North American Investment Grade CDS Index 107.78 bps -2.48%
European Financial Sector CDS Index 129.28 bps -3.83%
Western Europe Sovereign Debt CDS Index 159.0 bps +.21%
Emerging Market CDS Index 222.67 bps -.57%
2-Year Swap Spread 16.0 unch.
TED Spread 13.0 -2 bps
Economic Gauges:
3-Month T-Bill Yield .15% +1 bp
Yield Curve 206.0 +3 bps
China Import Iron Ore Spot $140.80/Metric Tonne +.93%
Citi US Economic Surprise Index -14.90 -3.2 points.
10-Year TIPS Spread 1.81% -1 bp
Overseas Futures:
Nikkei Futures: Indicating -4 open in Japan
DAX Futures: Indicating +19 open in Germany
Portfolio:
Slightly Lower: On losses in my Retail, Biotech and Ag long positions
Disclosed Trades: None
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades lower despite gains in commodities and most overseas markets. On the positive side, Computer, Oil Service, Alt Energy and Coal shares are especially strong, rising 1.0%+. Small-caps are outperforming. Copper is rising another +.63%. The 10-year yield is rising +3 bps to 2.49%. On the negative side, REIT, Retail, Homebuilding, Insurance, Biotech, Oil Tanker and Telecom shares are under pressure, falling more than .75%. (XLF)/(IYR)/(XHB) are a bit heavy. The US Muni CDS Index is jumping +3.46% to 220.71 bps. The euro currency continues to ignore mounting headwinds for the region as traders focus on deteriorating US fundamentals. The Shanghai Composite finished near session lows, falling slightly overnight, and closed below its 50-day moving average again. Investors continue to ignore most negative news items, which remains a large market positive. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, investor performance angst and technical buying.
Plosser Opposes More Fed Bond Purchases, Sees 'Little Risk' of Deflation. Federal Reserve Bank of Philadelphia President Charles Plosser said he opposes more monetary expansion by the U.S. central bank in part because he sees “little risk” of deflation. “Because I see little gain at this point, and some costs, I would prefer not to engage in further asset purchases at this time,” Plosser said in remarks prepared for a speech to the Greater Vineland, New Jersey, Chamber of Commerce today. “Asset purchases in our current economic environment can do little if anything to speed up the return to full employment.” “It is difficult, in my view, to see how additional asset purchases by the Fed, even if they move interest rates on long-term bonds down by 10 or 20 basis points, will have much impact on the near-term outlook for employment.”
Meredith Whitney Rates California Worst of 15 Biggest States, Fortune Says. Meredith Whitney, the analyst who correctly predicted Citigroup Inc.’s dividend cut in 2008, will release a report rating California’s financial condition as the worst among the 15 largest U.S. states, Fortune said. The report rates the states by four criteria: economy, fiscal health, housing and taxes, Fortune said, citing Whitney. Texas and Virginia are the only two states to receive overall positive ratings, the magazine reported yesterday.
Paris on Alert After Bomb Threats Empty Eiffel Tower, Stations. France is on “red alert” for a terrorist attack, deploying thousands of police and soldiers to “sensitive” locations after at least four bomb threats at the Eiffel Tower and railway stations in the past two weeks.
Chinese Government to Speed Up Property Tax Introduction to Cool Market. China will speed up the introduction of a trial property tax in some cities and then expand the levy to the whole country to curb rising real estate prices, the government said, without giving a timetable. The state also asked commercial banks to stop offering loans to buyers of third homes and extended a 30 percent down payment requirement to all first-home buyers, according to a statement posted on the government website. The down payment level previously applied only to homes larger than 90 square meters (969 square feet). The country will also end an income-tax exemption on profits from the sale of real estate reinvested within one year, the ministry said. Banks will be ordered to stop lending to property developers that violate industry regulations, the government said earlier today. Credit Suisse analysts led by Jinsong Du recommended “reducing exposure” to Chinese property stocks in the near term, saying a tax would hurt real-estate market sentiment, according to a note to clients dated yesterday. China may announce property taxes as early as the October National Day holidays, China Business News reported Sept. 21, citing an unidentified person.
