· Market Update – stocks seeing small profit taking; not really heavy selling going on - more an issue of buying taking a break (the tape has become overbought - the R2K is lower today - would be first down day for this index in last 10 sessions; the sp declined double digit points only 1x since Feb 5). It was pretty quiet on the data front - the retail sales were strong this morning, although after seeing the same-store-sales out last week this wasn’t too much of a surprise; the Michigan confidence reading was weaker. The desk continues to note an interest to buy stock on any weakness; shorts aren’t interested on laying out fresh exposure and are using dips to cover. Other asset classes not showing any clear signals – longer TSYs are rallying (10s, 30s) while the 2s are flat-to-down ahead of the Fed meeting this Tues. Despite 2yr yields (most sensitive to Fed rate expectations) hitting multi-week highs, the dollar is weaker on back of the Yellen headlines (you would expect the dollar to strengthen if 2s are weakening in anticipation of a more hawkish Fed). Despite the weaker dollar, commodities are coming for sale into the afternoon. Corp credit continues to outperform stocks (its tighter/higher today).
· Equity Sectors – financials and tech are both up small while health care, utilities, and energy underperofrm. No major sub-sector is up/down more than 1% today. Materials are up 0.6% and the best acting major group (CLF is up 5% on back of a pos. JPMorgan note this morning and leading materials; CF dips ~4% on the deal news out today and NEM falls 1.5%). Financials are flat-to-up on the day – there is some profit taking occuring (see C) but the group remains better to buy (see strength in MS/GS and the regional banks today). The BKX is up 5% this week and is up ~20% YTD alrady. Retail stocks are up 0.4% based on this morning’s sales #s (M, JWN, BBY, SHLD, BBBY, etc, are all up on the day).
· Best Performing SP500 stocks: CLF, SVU, ZMH, PCAR, MU, MCHP, HBAN, FSLR, PXD, CAT, ETN, IVZ, M, PWR, KR, ECL, OI, DOW, ATI
· Weakest performing sp500 stocks: PLL, CF, SLM, NRG, ABT, KEY, SCHW, HRS, C, ADM, GCI, CPWR, CBS, DVN, IPG, ETR, EXC, XRX, PFE
· Commodities: commodities have sold off sharply in the afternoon (despite the dollar being flat really since 6am). Oil is now just above $81, down ~1.35%. Natural gas is trading near its lows, at ~$4.42, down about ~0.45%. Gold is down ~0.5% trading at near $1102 – again at its lows. Similar to the rest of the group, copper is trading at its lows of the day, down ~0.2%
· FX: USD (DXY) has sold off this morning, with news that Janet Yellen is Barack Obama’s choice for Fed Vice Chairman (she is seen as being dovish); it’s trading near its lows around $79.80, down ~0.6%, for most of the day so far. The dollar sold off vs. the Euro in the overnight, and has traded flat since, down ~0.55%. The euro is catching a bid ahead of a European Fin Ministers meeting this Mon/Tues (where the anticipation is for a discussion around Greece); Greek CDS are ~13bp+ tighter today. The dollar is trading near its lows vs. the pound, down 0.9% (the pound is catching a bid after the latest polls show the Conservative party regaining its double digit lead). The dollar sold off sharply just before noon vs. the Yen, down ~0.1%. Similar to the dollar, the Euro just recently sold off vs. the Yen, although its up ~0.5% after the morning.
· Corp. Credit: Corp. Credit is outperforming today, while IG spreads have tightened .75 bps and HY has gained 3/8 of a pt.
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