Still Waiting On Washington

Markets opened today in fairly lackluster fashion and have only weakened since the first hour of trading.  Volume was also light yesterday as investors don't want to make any big bets ahead of what's to come out of Washington.  Frustrating.

There is also very little newsflow.  Economic reports have been delayed due to the govt shutdown, and corporate reports are light ahead of earnings season which is set to kick off this week.  Two big banks, JPMorgan and Wells Fargo report on Friday.

Asia's markets opened weaker but closed on an up note.  China gained +1.1% on its first day of trading after being closed for a week for Golden Week.  China's HSBC services PMI ticked down to 52.4 from 52.8.  Australia's business confidence climbed to 12 from 4.

Europe's markets are mostly lower.  Germany's trade surplus widened.  Spain's industrial production fell 2.0%.  And the FT said EU regulators are looking at penalizing banks that are still overly reliant on the ECB's LTRO facility.

Oil prices are higher today near $103.80.  And gold prices are up again to $1327.

The 10-year yield is barely higher today at levels near 2.63%. 

As for the volatility index, it started out lower but has since moved higher on the day to 19.80.  Yesterday it spiked 16% higher.  These are very high levels for the VIX.  We have only seen 2 closes all year above these levels.  So traders are nervous here, but ultimately we think this plays out similar to 2011 where the spike in fear turns out to be a good buying opportunity.

Trading comment: Fear is building as the market continues to slide.  But the declines have been orderly and not of the panic variety.  Volume also ran lighter yesterday so we avoided another distribution day.  We continue to look for spots to add to equity exposure as we think we will ultimately move past this point where the markets are held hostage by Washington and we see another push higher in stocks into year end.