Broad Market Tone:
- Advance/Decline Line: Modestly Lower
- Sector Performance: Mixed
- Volume: Below Average
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- VIX 17.20 +3.37%
- ISE Sentiment Index 80.0 -15.79%
- Total Put/Call 1.05 +28.05%
- NYSE Arms .97 -27.93%
Credit Investor Angst:
- North American Investment Grade CDS Index 99.81 -.03%
- European Financial Sector CDS Index 152.72 -1.36%
- Western Europe Sovereign Debt CDS Index 102.50 bps -.83%
- Emerging Market CDS Index 224.96 bps -3.41%
- 2-Year Swap Spread 12.0 unch.
- TED Spread 22.0 -1.0 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -25.25 -1.5 bps
Economic Gauges:
- 3-Month T-Bill Yield .09% +1 bp
- Yield Curve 136.0 -1 bp
- China Import Iron Ore Spot $117.10/Metric Tonne +1.56%
- Citi US Economic Surprise Index 33.0 -2.1 points
- 10-Year TIPS Spread 2.44 unch.
Overseas Futures:
- Nikkei Futures: Indicating -11 open in Japan
- DAX Futures: Indicating +9 open in Germany
Portfolio:
- Slightly Higher: On gains in my Tech/Medical sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 25% Net Long
BOTTOM LINE: Today's
overall market action is mildly bearish as the
S&P 500 is just slightly lower, below its 50-day moving average, despite rising global growth fears, eurozone debt angst,
earnings worries, technical selling and increasing US "fiscal cliff" fears. On
the positive side, Education, Computer, Networking and Disk Drive shares are
especially strong, rising more than +1.0%. Tech stocks have outperformed throughout the day. Oil is falling -.5%, gold is down -1.1%, Lumber is up +.4% and the UBS-Bloomberg Ag Spot Index is down -.64%. Major European indices were mostly higher,
led by a +1.0% gain in Italy. The Bloomberg European Bank/Financial
Services Index is rising +.6%. On
the negative side, Oil Tanker, Bank, Gaming and Restaurant shares are under pressure, falling more than -.75%. Consumer Discretionary shares have traded poorly throughout the day. The 10Y Yld is -1 bp to 1.61%. The Citi US Economic Surprise Index is rolling over technically and is down -27 points since 11/13. The Germany sovereign cds is rising +1.1% to 30.16 bps, the Spain sovereign cds is up +1.2% to 275.67 bps, the Ireland sovereign cds is gaining +3.1% to 181.67 bps and the China sovereign cds is jumping +6.2% to 61.17 bps. The benchmark China Iron/Ore Spot Index is down -34.9% since 9/7/11. As well,
copper and oil continue to trade poorly given investor perceptions that the Eurozone has successfully kicked-the-can, US housing
has hit a major bottom, China's economy is rebounding, Mideast tensions are rising and Hurricane Sandy will spur rebuilding. Shanghai Copper Inventories have risen +391.0% ytd. US weekly retail sales are rising at a +2.1% sluggish rate. Moreover,
the weekly MBA Home Purchase Applications Index has been around the
same level since May 2010 despite investor perceptions of a big
improvement in the nationwide housing market. The Baltic Dry Index has
plunged around -50.0% from its Oct. 14th high and is now down around
-40.0% ytd. US rail traffic is weakening too much. Oil tanker rates have plunged, with the benchmark Middle East-to-US voyage down to 30.0 industry-standard worldscale points. The 10Y T-Note continues to trade too well. There still appears to be a fairly high level of complacency among US investors regarding the deteriorating macro backdrop and any fiscal cliff deal "solution". The recession in Europe is worsening even before more tax hikes and spending cuts hit next year. A lack of economic competitiveness and growth incentives remain unaddressed problems in the region. The European debt crisis is also really affecting emerging market economies, which will further pressure exports from the region and further raise the odds of more sovereign/bank downgrades over the coming months. I continue to believe that China's problems are much larger than commonly perceived
and cannot be solved with another massive stimulus package given their
real estate bubble, rising food prices/labor costs, massive
overcapacity in certain key parts of the economy and growing bad loans
problem. As well, little being done by global central bankers that will help boost global economic growth to an extent that overcomes the growing
macro headwinds over the intermediate-term, in my opinion. Over the intermediate-term the Fed's recklessness greatly increases the chances of hard-landings in key emerging markets
and of a serious global stock swoon, in my opinion. The most likely outcome for the US fiscal cliff crisis is our own can-kicking or "small bargain" after a complete breakdown in talks occurs sometime before year-end, which would boost stocks in the short-run and leave
much investor uncertainty over the intermediate-term. Moreover, any of
the likely fiscal cliff "solutions" being bandied about would hurt
economic growth, which would more than offset the benefits to investors
from less uncertainty going forward. Moreover,
uncertainty surrounding the effects on businesses of Obamacare and more regulations will likely become pronounced economic headwinds next year. The Mid-east continues to unravel at an alarming rate, as well. Overall, broad market health remains poor as
breadth, volume, leadership, lack of big volume/gainers and
copper/oil relative weakness all continue to be concerns. For this year's equity advance to regain
traction, I would expect to see further European credit gauge
improvement, a further subsiding of hard-landing
fears in key emerging markets,
a rising 10-year yield, better volume, stable-to-lower food/energy
prices, a US "fiscal cliff" solution/can-kicking, a calming in Mid-east
and China/Japan tensions and higher-quality stock market leadership. I
expect US stocks to trade modestly lower into the close from
current levels on eurozone debt angst, rising global growth fears, increasing US fiscal cliff fears, more shorting, technical selling, profit-taking and consumer discretionary weakness.