Kocherlakota Says Additional Fed Asset Purchases May Have 'Muted' Impact. Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said the Fed may have a tough time aiding the economy and reducing a “deeply troubling” unemployment rate through a second round of Treasury purchases. With financial markets functioning better now than in early 2009, “my own guess is that further uses of QE would have a more muted effect” on narrowing the gap between longer and shorter-term Treasury yields, Kocherlakota said today in a speech in London hosted by the European Economics and Financial Centre, using “quantitative easing” to refer to such purchases. Kocherlakota’s skepticism about how much restarting large- scale purchases of Treasuries would boost growth and inflation signals he may not be in favor of adopting the policy.
Spain Has First General Strike in Decade as Europe Marches. Spanish workers disrupted transport and television broadcasts in the first general strike in eight years as demonstrators marched in a dozen European cities against government spending cuts.
NY Judge Finds Nothing Private About Facebook Postings. Here’s an interesting legal development for those New Yorkers who chronicle their personal lives on Facebook: A Suffolk County judge presiding over a personal-injury lawsuit has ruled that material posted to online social networks — even what people post behind privacy settings — can be used as evidence in court.
Obama Struggles to Reconnect With Voters. President Barack Obama, meeting swing-state voters in a leafy backyard, struggled again Wednesday to answer the concerns of supporters once buoyed by the excitement of the presidential campaign, but now demoralized by economic struggle.
Goldman(GS) Selling Part of Stake in ICBC. Goldman Sachs Group Inc. hopes to raise up to $2.05 billion from the sale of part of its stake in Industrial & Commercial Bank of China Ltd., a person familiar with the situation said Wednesday.
Gold Soars to Record High as Dollar Falls. Gold for December delivery, the most active contract, rose $3.90, or 0.3%, to $1,312.20 an ounce on the Comex division of the New York Mercantile Exchange. It hit a record at $1,314.80 an ounce earlier in electronic trading.
The Next Step In The Currency War: Capital Controls And Tariffs. This is getting serious. The currency war between the world's powers is expanding beyond the typical Japanese intervention, Chinese yuan pegging, and aggressive U.S. quantitative easing to include, "Brazil, Mexico, Peru, Colombia, Korea, Taiwan, South Africa, Russia and even Poland," according to Ambrose Evans-Pritchard. But what does this mean, and why is it happening?
Bill Gross has said that the most likely consequence of the government's stimulative policy will be a declining dollar and lower standard of living in his latest investment outlook. Pretty dark stuff.
An expanding supertanker fleet will prevent charter rates from rallying to levels seen in the first half of this year, Steve Christy, head of research at E.A. Gibson Shipbrokers Ltd., told TradeWinds.
Politico:
Boehner Backs Issa on Subpoena Promises. House Minority Leader John Boehner threw his full support behind Rep. Darrell Issa’s (R-Calif.) plan to bombard the Obama administration with subpoenas if Republicans take back the House in November. “I think Congress has an appropriate role under the Constitution to provide oversight of the executive branch. And I would pledge that it’s going to happen,” he told reporters Wednesday.
John Thune: Washington is Killing Jobs. Sen. John Thune of South Dakota, chairman of the Senate Republican Policy Committee, says his party will use its increased muscle after the midterm elections to “provide some predictability and some certainty to small-business owners that their taxes aren’t going up.” “Almost everything that Washington is doing right now kills jobs because it increases the cost of doing business,” Thune said Tuesday in an interview for the POLITICO video series “The Jobs Report.”
Distrust of Media Hits Record High. Fifty-seven percent of Americans do not trust the news media to accurately and fairly report the news, a new high according to a Gallup poll out Wednesday. The percentage of Americans who distrust the media has been steadily climbing since the mid 1990s, when distrusts in the news media rated hovered around 45 percent.
Reuters:
UN Gets Backing for Sovereign Debt Project. The United Nations has won backing from a range of governments and financial institutions for a plan to draw up guidelines governing sovereign debt, a U.N. debt official said on Wednesday. The project, run by the United Nations Conference on Trade and Development (UNCTAD), aims to establish principles for both lenders and government borrowers to reduce the severity and frequency of sovereign debt crises.
China Criticizes Weak U.S. Dollar Policy. China said the United States should take action to stabilise the dollar, criticising Washington's expansionary monetary policy for weakening the currency despite its key role in the global financial system. The comments by a Chinese official at a meeting of the World Trade Organization came as the U.S. House of Representatives was set to pass a bill putting pressure on China to let the yuan rise faster. "We are very much concerned about how the U.S. would take practical and responsible measures to prevent the dollar glut and maintain the stability of the currency," Sun said.
