Monday Morning Musings
It's always cloudy in Washington. The govt. shutdown enters its 7th day and sentiment weighed on global markets. Also, economic reports have again been delayed.
Hopes for progress on the debt ceiling debate faded after House Speaker Boehner said there were not enough votes in the House to pass a clean bill and that the US is on a path to default as long as the President refuses to negotiate.
Asian markets moved lower, with China still closed for the holiday until tomorrow. Tokyo Electric fell after a power failure disrupted efforts to cool reactors at Fukushima. What a mess that is.
Europe's markets are also lower today. Eurozone investor confidence fell to 6.1, well below expectations for 10.6. Greece introduced a draft budget for 2014 which calls for 0.6% projected growth. Doubtful.
The dollar is flat today and commodities are mixed. Oil prices are lower near $102.25. Gold prices are higher to $1323 as are silver prices, but copper prices are lower.
The 10-year yield is falling a bit to 2.61%. The 10-year yield has been finding support near this 2.60% level for the better part of a week.
The volatility index is spiking again, rising some 9% and almost toughing the 19 level this morning. That marks the highest levels we've seen on the VIX since late June.
Trading comment: The S&P 500 continues to struggle near its 50-day average support levels. The SPX broke down near 1675 early this morning before bouncing back above its 50-day which currently sits near 1679. We continue to think its a decent strategy to add to stocks into weakness, even as we realize the market could dip more on a continued impasse in Washington. Also, earnings season kicks off this week so we want to be careful about making big individual stock bets ahead of earnings reports.