North American Investment Grade CDS Index 82.87 -3.71%
European Financial Sector CDS Index 123.18 bps -9.86%
Western Europe Sovereign Debt CDS Index 176.83 bps -.84%
Emerging Market CDS Index 225.38 -2.96%
2-Year Swap Spread 18.0 unch.
TED Spread 19.0 unch.
Economic Gauges:
3-Month T-Bill Yield .12% unch.
Yield Curve 270.0 -1 bp
China Import Iron Ore Spot $184.10/Metric Tonne -.63%
Citi US Economic Surprise Index +70.20 -6.9 points
10-Year TIPS Spread 2.41% -2 bps
Overseas Futures:
Nikkei Futures: Indicating +35 open in Japan
DAX Futures: Indicating +5 open in Germany
Portfolio:
Higher: On gains in my Technology, Medical and Biotech longs
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is very bullish as the S&P 500 is building on yesterday's reversal higher despite Mideast Unrest, some disappointing economic data and emerging markets inflation fears. On the positive side, Education, Gaming, REIT, Construction, Hospital, Biotech, Medical, Networking, Disk Drive, Semi, Ag, Oil Service, Oil Tanker and Coal shares are especially strong, rising more than 1.5%. Small-cap shares are outperforming again. As well, (XLF) and (IYR) have outperformed throughout the day. Copper is rising +2.97%. The 10-year yield is falling -3 bps to 3.42%. The US Muni CDS Index is falling -4.53% to 161.59 bps. The Italy sovereign cds is falling -3.05% to 185.11 bps and the Russia sovereign cds is declining -4.30% to 143.97 bps. The Saudi sovereign cds is declining -4.08% to 136.0 bps and the Israel sovereign cds is falling -1.23% to 174.47 bps, which are also a big positives. On the negative side, Restaurant, Retail and Steel shares are underperforming, rising less than .5%. The Citi Eurozone Economic Surprise Index is falling -25.1% to +14.60, which is the lowest since Nov. 15, 2010. The UBS-Bloomberg Spot Ag Index is rising +3.3% and oil is gaining almost 2.0%. Oil's failure to follow-through on yesterday's downside reversal is a worry as the situation in the region continues to deteriorate. I expect more equity market volatility related to this over the coming weeks. I still believe $100/bbl. is the line in the sand. Any significant break above this level, would likely lead to more meaningful equity weakness. Stocks can likely grind back to recent highs, but not much higher, if oil hovers in the $90s. However, a significant break below $90 would likely propel the major averages to new multi-year highs. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, earnings optimism and lower long-term rates.
Protests Across Arab World Gain Momentum as Libyans Revolt Against Qaddafi. Protesters surged into city centers across the Middle East and North Africa to demand more rights today as Muammar Qaddafi of Libya became the latest regional autocrat to see his grip on power crumble. There were demonstrations in Yemen, Jordan, Tunisia, Egypt and Iraq, with protesters in each country demanding more accountable governments and better living standards. In Yemen, tens of thousands gathered in the capital, Sana’a, calling for an end to President Ali Abdullah Saleh’s three-decade rule. Protests there have persisted for 15 days even as police resorted to tear gas, truncheons and at times guns, leaving at least seven people dead. In Tunisia, thousands called for the resignation of Mohamed Ghannouchi, the interim prime minister who was a close ally of ousted President Zine El Abidine Ben Ali. In Egypt today, Cairo’s Tahrir Square once again filled with demonstrators, this time demanding the removal of a Cabinet sworn in on Feb. 22. The protesters were reacting against the failure of the military rulers who took over from Mubarak to change the leadership of key ministries, including foreign affairs, finance and defense. In Jordan, thousands demanded reforms and protested the use of force last week to suppress a similar rally. The demonstrators demanded faster social and political change, and the abolition of the country’s peace treaty with Israel. In Iraq, at least five were killed in the northern city of Mosul and rallies across the country led to clashes with security forces, Al-Jazeera reported. Demonstrations demanding more accountability from elected leaders and better services have intensified this month, though they began before the current wave of regional unrest.