Globe and Mail:
The Fed's Second Bubble. At the recent Federal Open Market Committee meeting, Federal Reserve Board Chairman Ben Bernanke signalled that he plans to keep interest rates effectively at zero for as long as possible, and that he’s ready to stand by with more quantitative easing (i.e. printing money) if necessary. But if the Fed’s blaming the last recession on the financial meltdown from the subprime mortgage market, why is it so committed to recreating those same credit conditions that spawned Wall Street’s worst-ever post-Depression crash?
Workers Arrive in Belgium for Spending Cuts Protest. Thousands of protesters from across Europe are arriving in Belgium for a mass demonstration against spending cuts by European governments. Trade unions hope that some 100,000 will march on European Union institution buildings in the capital, Brussels.
Irish Banks Hooked on ECB Cure as Lenihan's Financing Fails: Euro Credit. Irish Finance Minister Brian Lenihan persuaded lawmakers two years ago to back a guarantee of the country’s financial system to give banks time to wean themselves off European Central Bank and government life support. Instead, the banks are growing more dependent on the ECB. The cost of insuring Irish government debt against default has soared to a record as bond buyers shun Irish lenders, forcing the Dublin-based parliament to debate extending a guarantee of all deposits and most bank securities as the original pledge expires today. The consequences of adding bank liabilities to Ireland’s 87 billion euros ($118 billion) of sovereign debt “are huge,” said Mike Soden, the former chief executive officer of Bank of Ireland Plc and the author of “Open Dissent,” a book on the financial crisis. The nation’s borrowing costs are surging because “the markets are much quicker than the thinking power of the Department of Finance or anybody else,” he said. The banks’ failure to find alternative funding sources in the capital markets is stoking investor concern that the state may be overwhelmed by bailout costs. The banks are “tied to the sovereign,” Lenihan said in a Sept. 22 speech to a parliamentary committee. The extra yield investors demand to hold 10-year Irish bonds over German bunds widened 394 basis points to 447 basis points since the guarantee was introduced in September 2008. Credit-default swaps linked to Irish debt rose 11 basis points yesterday to 493 basis points, compared with other so- called euro peripherals such as Greece at 817 basis points and Portugal at 446 basis points, according to CMA prices.
Federal Reserve's Lockhart Says Need for More Monetary Easing Isn't Clear. Federal Reserve Bank of Atlanta President Dennis Lockhart said policy makers haven’t reached a consensus on whether to undertake a new round of buying Treasuries, and the need for further monetary easing isn’t clear. “For me personally it is not a foregone conclusion that more accommodation is required,” he told reporters after a speech today in Sewanee, Tennessee. “I am not yet of a firm mind of what exactly that problem is, and for that reason I’m not yet committed to a particular course of action that might involve further accommodation.” Fed officials “must come to grips” in the coming weeks “with the question of whether there is anything they can do to improve the situation in the economy and, if so, what that action should be,” Lockhart said in his speech about the Federal Open Market Committee’s decision. “If in six months or 12 months the economy is operating at the low level it is today” and unemployment is 9.5 percent or higher, “I will be comfortable with taking action,” he said.
Spanish Credit Rating Set for Moody's Cut as Growth Slows, Investors Say. Spain’s top Aaa credit rating, held since 2001, probably will be cut one level by Moody’s Investors Service as the euro region’s fourth-biggest economy struggles to grow, according to investors managing about $700 billion. Five out of eight money managers surveyed predicted a one- step reduction to Aa1, with the rest forecasting a two-level cut to Aa2. The decision may come this week after Moody’s put Spain’s debt on review for a possible downgrade on June 30, saying it would conclude the analysis within three months.
California Treasurer Lockyer Calls for Ban on Muni Credit-Default Swaps. California Treasurer Bill Lockyer said he wants regulators to prohibit municipal credit-default swaps because of concern that investors may use the instruments to manipulate the market and cost state taxpayers. Lockyer, 69, said he would ban credit-default swaps, a type of derivative used to protect debt-holders against default, if he had the authority. He’s called on regulators to adopt capital-margin requirements to reduce leverage and to prohibit the speculative use of credit-default swaps -- the trading of debt-insurance contracts by investors who don’t own the securities.
Hewlett-Packard(HPQ) Forecasts Sales, Profit That Beat Estimates. Hewlett-Packard Co., the world’s largest computer maker, forecast earnings and sales for fiscal 2011 that exceeded analysts’ estimates. The company expects earnings excluding costs of $5.05 to $5.15 a share on sales of $131.5 billion to $133.5 billion, interim Chief Executive Officer Cathie Lesjak said today. Analysts had predicted sales of earnings of $5.01 and revenue of $131.7 billion, according to a Bloomberg survey.