Bloomberg:
- Republican DeMint Criticizes Boehner’s Deficit Plan. House Speaker John Boehner’s proposal to generate $800 billion in new
revenue “will destroy American jobs” and Republicans should oppose it,
Senator Jim DeMint of South Carolina said today.
- Elizabeth Warren to Receive Senate Banking Committee Seat. U.S. Senator-elect Elizabeth Warren,
the Harvard University law professor and critic of Wall Street,
is expected to join the Senate Banking Committee after she’s
sworn into office in January. Two Democratic aides briefed on the matter said Senate
leaders intend to assign Warren to the Banking Committee,
although a final decision on committee assignments will not be
made until the new session of Congress convenes.
- EU Nations Eye New ECB Bank Supervisor Amid German Doubts. European Union finance ministers
tried to bridge bank oversight disagreements, a step that would
help sever links between banking woes and sovereign debt
plaguing the crisis-stricken euro zone. Germany sought to shield its
small banks, France pressed for common standards and Spain wanted
influence that reflects the size of its banking market at a meeting of
finance ministers in Brussels today. No nation offered die-hard
opposition to the new supervisor, which EU leaders seek to establish at
the European Central Bank by the end of this year. Further gatherings
are possible before Dec. 31.
- Gold Drops to Four-Week Low as Commodities Fall on Fiscal Cliff. Gold futures slumped to a four-week low as a stalemate in U.S. budget
talks drove commodities lower. Silver, platinum and palladium
also dropped. “Gold is being sold along with just about everything
else in commodities with the worries on the fiscal cliff,” Bart Melek,
the Toronto-based head of commodity strategy at TD Securities, said in a
telephone interview. “Gold is usually said to be a safe haven, but the
threat to economies globally from the fiscal cliff is having
knock-on effects.”
CNBC:
- Toll Brothers(TOL) Profit Rises, Orders Jump.
- The Most Dangerous Idea in Washington: Economist.
Ethan Harris, a well-respected economist for Bank of America Merrill
Lynch, sounds very afraid when he talks about the "increasingly popular
view" that going over the "Fiscal Cliff" this year will do minimal
damage to the economy and make possible a better deal next year."One
of the most dangerous ideas circulating in Washington is that it is
okay to go over the cliff temporarily," Harris said in his latest note
to clients.
- Small Manufacturers Pulled Back 50% in Q2. (video) Small manufacturers pulled back 50% in Q2, and according to Paynet, manufacturers are pulling back due to uncertainty about the economy, reports CNBC's Phil LeBeau.
Business Insider:
MercuryNews.com:
- Egyptian protesters storm barricade at presidential palace. A protest
by tens of thousands of Egyptians outside the presidential palace in
Cairo turned violent on Tuesday as tensions grew over Islamist President
Mohammed Morsi's seizure of nearly unrestricted powers and a draft
constitution hurriedly adopted by his allies. In a brief
outburst, police fired tear gas to stop protesters approaching the
palace in the capital's Heliopolis district. Morsi was in the palace
conducting business as usual while the protesters gathered outside. But
he left for home through a back door when the crowds "grew bigger,"
according to a presidential official who spoke on condition of anonymity
because he was not authorized to speak to the media.