Oil Heads for Biggest Weekly Gain in Two Years on Libyan Unrest. Crude oil headed for its biggest weekly gain in two years on concern the turmoil that has cut Libya’s output may spread to other parts of the Middle East. Futures in New York surged to a 29-month high yesterday amid estimates that Libya’s output was cut by as much as two- thirds. Crude oil for April delivery climbed 20 cents to $97.48 a barrel at 11:02 a.m. on the New York Mercantile Exchange. Oil surged to $103.41 yesterday, the highest intraday price since Sept. 29, 2008. Prices for futures closest to expiration are up 13 percent this week in New York, the biggest increase since the five days ended Feb. 27, 2009. Brent crude oil for April settlement rose 22 cents to $111.58 a barrel on the London-based ICE Futures Europe exchange. Yesterday, it climbed to $119.79, the highest price since Aug. 22, 2008. Brent is up 8.8 percent this week.
Hedge Funds Cut Food-Price Bets as Grains Take a Fall. Hedge funds are leading an exodus from agricultural markets, slashing bullish bets in the U.S. from almost the highest levels on record after grain prices slumped, money managers said. The 8.6 percent plunge in wheat since Feb. 18 and a decline in corn and soybeans means speculators probably kept cutting positions this week, said Nic Johnson, who helps manage about $30 billion in commodities at Pacific Investment Management Co. in Newport Beach, California. Speculators reduced bets on rising wheat prices by 23 percent in the week ended Feb. 15, Commodity Futures Trading Commission data show. Bullish bets on soybeans fell 18 percent and those for corn slid 3.4 percent. Holdings in eight agriculture commodities by money managers are higher than during the global food crisis three years ago. “The amount of speculative positions is off the charts,” Johnson said. “What you’ve seen in the last few days is liquidation of that length.” In agricluture, “the big speculators were holding very large net-long positions and have begun to liquidate those positions to take some profits after the strong rally,” said Dan Cekander, the director of grain research at Newedge USA LLC in Chicago. “We may have reached the limit of their buying.” The move into agriculture accelerated in the past six months. Corn is up 40 percent since the end of September, while soybeans advanced 20 percent and wheat 16 percent. Open interest, or contracts outstanding, reached record levels this month for all three commodities, according to Chris Grams, a spokesman for CME Group Inc., the world’s largest futures market. Investors put a record $2.6 billion into agriculture-index swaps, exchange-traded products and medium-term notes last month, after pouring $5.7 billion during the fourth quarter of 2010, according to Barclays Capital. Demand for new shares of 19 exchange-traded products tracking agricultural commodities rose 33 percent this year, according to data compiled by Bloomberg. Shares outstanding in Deutsche Bank AG’s $3.5 billion PowerShares DB Agriculture exchange-traded fund expanded 24 percent, data compiled by Bloomberg show. “The trend itself is based on fundamentals, but price moves are magnified on the upside and downside by demand from speculators,” said James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees $340 billion. “There are a whole host of portfolios out there, and for a small fraction of them to be convinced to own some commodities, that is a huge new demand.” Barclays Plc’s iPath Dow Jones-UBS ETNs also attracted money. Shares outstanding in its $347 million grains ETN rose 83 percent since the start of the year, the $295 million agriculture index ETN more than doubled, and units in the $117 million livestock ETN increased 75 percent, according to data compiled by Bloomberg. “There’s real scarcity there,” said Peter Timmer, a professor emeritus at Harvard University and an expert in food policy. “We need to deal with that. But we don’t need to exacerbate the scarcity with all this hot money.”
Rice Surges Limit as Leaders Seek to Avoid Food-Price Inflation. Rice, the staple food for half the world, rallied by the daily limit from a four-day losing streak in Chicago as governments boosted stockpiles to curb prices that sparked protests in North Africa and the Middle East. Bangladesh, South Asia’s biggest buyer, said it’s seeking supply from India as part of more regular grain purchases to bolster food security. Japan bought 68,000 metric tons of rice from the U.S., Australia and Thailand in a tender two days ago. “When we go for international tenders and prices suddenly rise, private suppliers sometimes fail to fulfill their commitments,” Muhammad Abdur Razzaque, the Bangladeshi food minister, said in an interview yesterday. “They don’t supply us and put us in trouble. It has happened.” Rice traded in Chicago has gained 48 percent since the end of June, part of a surge in agriculture prices that the United Nations says drove world food prices to a record last month. Rice for May delivery rose 50 cents, or 3.6 percent, to $14.31 per 100 pounds at 11:45 a.m. on the Chicago Board of Trade. The grain climbed 8.5 percent in January. The grain represents almost 50 percent of food costs of the poorest across the developing world and 20 percent of total household spending, according to the International Rice Research Institute, based in Los Banos, the Philippines.