Boeing(BA) Gets $5.3 Billion U.S. Navy Order for 124 F/A-18s. Boeing Co. received a contract today for 124 F/A-18 fighter jets valued at $5.3 billion, the Pentagon said on its website. The contract is for 66 planes of the F/A-18 variant called the Super Hornet and 58 electronic jamming aircraft called the Growler, Boeing said today in a separate statement.
Sarkozy Readies France's Biggest Budget-Deficit Reduction in Two Decades. French President Nicolas Sarkozy’s government will today propose the country’s biggest annual budget-deficit cut in two decades to calm investor concerns and protect its top credit rating. Government borrowing will fall to about 6 percent of gross domestic product next year from about 7.8 percent this year, according to recent statements by Budget Minister Francois Baroin and Finance Minister Christine Lagarde. The ministers will present details of the budget to Sarkozy’s cabinet at 10 a.m. today in Paris.Sarkozy’s tax and spending plans may still leave his country trailing its euro-area peers in repairing national finances after the financial crisis. France’s deficit may exceed that of Germany, Italy, Belgium and the Netherlands just as Sarkozy is gearing up for an election in early 2012.
Japan's Tankan Sentiment Index Climbs Least in Six Quarters. Confidence among large Japanese manufacturers rose the least since early 2009 in September, and companies forecast that pessimists will outnumber optimists by year-end, as a rising yen threatens the nation’s recovery. The Tankan index of sentiment climbed 7 points in September to 8, the Bank of Japan said in Tokyo today. The figure compares with a 15-point increase in June. Confidence is expected to fall to minus 1 in December, the report said.
Investors, Regulators Laid Path to 'Flash Crash'. As the Securities and Exchange Commission finalizes its report on the May 6 "flash crash," it is being forced to confront the fallout of its own decisions—which Wall Street sought and cheered—that ushered in an era of fast trading dispersed across dozens of venues.
Currency Wars: A Fight to Be Weaker. Tensions Grow in Foreign-Exchange Market as Countries Scramble to Tamp Down Their Money. Tensions are growing in the global currency markets as political rhetoric heats up and countries battle to protect their exporters, raising concerns about potentially damaging trade wars. At least half a dozen countries are actively trying to push down the value of their currencies, the most high-profile of which is Japan, which is attempting to halt the rise of the yen after a 14% rise since May.
Tehran Touts Its Exports of Gasoline. Iran said Tuesday it has started exporting domestically produced gasoline, drawing skepticism from oil-industry experts but representing Tehran's latest show of defiance amid international sanctions aimed at curbing its nuclear ambitions.
HP(HPQ) Boosts Profit, Sales Forecasts; Shares Rise. Hewlett-Packard on Tuesday forecast revenue and earnings for fiscal 2011 above Wall Street's expectations, as it prepares to name a new chief executive to succeed Mark Hurd.
Hugh Hendry Making Huge $2 Billion Bet On Asia's Failure. Hugh Hendry, CEO of Eclectica Asset Management, revealed a huge bet against Asia in an interview with King World News (via Zero Hedge). Hendry thinks that Asia will be the next global market to hit the skids after the subprime collapse in the U.S. and the sovereign crisis in Europe. He envisions severe problems for Japan, when currency strength will for the country to engage in another, more aggressive round of quantitative easing, debauching the country's currency. So he is making a bet worth $2 billion against Japanese credit, notably in corporations. He sees overconfidence and over reliance on the growth of China as a reason for this position. He even compared China to Starbucks, noting that they are now investing money in manufacturing the same way Starbucks did in new stores: accepting a negative marginal return on invested capital.
Trucking Volume Collapses, Falls Most Month To Month Since March 2009. (graph) Tonnage fell by 2.7% from July to August, according to the American Trucking Association.That's the biggest month over month fall since March 2009. The chief economist at the ATA, Bob Costelo, says this slowdown was expected and that it should be slowing further with the economy for the remainder of the year.
NY Times:
Guilty Plea Expected by Ex-New York Comptroller Hevesi in Corruption Case. Alan G. Hevesi, the former state comptroller, is poised to plead guilty to a felony corruption charge after a lengthy investigation into his office’s rewarding of pension investment business to firms that provided financial benefits to Mr. Hevesi and his aides, people with knowledge of the case said on Tuesday.
