Friday, July 10, 2009

Consumer Sentiment Dips Again

The market is trading lower this morning after the Michigan Consumer Sentiment index dropped to 64.6 in July, versus consensus for 70.0. This datapoint seemed to move the market more than the U.S. trade data that came out, and showed the trade deficit fell in May as exports picked up.

In corporate news, GM is exiting bankruptcy after just 40 days, with a new corporate structure and improved balance sheet. Financials stocks are lower after the WSJ reported that firms looking to buy back the warrants held by the govt. are complaining the Treasury is demanding too high a price. Also, there is chatter that CIT may not be able to get FDIC backing on its bond issuance.

Markets were mostly lower in Asian overnight. Reports out of China showed that exports fell for the 8th straight month as the global recession cuts into demand. I don't see how China doesn't experience a slowdown from its recent, torrid pace of growth.

The dollar is higher today, weighing on oil and commodities; energy stocks are under selling pressure, while tech is holding up the best; the 10-year yield is lower again, down to 3.28% (have you locked in a good refi rate?); and the VIX is hovering right at that key 30 level we've been watching.

Trading comment: The market has not had the kind of bounce I thought it would from the SPX 870-875 level. As such, I want to look to use any strength to add some more etf hedges to the portfolios. But I do not want to get too bearish, as I think investor sentiment has already moved heavily to the bearish side of the equation, and that in and of itself should keep future selloffs contained. I still expect a rangebound, choppy market for most of the summer. I just want to have longs and shorts on to trade around and try to scalp incremental profits.


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