Fed May Need to Reduce $600 Billion Easing, Lacker Tells CNBC. Federal Reserve Bank of Richmond President Jeffrey Lacker said an early end to the central bank’s plan to purchase $600 billion in Treasury securities may be needed to limit inflation pressures. “The improvement in the growth outlook has been noticeable enough to tilt the case further against QE2,” Lacker said today in a CNBC television interview, referring to the second round of so-called quantitative easing. “To my mind, it was a close call to begin with.” Lacker also said in the interview that rising oil and commodities prices pose a risk to inflation later in the year as companies seek to recoup the costs. “As long as inflation expectations are managed pretty well, I think we’re going to get through this without a big burst of inflation,” he told CNBC.
The cost of hiring capesize ships to haul iron ore and coal fell to the lowest level in more than two years on prospects for deliveries of more ships. Capesize rents slid 30% for the week to $4,653 a day, the lowest since Dec. 9, 2008. That compares with average operating costs estimated at about $7,000 by Dag Kilen, an analyst with RS Platou Markets AS in Oslo. "The market seems crippled with oversupply," Kilen said today. "The only option for the owners left could be idling vessels', primarily the older tonnage, and creating an artificial tonnage shortage."
Republicans Urge Democrats to Accept Budget Cut, Avoid Shutdown. House Republicans demanded that Senate Democrats accept their plan to cut $4 billion in federal spending while keeping the government open until mid-March or bear responsibility for “actively engineering” a shutdown. “If Senate Democrats walk away from this offer” then “they are actively engineering a government shutdown,” Deputy Republican Whip Pete Roskam of Illinois told reporters on a conference call. "We hope the Senate is going to finally join us in these common-sense cuts to keep the government running and not continue to play chicken with government shutdowns,” said House Majority Leader Eric Cantor of Virginia. “We don’t want to shut the government down. That is not an acceptable or responsible option for any of us,” Cantor said.
US Economy: Consumer Sentiment Climbs to Three-Year High. The Thomson Reuters/University of Michigan final index of sentiment climbed to 77.5, exceeding the median forecast of economists surveyed by Bloomberg News, from 74.2 in January, a report today showed.
Wall Street Journal:
Gadhahi Forces Fire on Tripoli Protests. Tripoli residents mounted their first mass demonstrations in days Friday, gathering across the capital to pray and demonstrate against their leader, but were met with heavy gunfire in several places by forces loyal to Col. Moammar Gadhafi. Residents in several spots of the capital, reached by telephone, described a heavy presence of Gadhafi loyalists who were armed with machine guns and manning roadblocks. Witnesses and march participants in at least three neighborhoods reported that security forces had opened fire on crowds of demonstrators, with witnesses describing streets strewn with bodies. Col. Gadhafi's move against Libyans in the capital came as several cities across the country—most of those to the east, as well as the strategic oil hub of Al-Zawiya to the west of Tripoli—came under control of those who oppose his regime.
Troopers Hunt for Wisconsin Senators. Wisconsin Republican lawmakers dispatched state troopers to the homes of absent Democratic senators in search of a quorum Thursday but came up empty as the state's legislative standoff continued.
Banks Bristle at Mortgage-Loan Plan. The banking industry privately knocked the Obama administration's nascent proposal to force banks to modify mortgage loans, saying the plan won't help solve problems facing troubled borrowers. The nation's largest banks haven't yet seen a proposal that is designed to help resolve mortgage-servicing errors that affected troubled borrowers. But industry executives are bristling at the administration's new approach, disagreeing that principal reductions will help borrowers and, in turn, the broader housing market.