StreetInsider.com:
- Tesla (TSLA) Said to Be Under Federal Investigation for Buying Foreign Parts. According to the Washington Times (WT), the U.S. Immigration and
Customs Enforcement (ICE) is cracking down on Tesla for using foreign
parts in the construction of its vehicles. Specifically, ICE wants to know whether or not Tesla was using its
foreign trade zone status in an effort to bypass federal loan
requirements that companies accepting the funding must use domestically
produced parts.
IDB:
- Obama Should Return To Clinton-Era Spending Levels. Talk of Clinton-era tax rates ignores the fact that the former president,
working with a GOP Congress, cut spending as a share of GDP and produced four
balanced budgets by focusing on growth, not spending.
Reuters:
Financial Times:
- EU finance chiefs clash over bank reform. Germany’s
powerful finance minister dug in his heels on Tuesday against a quick
move towards a eurozone banking union, raising fundamental concerns that
cast doubts on the EU meeting a self-imposed year-end deadline for
agreement.
Telegraph:
- Weak UK construction deals blow to George Osborne. The Chancellor has been dealt a blow on the eve of his Autumn Statement by the
weakest outlook among building firms since the depths of the recession.
Activity in the construction industry shrank in November – the third decline
in four months, jobs were cut at the fastest pace in two years, new orders
collapsed at their sharpest rate in three-and-a-half years, and sentiment in
the industry hit its lowest point since December 2008, according to the
CIPS/Markit Purchasing Managers Index (PMI).
Financial Times Deutschland:
- European Crisis States' Structural Unemployment Rises. Unemployment
in European crisis states won't return to pre-crisis levels for years
even if the economy improves, citing calculations by the Intl. Labor
Organization. Structural unemployment in crisis states will continue to
rise. Young people are most heavily affected, the report said.
Kyodo:
- Nissan China New Car Sales Fall 30% in November. Sales in China fall y/y to 79,500 units, citing the company.
Business Recorder:
- Iron ore at six-week low on slower China demand. SINGAPORE: Iron ore fell to its lowest since October and is pressured
to drop further for the rest of the year, as Chinese mills limit
purchases of spot cargoes at a time when colder weather curbs demand for
steel. Construction activity slows during winter in
China, cutting demand for steel products, whose prices have fallen
recently to levels last seen in September. Appetite for
spot iron ore cargoes has been thin since last week, dragging down the
price of the benchmark 62-percent grade to $115.30 a tonne on Monday,
its lowest since Oct. 19, based on data from Steel Index. "Physical
steel prices are weakening and this is having a spillover effect on
iron ore. Fundamentals are very weak, construction has come to a
complete stop in northern China," said a physical iron ore trader in
Singapore. "I remain bearish on iron ore, but I think spot
prices would decline very slowly day by day. We will not see a sharp
correction because iron ore is still in demand as steel mills are still
producing." China's steel mills have kept production close to 2 million tonnes a day
for the most part of this year as producers responded to even modest
rises in steel prices and counted on a pickup in consumption.
Style Underperformer:
Sector Underperformers:
- 1) Gaming -3.01% 2) Coal -1.71% 3) Restaurants -1.53%
Stocks Falling on Unusual Volume:
- DMD, IACI, WYNN, FSC, COT, AAPL, CTCM, PCS, PVTB, IOC, LEAP, FHN, USB, NMFC, DRI, MTN, FRC, SSYS, APL, GPS, SYNT, YOKU, SINA, VOLC, EDU, CAKE, SFUN, MPEL, STMP, PKY, NXTM, AMAP, BIDU, NTES, QIHU, LPSN, GMED and ESL
Stocks With Unusual Put Option Activity:
- 1) GPS 2) BMC 3) XLF 4) FITB 5) XLB
Stocks With Most Negative News Mentions:
- 1) COH 2) TSCO 3) CCL 4) AZO 5) IACI
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Networking +.95% 2) Oil Service +.65% 3) Tobacco +.63%
Stocks Rising on Unusual Volume:
Stocks With Unusual Call Option Activity:
- 1) TXN 2) CXW 3) UPL 4) DRI 5) MDVN
Stocks With Most Positive News Mentions:
- 1) COH 2) MTN 3) JEC 4) DSW 5) DAL
Charts:
Evening Headlines
Bloomberg:
- Grand Bargain Inadequate to Fix U.S. Fiscal Woes, Study Finds.