House Likely to Join a Call Urging China to Raise Currency. The House is expected to give the Obama administration another tool in its diplomatic pouch to pressure China to let its currency rise in value, reflecting growing concern around the country over the loss of manufacturing jobs, persistently high unemployment and a rising trade deficit.
Mineral Trade Halt Called a Threat to Japan's Economy. A halt of Chinese shipments of crucial industrial minerals to Japan poses a threat to the Japanese economy, a top Tokyo government official said Tuesday, amid a dispute over territorial sovereignty that has damaged relations between the regional rivals.
Forbes:
Chevron(CVX) Drills First Deepwater Well In North America Since BP Disaster. With no fanfare, no press release, and no incidents, Chevron has drilled the first deepwater well in North America since the Deepwater Horizon disaster. How did the oil giant get around the Obama administration’s deepwater drilling moratorium? It drilled in Canada.
Institutional Investor:
Hard Times for D.E. Shaw. Hedge fund firm D.E. Shaw & Co. laid off 150 people today, according to sources familiar with the situation. The cuts, which amount to around 10 percent of the New York–based alternative asset manager’s work force, were across the board and included partners and portfolio managers, these sources confirmed.
Politico:
Obama: Yes to 2011 Climate Bill Push.President Barack Obama is pledging to throw his full weight next year behind efforts to overhaul the nation's energy and climate change policies, though he concedes such moves might need to happen "in chunks."
Reuters:
Activist Group Has Signatures for Recall in Bell. A citizens activist group said on Tuesday it had gathered enough signatures to force a recall election in the Los Angeles suburb of Bell, where eight current and former officials are accused of misappropriating some $5.5 million in public funds.
Spanish Unions to Stage General Strike Over Cuts. Trade unions have called for a general strike across Spain on Wednesday to protest against harsh cuts the government says are needed to cut the country's budget deficit.
SMSC Q2 Beat Street; Gives Q3 EPS Below Market View. Chipmaker Standard Microsystems Corp (SMSC) posted better-than-expected second-quarter results helped by lower expenses, but gave third-quarter earnings outlook below analysts' view as it expects "muted seasonality," sending its shares down 8 percent.
Green Mountain(GMCR) Says SEC Probes Accounts, Shares Fall. Green Mountain Coffee Roasters Inc (GMCR) said U.S. regulators are conducting an inquiry into some of its revenue recognition practices and its relationship with a 'fulfillment' vendor, sending its shares down 16 percent.
Sealy Q3 Profit Misses Wall Street View. Mattress-maker Sealy Corp (ZZ) reported disappointing third-quarter results as the company was forced to cut prices for its lower end mattresses to fend off competitors amid inconsistent demand. Shares of the Trinity, North Carolina-based company were down nearly 12 percent after the bell.
Dublin to Launch Fresh Anglo Irish Bail-Out. Ireland's central bank may announce plans to inject additional capital of about 5 billion euros($6.8 billion) into Anglo Irish Bank Corp. The extra funds, to be announced on Sept. 30, will take the bailout costs for the bank to 30 billion euros, the FT said. Finance Minister Brian Lenihan will also announce plans to meet tougher capital targets, including a restructuring of part of Anglo Irish's 16 billion-euro bond debt.
Junk Buying Fuels 'Yield Chasing' Fears. Retail investors in the US have sharply increased their direct buying of junk bonds in the third quarter of the year, providing evidence of a trend of “yield chasing” that is worrying regulators. Finra, which regulates US securities firms, said the trend was a concern given the risks involved in this part of the corporate bond market.
Shell Plan Rapid North American Growth. Royal Dutch Shell is planning a rapid expansion of its North American business to raise production by 40 per cent to 1m barrels equivalent per day in 2014, including gas, Canadian oil sands and deepwater oil. The strategy, announced in Canada on Tuesday, is part of Europe’s largest oil company’s plan to meet its “aspiration” of producing 3.7m barrels per day in 2014, compared with 3.15m last year.
SkyNews:
Multi-Attack Terror Plot On European Cities. Intelligence agencies have intercepted a terror plot to launch Mumbai-style attacks on Britain and other European countries, according to Sky News sources. Sky's foreign affairs editor Tim Marshall said militants based in Pakistan were planning simultaneous strikes on London and major cities in France and Germany. He said the plan was in the advanced but not imminent stage and the plotters had been tracked by spy agencies "for some time".
