North American Investment Grade CDS Index 83.93 +.82%
European Financial Sector CDS Index 148.85 bps +4.85%
Western Europe Sovereign Debt CDS Index 184.50 bps -.72%
Emerging Market CDS Index 224.49 +10.74%
2-Year Swap Spread 22.0 +2 bps
TED Spread 16.0 +1 bp
Economic Gauges:
3-Month T-Bill Yield .14% unch.
Yield Curve 278.0 -3 bps
China Import Iron Ore Spot $185.30/Metric Tonne -.16%
Citi US Economic Surprise Index +28.20 -5.2 points
10-Year TIPS Spread 2.26% +1 bp
Overseas Futures:
Nikkei Futures: Indicating -115 open in Japan
DAX Futures: Indicating -6 open in Germany
Portfolio:
Lower: On losses in my Retail, Biotech and Tech long positions
Disclosed Trades: Added (IWM)/(QQQQ) hedges, added to my (EEM) short
Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 trades substantially lower on good volume, despite mostly positive economic data and diminishing eurozone sovereign debt angst. On the positive side, Coal, Oil Service and Oil Tanker shares are rising on the day. Copper is rising +.38% and lumber is rising +.48%. The 10-year yield is falling -6 bps to 3.33%. The Spain sovereign cds is falling -3.93% to 264.85 bps, the Italy sovereign cds is dropping -2.87% to 186.11 bps and the Ireland sovereign cds is falling -2.01% to 618.53 bps. On the negative side, Airline, Education, Retail, Construction, HMO, Biotech, Networking, Disk Drive, Semi, Software, Internet and Alt Energy shares are under significant pressure, falling more than -3.0%. The Brazil sovereign cds is rising +7.5% to 119.06 bps, the Russia sovereign cds is gaining +7.8% to 154.70 bps and the Egypt sovereign cds is climbing +3.9% to 390.80 bps. Moreover, the Emerging Markets Sovereign CDS Index is jumping +7.62% to 210.24 bps. China's 1yr swap rate is making another new multi-year high, rising +14 bps to 3.81%. The number of autos on ships anchored in global ports continues to trend higher, which indicates slowing demand from dealers. If unrest in the middle-east spreads and sends oil above $100/bbl, global equities will come under increasing pressure as inflation worries in emerging markets intensify, thus increasing the odds of hard economic landings in those economies. As well, a significant spike in energy prices would greatly damage consumer spending in developed economies. I expect US stocks to trade mixed-to-lower into the close from current levels on profit-taking, more shorting, emerging markets inflation fears, rising mid-east social unrest and surging oil prices.
Hi Gary - not a great day for the markets, is this the catalyst for the long awaited correction, or does this disappear by Monday morning. Either way, makes for an interesting weekend, as markets were very nervous today. Thanks, Jim
Jim, it is too early to tell, but it definitely has the potential to spark a meaningful correction. Much will depend on how much of this spreads to other countries in the region and oil's reaction. Oil materially above $100/bbl. would become a significant headwind for the equity markets given the fragility of many global economies and elevated inflation fears in emerging markets. I hope you had a great weekend.
Gary, thanks for your website; it is a daily read for me.
A sell-off In Africa, AFK, -4.5%, Emerging Market Financials, EMFN, -3.2%, Emerging Markets, EEM, -3.1%, and Ford, -13.4, commenced a bear market in world stocks, VT, on January 28, 2011.
Most stocks have been monetized by the announcement of QE 2, where as gold stocks were decapitalized by the US Federal reserve purchase of debt; but with a market shift lower, that changed with gold, GLD, and gold stocks, GDX, moving higher; how long the gold stocks will move higher with gold is any one’s guess.
An epic investment and economic sea change has occurred: the Emerging Market Small Caps, EWX, are leading the way down in a debt deflationary sel-off at the hands of the FX currency traders, as is seen in the chart of EWX, VSS, and EEM.
The five-part Elliott Wave governs investments and economies. The Emerging Market Financials, EMFN, entered an Elliott Wave 3 Down on January 1, 2011, and entered an Elliott Wave 3 of 3 Down on January 28, 2011. The third wave is the most sweeping and dramatic of all; it is the wave that builds wealth on the way up and destroys wealth on the way down.
The world has passed from the age of leverage, economic expansion and prosperity … and into the age of deleveraging, economic contraction and austerity. With a falling median income level, and a rising 10 year US Government Note Interest Rate, $TNX, real estate sales will become quite rare, many homes will become vacant and many people will rent and not buy homes; a large number will take to living in vehicles and tents.
Of note, the chart of the Brazil Financials together with Brazil Small Caps, and the India Earnings, and the India Small Caps, BRAF, BRF, EPI, and INP, suggests that the Brazil Financials, BRAF, are pulling Brazil Small Caps, BRF, Down, and gives credence to the concept that the Emerging Market Financials, EMFN, are at the very core of a global stock market, VT, meltdown.
Falling world wide stock values, VT, are likely to create an investment demand for precious metals, JJP.
I encourage that one cease from all brokerage account trading and invest in and take physical possession of gold, GLD, and silver, SLV bullion.
3 comments:
Hi Gary -
not a great day for the markets, is this the catalyst for the long awaited correction, or does this disappear by Monday morning. Either way, makes for an interesting weekend, as markets were very nervous today.
Thanks,
Jim
Jim, it is too early to tell, but it definitely has the potential to spark a meaningful correction. Much will depend on how much of this spreads to other countries in the region and oil's reaction. Oil materially above $100/bbl. would become a significant headwind for the equity markets given the fragility of many global economies and elevated inflation fears in emerging markets. I hope you had a great weekend.
Gary, thanks for your website; it is a daily read for me.
A sell-off In Africa, AFK, -4.5%, Emerging Market Financials, EMFN, -3.2%, Emerging Markets, EEM, -3.1%, and Ford, -13.4, commenced a bear market in world stocks, VT, on January 28, 2011.
Most stocks have been monetized by the announcement of QE 2, where as gold stocks were decapitalized by the US Federal reserve purchase of debt; but with a market shift lower, that changed with gold, GLD, and gold stocks, GDX, moving higher; how long the gold stocks will move higher with gold is any one’s guess.
An epic investment and economic sea change has occurred: the Emerging Market Small Caps, EWX, are leading the way down in a debt deflationary sel-off at the hands of the FX currency traders, as is seen in the chart of EWX, VSS, and EEM.
The five-part Elliott Wave governs investments and economies. The Emerging Market Financials, EMFN, entered an Elliott Wave 3 Down on January 1, 2011, and entered an Elliott Wave 3 of 3 Down on January 28, 2011. The third wave is the most sweeping and dramatic of all; it is the wave that builds wealth on the way up and destroys wealth on the way down.
The world has passed from the age of leverage, economic expansion and prosperity … and into the age of deleveraging, economic contraction and austerity. With a falling median income level, and a rising 10 year US Government Note Interest Rate, $TNX, real estate sales will become quite rare, many homes will become vacant and many people will rent and not buy homes; a large number will take to living in vehicles and tents.
Of note, the chart of the Brazil Financials together with Brazil Small Caps, and the India Earnings, and the India Small Caps, BRAF, BRF, EPI, and INP, suggests that the Brazil Financials, BRAF, are pulling Brazil Small Caps, BRF, Down, and gives credence to the concept that the Emerging Market Financials, EMFN, are at the very core of a global stock market, VT, meltdown.
Falling world wide stock values, VT, are likely to create an investment demand for precious metals, JJP.
I encourage that one cease from all brokerage account trading and invest in and take physical possession of gold, GLD, and silver, SLV bullion.
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