Libya Instability Should Buoy US Dollar, Energy Expert Says. Rising oil prices often depress the value of the U.S. dollar, but political instability in Libya and other countries is likely to buoy the U.S. currency, said Daniel Yergin, chairman of IHS Cambridge Energy.
Kleiner Perkins partner Mary Meeker analyzes America as a corporation in an epic presentation: USA Inc.: A Basic Summary of America's Financial Statements. Meeker says USA Inc. is on a parallel course to GM before its bankruptcy. Only through drastic cost-cutting can our country bounce back -- like GM has done in the past two years. Here are some key slides from her definitive report:
Libya: State TV Announces Salary Increases, Money to Families as Protesters Push to Oust Kadafi. In an apparent bid to mitigate swelling anti-government protests that have resulted in the Libyan regime losing control over large swaths of land to demonstrators in recent days, Libyan state TV announced on Friday that the government will give Libyan families $400 each. The broadcast, aired as demonstrators were reported to be gearing up for massive protests to try to oust embattled Libyan leader Moammar Kadafi from power, also said that the government pledged to increase salaries for state employees by as much as 150%. Media reports say it's the first time the Kadafi regime has offered incentives to Libyans in an attempt to keep their loyalty, and suggested that the government is making use of its large oil earnings to try to retain public support.
Rasmussen Reports:
Voters Continue to Give Obama Low Marks on the Economy. A new Rasmussen Reports telephone survey finds that 35% of Likely U.S. Voters feel the president is doing a good or excellent job handling the economy, but 47% rate the job he's doing in this area as poor, the most negative finding since mid-November.
Reuters:
Saudi Raises Oil Output as Libyan Exports Disrupted.Saudi Arabia has raised oil output about 8 percent to above 9 million barrels per day (bpd) to make up for a near halt in Libyan exports, an industry source said, helping prices fall further from the highest since 2008. Some European oil firms said they were looking to buy more crude from Iran and the West's energy watchdog, the International Energy Agency, said Friday there was no need for an immediate strategic stock release. "We have started producing over 9 million barrels per day. We have a lot of production capacity," the industry source familiar with Saudi production told Reuters. That would be up more than 700,000 bpd from January.
US Leading Economic Growth Gauge Rose Last Week - ECRI. A measure of future U.S. economic growth rose in the latest week, while its annualized growth rate jumped to its highest level since May, a research group said on Friday. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index climbed to 130.5 in the week ended Feb. 18 from 129.5 the previous week. The index's annualized growth rate increased to 6.1 percent from 4.9 percent a week earlier. It was the highest level since the week ended May 14, 2010 when it stood at 9.4 percent.
Qaddafi's Grip on Power Weakens on Loss of Territory. Libyan leader Muammar Qaddafi’s world was shrinking yesterday as a close adviser abandoned him, opponents consolidated their control of the country’s oil-rich east, and Switzerland froze some of his assets. The leader responded by reinforcing his defenses in and around the capital, Tripoli, with tanks and mercenaries. “It’s a massacre in there,” Egyptian Mohamed Yehia said, describing recent violence after fleeing his home in the eastern coastal city of al-Bayda. Forces still loyal to the Libyan dictator moved against cities near Tripoli, and more than 100 people were killed in Az-Zawiyah, a town west of the capital, Al Jazeera reported.
Chavez Says Qaddafi Faces Civil War Amid Speculation on Asylum. Venezuelan President Hugo Chavez said Libya is bracing for civil war, his first comments on the unrest that follow speculation he may offer Libyan leader Muammar Qaddafi asylum. “Long live Libya and its independence,” Chavez said today in a post on his Twitter account, which came after comments from his Foreign Minister Nicolas Maduro on Libya before the National Assembly. “Qaddafi is facing a civil war.”
LinkedIn Blocked in China After 'Jasmine' Pro-Democracy Postings. LinkedIn Corp., operator of the largest networking site for professionals, became inaccessible in China after a user posted comments that Tunisia’s Jasmine Revolution should spread to the Asian country. The blockage of the service "appears to be part of a broader effort in China going on right now, involving other sites as well," Hani Durzy, a spokesman for Mountain View, California-based LinkedIn, said in an e-mail. Since 2009, the world’s largest Internet market by users has shut out sites such as those operated by Facebook Inc. and Twitter Inc. that don’t comply with Chinese rules to self censor information on politically sensitive subjects. A LinkedIn user identified as “Jasmine Z” last week set up a discussion group to post opinions on whether the revolutions that brought down the leaders of Tunisia and Egypt should be brought to China.