(video) Even a so-called grand bargain might not be enough to solve the U.S.
fiscal woes. A $4 trillion combination of spending cuts and tax
increases over 10 years envisioned by Democrats and Republicans as a
long-term fix would be inadequate, according to a Bloomberg Government
study. Almost $6 trillion in deficit reduction will be needed in the
next decade "to make a minimum down payment that puts the nation on a
sounder fiscal footing," the report said.
- Islands Seek Funds for Climate Damage at UN Discussions. Islands that are most vulnerable to rising oceans are
seeking an insurance program to protect against damage related to
climate change, adding to pressure on industrial nations to increase aid
committed to fight global warming to more than $100 billion a year. The
islands are proposing a “loss and damage” mechanism that would insure
and compensate countries that suffer from extreme weather, erosion and
drought. The request is raising tension levels among more than 190
industrial and developing nations at United Nations climate talks in
Doha this week. “All we are asking is that they help us with
these issues that aren’t our doing,” Malia Talakai of Nauru, lead
negotiator for the Alliance of Small Island States, or AOSIS, a bloc of
43 island nations, said in an interview in Doha. “We are trying to say
that if you pollute you must help us.”
- Most Accurate Economic Forecaster Sees Lethargic U.S. Expansion. Shapiro has scored the top spot among forecasters of the U.S. economy
for the two-year period ended on Sept. 30, according to data compiled
for the annual Bloomberg Markets ranking of global forecasters. Shapiro sees monetary policy, with the Federal Reserve benchmark
interest rate at almost zero, as having a limited near-term impact on
growth. And he considers the $1 trillion U.S. fiscal deficit an
important drag on future expansion. “There is an element of
repetitiveness in being an economist these days, because adjustments
that affect the economy are all very long-term and are not going to
change anytime soon,” he says.
- China’s Stocks Drop to Lowest Level Since 2009; Moutai Declines. China’s
stocks fell, dragging the benchmark index down for the sixth time in
seven days, as liquor shares extended yesterday’s rout on concern demand
will weaken. Kweichow Moutai Co. dropped for a third day, pushing
losses for a gauge of consumer staples producers over the past month to
20 percent after excessive levels of plasticizer were found in JiuGuiJiu
Co. products. Chengdu B-Ray Media Co. plunged 10 percent, sending a
gauge of small-company stocks to the lowest level since March 2009. The
Shanghai Composite Index (SHCOMP) slipped 0.4 percent to 1,951.85 at the
11:30 a.m. break, heading for the lowest level since Jan. 15, 2009. “Investors
have kind of given up for this year,” Zhang Haidong, analyst at Tebon
Securities Co. analyst, said by telephone in Shanghai. “The stock market
hasn’t reached a
bottom yet. Investors are concerned that demand for high-end
products like liquor will suffer.”
- SEC Says Big Four Audit China-Affiliates Blocked Probe. U.S. regulators probing potential
fraud by China-based companies increased pressure on their
auditors by formally accusing affiliates of Big Four firms of
withholding documents from investigators. Deloitte Touche Tohmatsu
CPA Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen and
PricewaterhouseCoopers Zhong Tian CPAs Limited have refused to cooperate
with accounting fraud investigations into nine companies whose
securities are publicly traded in the U.S., the Securities and Exchange
Commission said in an administrative order yesterday. BDO China Dahua
Co. Ltd. was also named by the SEC in the action.
- Hong Kong Leads Singapore, U.S. in Youth Gap: Chart of the Day. Singapore Prime Minister Lee Hsien Loong’s concern about a low birthrate
underscores a common problem in the world’s richest nations, where
shrinking pools of workers and taxpayers will shift burdens onto the
elderly.
- Japan Deploys Missile Defense Against North Korean Rocket Test. Japan will deploy its Patriot anti-
missile defense system in Okinawa and around Tokyo to guard
against this month’s planned North Korean rocket launch, the Defense Ministry said.
Ships carrying PAC-3 missile interceptors set out for Okinawa from a
naval base in Hiroshima yesterday, Defense Ministry spokesman Takaaki
Ohno said. The move follows an order issued by Defense Minister Satoshi
Morimoto over the weekend, he added. North Korea said last weekend it will fire a rocket between Dec. 10 and Dec. 22 to put a satellite into space, the same
explanation given for an April launch that failed shortly after
liftoff.
