and somehow make things right. The global financial crisis ignited a resurgence in Keynesian thought -- specifically, the idea that government should spend big to pull out of a recession. But given Europe's sovereign debt crisis, is it time to ask where Keynes may have gone wrong? Or did European leaders misinterpret his teachings? And, given the growing complexity of the global financial system, are Keynes' ideas perhaps outdated?

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Friday shows that 27% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-three percent (43%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -16 (see trends).

The Hill:

• Panel Commissioned by Barney Frank Recommends Nearly $1 Trillion in Defense Cuts. A panel commissioned by Rep. Barney Frank (D-Mass.) is recommending nearly $1 trillion in cuts to the Pentagon’s budget during the next 10 years. The Sustainable Defense Task Force, a commission of scholars from a broad ideological spectrum appointed by Frank, the House Financial Services Committee chairman, laid out actions the government could take that could save as much as $960 billion between 2011 and 2020.

Reuters:

• OECD Indicators Point to Slower Expansion, Brazil Peak. The pace of economic growth in the world's developed economies showed signs of slowing in April, with a potential peak emerging in Brazil and stronger evidence of expansion halting in China, France and Italy, according to an OECD survey on Friday.

TimesOnline:

• BP(BP) Plans to Defer Dividend After Pressure From Obama. BP is preparing to defer payment of its next dividend to shareholders by placing the money in an escrow account until the full scale of the company’s liabilities from the Gulf of Mexico disaster can be determined, The Times has learnt.

Xinhua:

• The average price of second-hand housing in Beijing in May fell 17% from April to 12,661 yuan per square meter, the city's statistics bureau said on its website today. The number of transactions of second-hand homes slumped by 70.7% from April and 64.8% from May last year to 3,028, according to the statement.

Bear Radar

Style Underperformer:

• Large-Cap Value (-.37%)

Sector Underperformers:

• Banks (-1.31%), Retail (-1.0%) and Homebuilders (-.84%)

Stocks Falling on Unusual Volume:

• SI, WPPGY, EDMC, CHBT, BIIB, SBR, RMBS, FARO, UFPI, THO, BPL and HBHC
  

Stocks With Unusual Put Option Activity:

• 1) SPWRB 2) PHM 3) HAL 4) PM 5) MAR
  

Stocks With Most Negative News Mentions:

• 1) BP 2) DELL 3) XOM 4) EOG 5) APH
  

Bull Radar

Style Outperformer:

• Small-Cap Growth (+.29%)

Sector Outperformers:

• Education (+.77%), Biotech (+.66%) and Airlines (+.63%)

Stocks Rising on Unusual Volume:

• CSIQ, NSM, ADVS, PFE, BMY, BA, TIN, BP, AIXG, ULTA, ARST, LFUS, MEAS, DCTH, IPCM, DECK, CECO, AGAM, ADVS, SVVS, FINL, CAVM, ALTR, BGH, PWO and TBL
  

Stocks With Unusual Call Option Activity:

• 1) LXK 2) DFS 3) GME 4) LULU 5) CAL
  

Stocks With Most Positive News Mentions:

• 1) QCOM 2) WEN 3) LFUS 4) AAPL 5) BSFT