Investors Stretch for Yield Amid 'Collapsing' CMBS Spreads. Buyers are snapping up newly issued bonds tied to real estate, driving yield-starved investors toward riskier debt sold during the lending boom. “Collapsing new issue spreads have helped to spur further tightening in legacy securities” as the market is “on track for a strong resurgence” this year, Morgan Stanley analysts led by Richard Parkus said in a report today. Banks have arranged about $5 billion in commercial- mortgage-backed bond sales this month, and a $1.5 billion offering from JPMorgan Chase & Co. is currently being marketed, according to data compiled by Bloomberg. Spreads have tightened “dramatically” with each successive deal, creating more demand for older bonds, according to New York-based Morgan Stanley. “The problem with new issue is it’s scarce,” Parkus said in a telephone interview. “There are just not enough bonds, which means investors are left looking for additional bonds in the legacy universe.” Legacy securities are those sold before the credit market seized up in 2008, when underwriting standards were looser and as property values soared.
Russia's Terrorists Threaten Olympics as Focus Moves to Sochi. Islamic militants in southern Russia, inspired by uprisings across the Arab world, are changing tactics and attacking targets closer to Sochi in a bid to derail the 2014 Winter Olympics. The killing of Muscovites and bombing of a ski lift at a resort in Kabardino-Balkaria, a region between Chechnya and Sochi, last week is part of “new terror campaign” against Russian rule designed to elicit maximum media coverage, said Grigory Shvedov, chief editor of Caucasian Knot, a Moscow-based news and analysis group that tracks the situation in the North and South Caucasus.
U.S. Arrests 100 People in Nationwide Sweep Against Mexican Drug Cartels. U.S. authorities arrested 100 people and seized more than $4 million in a nationwide sweep against Mexican drug cartels sparked by the killing of a U.S. immigration agent last week, Drug Enforcement Administration officials said.
Brown Says California Faces $25 Billion in Budget Cuts Without Tax Vote. California Governor Jerry Brown pledged to cut $25 billion from an $85 billion spending plan to close the state’s budget gap if lawmakers block a special election to allow voters to extend temporary tax increases. If lawmakers don’t approve the special election, Brown said he’d hold up the budget for as long as it takes to eliminate the $25 billion deficit through spending cuts. “It’s very fundamental, whether you vote the taxes or you vote the cuts,” said Brown, a 72-year-old Democrat who was governor from 1975 to 1983.
Boeing(BA) Defeats EADS for $35 Billion Air Force Tanker Program. Boeing Co., the sole supplier of aerial refueling tankers to the U.S. Air Force since 1948, beat European Aeronautic, Defence & Space Co. for a $35 billion program to build 179 new tankers, the Pentagon said today. It was the Chicago-based company’s third try at the contract since Congress and the Air Force first proposed the tanker replacement program in late 2001. “Boeing was the clear winner,” Deputy Defense Secretary William Lynn said at a Pentagon news conference. “This competition favored no one, except the taxpayer and the war fighter.”
AIG(AIG) Says Risk of Losses Has Increased on $46.6 Billion Muni-Bond Portfolio. American International Group Inc., the bailed-out insurer, said it faces increased risk of losses on its $46.6 billion municipal bond portfolio and that defaults could pressure the company’s liquidity. “Because of the budget deficits that most states and many municipalities are continuing to incur in the current economic environment, the risks associated with this portfolio have increased,” New York-based AIG said today in its annual report to the Securities and Exchange Commission. AIG said that “several” issuers of the bonds it holds have been downgraded, amid budget pressures. As of Dec. 31, the company had more than $700 million of state general-obligation bonds from California, which has the lowest Standard & Poor’s credit rating of any state. It also held more than $200 million in the bonds from Illinois.