- Japan Tunnel Collapse Threatens to Add to Fiscal Burden: Economy. Japan’s fatal tunnel tragedy this
week escalated a political debate over infrastructure spending
as the nation heads for elections, bringing focus to aging
transport networks in the world’s third-largest economy.
- RBA Cuts Key Rate to Half-Century Low of 3% as Hiring Slumps. The Reserve Bank of Australia cut its
benchmark interest rate to the half-century low set during the
2009 global recession as hiring falters and an elevated currency
hurts industries such as manufacturing and tourism. Governor Glenn Stevens and his board reduced the overnight
cash-rate target by a quarter percentage point to 3 percent, the
central bank said in a statement in Sydney today. The sixth cut
in the past 14 months was predicted by 20 of 28 economists
surveyed by Bloomberg. The rate matches the level reached from
April-October 2009 that was the lowest since 1960.
- Qualcomm(QCOM) Said to Agree to 5 Billion Yen Investment in Sharp. Sharp Corp. (6753), the Japanese TV maker
that warned last month about its ability to survive, agreed to
sell a stake in itself to Qualcomm Inc. and team up with the U.S.
company to make displays, two people familiar with the plan said. Sharp plans to make an announcement today on the agreement,
which includes selling 5 billion yen ($61 million) of new shares
to the San Diego-based chipmaker this year, one of the people
said, asking not to be named because the plan hasn’t been made
public. That would give Qualcomm a 2.6 percent stake in Sharp,
based on its 191 billion yen market value yesterday.
Wall Street Journal:
- GOP Makes Counteroffer In Cliff Talks. Proposal Calls for $800 Billion Increase
In Revenue, Half What Obama Seeks. The GOP offer was immediately rejected by the White House, but it
provides the most detailed statement to date of what Republicans are
willing to concede for now. It comes days after the White House put
forward its opening bid in the high-stakes deficit talks. With both
sides now having made preliminary offers, the parameters for future
negotiations between Republicans and the White House are becoming
clearer.
- Fiscal Cliff: Live Stream.
- GM(GM) Moves to Reduce Inventory. General Motors Co., saddled with large stocks of unsold cars and trucks, is taking steps
to cut excess production and signaled there may be more to come. Workers
at its Lordstown, Ohio, assembly plant soon will be off the job for
three weeks instead of a planned two-week Christmas shutdown as the
Detroit auto maker curtails Chevrolet Cruze output. A second U.S. plant also may be idled according to a person familiar with the matter. The company also said on Monday that year-end inventories of Silverado
and Sierra pickups may exceed 220,000 vehicles in part due to a decision
to hold the line on discounts. The higher-than-expected supply will
likely push GM's overall car and truck inventory beyond a year-end
target of 670,000 vehicles.
- Top U.S. Firms Are Cash-Rich Abroad, Cash-Poor at Home.
- U.S. Warns Syria on Chemical Arms. White House Draws 'Red Line' After Seeing Large Stockpile Movement, but Pentagon Remains Opposed to Land War.
- China Tightens Reins on Macau. Police in Gambling Enclave, Mainland Detain Junket Operators; First Sign of a Corruption Crackdown. The Chinese government is increasing its scrutiny of Macau's booming
casino industry and the junket operators that bankroll its high-rolling
gamblers, the first sign of a crackdown on corruption following
stepped-up rhetoric by China's new leadership.
- Matthew Kaminski: Trying to Save Europe 'Step by Step'.
Finance Minister Wolfgang Schäuble on Germany's balancing act between
euro scold and bailout enabler. Last week's Greek deal depends on the
successful buyback of bonds
from private creditors later this month, and it makes rosy assumptions
about future Greek growth. Within hours of its approval, Mr. Schäuble
had to admit that the deal might not be enough to stave off Greek
insolvency. He says that alternatives are available down the road but
won't "explicitly" spell them out. Germany first needs to see the
promised Greek reforms "fully implemented." "If there is no crisis, Europe doesn't move," Mr. Schäuble says. "If
you have success you start to destroy the basis of the success. That is
what Sisyphus is about."
Zero Hedge:
Business Insider:
IBD:
Washington Post:
- U.S. pushes to restart peace talks with Taliban. The
Obama administration has launched a post-election push to restart
moribund peace talks with the Taliban, despite resistance from the U.S.
military, mixed signals from Pakistan and outright refusal by the
militants themselves, according to U.S. officials. Senior White House
and State Department officials reiterated the administration’s
negotiating position — including its willingness to exchange prisoners
with the Taliban — to a reluctant Defense Department at a meeting of
national security deputies two weeks ago.