The Standard:
Expert Tips 5% Fall in 'Overpriced' Hong Kong Property Market. The Hong Kong property market is overpriced and will see a 5 percent correction by the end of the year, according to David Ng Ka-Chun, researcher at Royal Bank of Scotland (Hong Kong).
21st Century Business Herald:
Some steelmakers in China have continued production and even boosted output amid government measures to curb overcapacity, citing an unidentified person at the China Iron & Steel Association.
Evening Recommendations Citigroup:
Upgraded (ENDP) to Buy, target raised to $40.
Wells Fargo:
Rated (WMS), (PENN), (WYNN) and (BYI) Outperform.
Night Trading
Asian equity indices are unch. to +.75% on average.
Asia Ex-Japan Investment Grade CDS Index 126.0 -1.0 basis point.
Asia Pacific Sovereign CDS Index 112.50 -.5 basis point.
Bloomberg consensus estimates call for a weekly crude oil inventory decline of -700,000 barrels versus a +970,000 barrel increase the prior week. Gasoline supplies are expected to rise by +350,000 barrels versus a +1,590,000 barrel gain the prior week. Distillate inventories are estimated to rise by +325,000 barrels versus a +347,000 barrel increase the prior week. Finally, Refinery Utilization is expected to fall by -.6% versus a +.2% gain the prior week.
Upcoming Splits
None of note
Other Potential Market Movers
The Fed's Rosengren speaking, Fed's Kocherlakota speaking, Fed's Plosser speaking, weekly MBA mortgage applications report, $29 Billion 7-Year Treasury Notes Auction, BofA Merrill Power/Gas Conference, Oppenheimer Industrials Conference, UBS Auto Conference, JMP Securities Financial Services Conference, Wells Fargo Consumer Conference, (KMT) Analyst Day, (CRR) Analyst Meeting and the (FDX) Analyst Meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
North American Investment Grade CDS Index 110.52 bps +1.86%
European Financial Sector CDS Index 134.11 bps +2.74%
Western Europe Sovereign Debt CDS Index 158.66 bps +1.71%
Emerging Market CDS Index 225.10 bps -.19%
2-Year Swap Spread 16.0 -2 bps
TED Spread 15.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .14% +1 bp
Yield Curve 203.0 -6 bps
China Import Iron Ore Spot $139.50/Metric Tonne unch.
Citi US Economic Surprise Index -11.70 -4.6 points.
10-Year TIPS Spread 1.82% +2 bps
Overseas Futures:
Nikkei Futures: Indicating -5 open in Japan
DAX Futures: Indicating -8 open in Germany
Portfolio:
Slightly Lower: On losses in my Tech and Ag long positions
Disclosed Trades: None
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite recent sharp equity gains, sovereign debt worries and more weak economic data. On the positive side, Retail, Semi, Gold and Steel shares are especially strong, rising 1.0%+. Growth stocks are outperforming value shares again. On the negative side, REIT, Wireless, Ag and Coal shares are under pressure, falling more than .75%. Small-caps are underperforming. (XLF) is also a bit heavy. Weekly retail sales rose +2.6% this week, which is the slowest pace since the week of May 4. Lumber is down another -2.97% today. The Euro Financial Sector CDS Index is up again today and is very near a technical breakout, which is a major negative. The Portugal sovereign cds is rising +4.10% to 435.0 bps and is close to a new record high. The Ireland sovereign cds is continuing its recent parabolic move higher, rising another +1.30% to a record of 485.10 bps and the Spain sovereign cds is gaining +2.29% to 234.29 bps. Furthermore, key credit default swap indices continue to move higher, even as equities trend higher, which is also a large negative. I still believe equity investors will continue to ignore these worrisome moves until they start to negatively impact the euro currency. Oil continues to trade poorly given recent equity and euro strength. The 10-year yield is down another -6 bps to 2.46% and is close to its 52-week low at 2.41%. The Shanghai Composite closed slightly below its 50-day moving average again last night and continues to trade poorly. The knee-jerk selling in (AAPL) shares on false rumors could be another red flag for the broad market. Investors continue to ignore most negative news items, which could be related to end-of-the-quarter positioning, but remains a large market positive for now. I expect US stocks to trade mixed-to-lower into the close from current levels on rising sovereign debt angst, profit-taking, more shorting, China concerns and increasing financial sector pessimism.