Wall Street Journal:
Libya Rebels Tighten Noose. Rebels menaced Col. Moammar Gadhafi's stronghold from all sides Thursday, as insurgent commanders said they have sent troops for an offensive against Tripoli and residents of the capital prepared their first mass demonstration in days on Friday. Just 30 miles west of Col. Gadhafi's shrinking base of power, antiregime forces battled for the oil-industry town of Al-Zawiya. On Thursday evening, opposition forces gained control of Misrata, a coastal city 130 miles east of Tripoli. In Benghazi, the country's second-largest city and the hub of eastern Libya, a group of army colonels who recently defected said they are plotting the end their former commander's 42-year reign, which began to crumble last week as Libyans joined the antiauthoritarian protests roiling the Arab world. "We have a plan to bring down Tripoli," Col. Tareq Saad Hussein, one of seven former colonels who have taken charge of rebel forces in Benghazi, said in an interview. "We will not stop until we liberate the whole country."
Libya Power Void Raises Terror Fears. It's unlikely al Qaeda is to blame for the uprising in Libya, as embattled strongman Moammar Gadhafi asserts—but the country is home to a young cadre of Islamist extremists, many of whom fought against U.S. forces in Iraq and Afghanistan. As anti-government forces take over the eastern part of Libya, concern is growing that extremists from that region could take advantage of the government's disintegration to morph into a wider terrorist threat.
Pressures Mount to Resume Drilling. Interior Secretary Ken Salazar plans to meet with oil industry executives in Houston Friday to assess the industry's readiness to handle a major offshore oil spill, amid growing pressure from congressional Republicans and a federal judge to resume deep-water drilling in the Gulf of Mexico. The recent jump in world oil prices and U.S. gasoline prices following unrest in Libya has spurred renewed calls from many Republicans and Gulf Coast Democrats in Congress to allow more domestic production. One House committee is scheduled to hold hearings on drilling policy next month.
Publishers Expand E-Textbook Offerings for Classroom. In a sign that tablet computers are becoming increasingly mainstream, schools are beginning to incorporate the devices into the classroom, leading publishers to strike deals to expand their e-textbook offerings.
Business Insider:
Did Goldman Sachs(GS) Secretly Write Some Democratic Propaganda And Disguise It as Research? A Goldman Sachs research report warning that austerity measures and a possible budget shut down would be a drag to growth is being seen as a covert piece of Democratic propaganda by some on the right. The report, by Goldman economist Alec Phillips, was first surfaced yesterday by ABC, which published a few key paragraphs. See if you can spot the propaganda.
Hugh Hendry's Awesome New Presentation On How And Why He's Shorting China. Hugh Hendry spoke about why he's shorting China today at the Grant Interest Rate Observer conference today. In the following presentation, he explains his trade in 20 charts that are of course, bursting with eccentric personality, just like he is.
ObamaCare Is Starting To Bleed Insurers Dry. In an industry that already suffers low profit margins, mandates are driving insurers from the health insurance sector altogether.
First Solar(FSLR) Weakens Sales Forecast, Stock Drops. U.S. solar company First Solar Inc lowered the top end of its 2011 sales forecast and said it cut prices in anticipation of solar subsidy cutbacks that could hamper demand in Europe, and its stock fell 3.8 percent after hours.
Offshore Drillers Eye Brazil Boost for Deepwater. Leading offshore drilling contractors expect deepwater demand to improve this year as an impending contracting move by Petrobras (PETR4.SA) is likely to prompt other oil executives to secure rigs while they can.
Salesforce.com(CRM) Beats Street, Shares Jump. Cloud-based software maker Salesforce.com Inc (CRM.N) announced stronger-than-expected quarterly results and an upbeat sales forecast for the current quarter, sending its shares up 7.4 percent.
Deckers Outdoor(DECK) Q4 Beats on Strong UGG Sales. Deckers Outdoor Corp reported a better-than-expected quarterly profit for the ninth straight quarter at least, helped by strong demand for its UGG boots, driving its shares up 7 percent in extended trading.
