The dollar index is lower after Moody's warned that it could downgrade the US debt rating if Congress doesn't pass some measures that "lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term". I just hope Congress heeds their warning. We all know what a disaster it was last year when the debt ceiling expired with no action.
High end retail stocks like COH, RL, and TIF are lower today after Britain's Burberry cut its profit expectations.
Asian markets were mostly lower overnight. China's Commerce Minister reiterated his skepticism on meeting the 2012 target of 10% growth.
In Europe, attention is turning to the German court which is expected to rule on the constitutionality of the European Stability Mechanism on Wednesday. German Finance Minister Wolfgang Schaeuble said that Germany remains opposed to Euro bonds and reiterated that shared liability or a printing press won't solve the crisis.
Commodities are mostly higher. Oil prices are up to $97 and gold prices are higher near $1738. Silver prices are also up again, as are copper.
The 10-year yield is hovering around 1.69%. And the VIX is slightly lower to 15.83 after a huge reversal yesterday. In my opening post yesterday I noted that the VIX was lower and approaching August's lows, but it soon began to reverse higher and by the end of the day had rocketed 16% off of its lows. We will see if there is any follow through to come, as the VIX remains below its 50-day average.
Trading comment: Yesterday's selloff was not accompanied by the rise in volume that would mark the sort of distribution that should worry investors. As of now it appears to be a price dislocation. As always, it is the follow through of the market that is meaningful. If we don't see any further downside this week, traders will chalk the selloff up as a one-day wonder. But we have some big announcements this week with the German ruling on the ESM Wednesday and the FOMC meeting Thursday. So I think that we are likely to see some bigger moves in the market one way or another. Tech really took it on the chin yesterday, led by AAPL which will announce the iPhone5 this week. Some wonder whether it will be a buy the rumor-sell the news type of even.
KAM Advisors has long positions in AAPL and COH
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