NY Times:
- High-Speed Trades Hurt Investors, a Study Says.
A top government economist has concluded that the high-speed trading
firms that have come to dominate the nation’s financial markets are
taking significant profits from traditional investors. The chief economist at the Commodity Futures Trading Commission, Andrei
Kirilenko, reports in a coming study that high-frequency traders make an
average profit of as much as $5.05 each time they go up against small
traders buying and selling one of the most widely used financial
contracts.
Reuters:
Financial Times:
- Europe’s property loans go unpaid. More
than 70 per cent of the European commercial property loans that were at
the heart of securitisation deals structured before the subprime crisis
and that reached maturity this year have not been repaid. Fresh figures from Fitch Ratings point to the continued difficulties
facing issuers and investors involved in European commercial
mortgage-backed securities deals that were structured in the
securitisation boom between 2004 and 2006.
- Yen short positions hit five-year high.
Telegraph:
- French economy buckles as car sales collapse. France’s industrial woes deepened last month as car sales crashed 19pc and
French brands lost market share at an dramatic pace, raising fears of a
serious economic crisis next year once austerity hits.
Globe and Mail:
- Investors fume at Sprott’s shakeup of Flatiron funds. Just six months after Sprott Inc. bought
Flatiron Capital Management, the asset manager is shutting one of the
acquired funds and replacing the managers of the others after assets
under management plummeted by 45 per cent.
Yonhap News Agency:
- U.S. to mull 'appropriate actions' if N. Korea fires rocket: Samore. A senior security aide to President Barack Obama said Monday the U.S. is
concentrating efforts in cooperation with South Korea, China, Russia
and Japan to dissuade North Korea from pressing ahead with another
rocket launch. Gary Samore emphasized that if the launch takes place
Washington will take "appropriate actions." "We've made it very clear
that we consider this to be a very
unfortunate provocative event, which is not going help North Korea nor
the people of North Korea," Samore told Yonhap News Agency.
Kontan:
- United Tractors Co. Estimates 2012 Sales May Fall 27%. The co. expects heavy equipment sales may fall to 6,200 units in 2012, from 8,500 units last year, citing Director Loudy Ellias.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to -.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 112.5 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 84.0 +1.25 basis points.
- FTSE-100 futures -.36%.
- S&P 500 futures -.30%.
- NASDAQ 100 futures -.24%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (TOL)/.24
- (BIG)/-.26
- (AZO)/5.39
- (OXM)/.21
- (MFRM)/.46
- (P)/.01
- (AVAV)/.22
Economic Releases
Upcoming Splits
Other Potential Market Movers
- The Fed's Bullard speaking, Eurozone inflation data, Canada rate decision, Australia GDP, China HSBC Services PMI, weekly retail sales reports, (ASH) analyst day, (URI) investor day, ISM New York for November and the Goldman Sachs Financial Services Conference could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by industrial and commodity
shares in the region. I expect US stocks to open mixed and to
weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
Today's Market Take:
Broad Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Most Sectors Declining
- Volume: Below Average
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- VIX 16.69 +5.17%
- ISE Sentiment Index 95.0 +9.2%
- Total Put/Call .78 -33.33%
- NYSE Arms 1.12 +26.92%
Credit Investor Angst:
- North American Investment Grade CDS Index 99.50 +.89%
- European Financial Sector CDS Index 160.19 -3.36%
- Western Europe Sovereign Debt CDS Index 106.38 bps -1.85%
- Emerging Market CDS Index 233.0 bps -1.87%
- 2-Year Swap Spread 12.0 -.75 basis point
- TED Spread 23.0 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -23.75 +1 bp
Economic Gauges:
- 3-Month T-Bill Yield .08% unch.
- Yield Curve 137.0 unch.
- China Import Iron Ore Spot $115.30/Metric Tonne -.26%
- Citi US Economic Surprise Index 35.10 -8.0 points
- 10-Year TIPS Spread 2.44 +2 basis points
Overseas Futures:
- Nikkei Futures: Indicating -13 open in Japan
- DAX Futures: Indicating -9 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Disclosed Trades: None
- Market Exposure: 25% Net Long