Financial Times:
Sovereigns Turn to Pre-Crisis Financial Wizardry. Warren Buffett, one of the world’s most respected investors, labelled them “weapons of mass destruction”. In the wake of the financial crisis, various policymakers and regulators chimed in to demonise derivatives, along with structured finance and hedge funds, as causes of the turmoil. But in recent months, these tools have been increasingly embraced by countries to help them out of crisis.
Fears Over CFTC Derivatives Rule. Leading US exchanges are gravely concerned about proposed rules that could hamper the launch of new derivatives products – a key strategy in the current round of exchange mergers. The issue revolves around a rule proposed by the Commodity Futures Trading Commission that 85 per cent of annual trading in a futures contract or swap must occur on an exchange, or what is called a Designated Contract Market.
4Q Revised GDP is estimated to rise +3.3% versus a prior estimate of a +3.2% rise.
4Q Revised Personal Consumption is estimated to rise +4.2% versus a prior estimate of a +4.4% gain.
4Q Revised GDP Price Index is estimated to rise +.3% versus a prior estimate of a +.3% gain.
4Q Revised Core PCE is estimated to rise +.4% versus a prior estimate of a +.4% gain.
9:55 am EST
Final Univ. of Mich. Consumer Confidence for February is estimated to rise to 75.4 versus a prior estimate of 75.1.
Upcoming Splits
(ETN) 2-for-1
Other Potential Market Movers
The Fed's Lacker speaking, Fed's Yellen speaking, (ETN) analyst meeting, (IMGN) investment community meeting and the (TXN) international conference could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by technology and retail shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
North American Investment Grade CDS Index 86.06 +.88%
European Financial Sector CDS Index 131.66 bps +.83%
Western Europe Sovereign Debt CDS Index 178.33 bps +.47%
Emerging Market CDS Index 231.29 +.09%
2-Year Swap Spread 18.0 +1 bp
TED Spread 19.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .12% +1 bp
Yield Curve 271.0 -3 bps
China Import Iron Ore Spot $184.90/Metric Tonne -.43%
Citi US Economic Surprise Index +77.10 -.1 point
10-Year TIPS Spread 2.43% +2 bps
Overseas Futures:
Nikkei Futures: Indicating -12 open in Japan
DAX Futures: Indicating +5 open in Germany
Portfolio:
Higher: On gains in my Technology, Medical, Biotech, Retail longs and emerging market shorts
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 is reversing higher despite Mideast Unrest, rising eurozone debt angst and US housing concerns. On the positive side, Airline, Road & Rail, Education, Homebuilding, Construction, HMO, Hospital, Wireless, Networking, Disk Drive, Semi, Software, Internet, Steel, Alt Energy and Defense shares are especially strong, rising more than 1.0%. Small-cap shares are outperforming. As well, transport and tech shares are relatively strong. Oil and gold have had significant downside reversals on unconfirmed news. The UBS-Bloomberg Spot Ag Index is also down -.55%. Copper is rising +1.48%. The 10-year yield is falling -3 bps to 3.45%. The US Muni CDS Index is falling -2.23% to 169.25 bps. The AAII % Bulls fell to 36.63 this week, while the % Bears rose to 36.14, which is also a big positive. On the negative side, Oil Service and Oil Tanker shares are under pressure, falling more than 1.0%. Cyclicals are underperforming again and (XLF)/(IYR) are relatively weak. Lumber is declining another -3.15% and has broken down again technically. The Saudi sovereign cds is rising +1.31% to 141.79 bps and the Israeli sovereign cds is rising +2.02% to 176.63 bps. Moreover, the Spain sovereign cds is rising +2.95% to 271.83 bps, the Belgium sovereign cds is climbing +2.92% to 181.80 bps and the Italy sovereign cds is gaining +3.62% to 191.33 bps. Investor complacency regarding the situation in the Mideast still seems too high, however the technical reversal lower in oil after it repeatedly failed to hold $100/bbl. is noteworthy. If oil follows through to the downside tonight and in the morning I would expect to see further equity strength. One of my longs, (SXCI), is surging 6% today on volume after earnings. I still see substantial upside to the shares over the longer-run. I expect US stocks to trade mixed-to-higher into the close from current levels on lower energy prices, short-covering, bargain-hunting and lower long-term rates.
