Jordan Kahn's  Instablog

Global markets are weaker this morning, with all of the major indexes now trading back below their 50-day averages. The main culprit I'm hearing is that the market is disappointed with yesterday's FOMC minutes in that the Fed failed to call for more immediate quantitative easing.

I think this is silly. I wasn't the least bit surprised by the FOMC minutes. Members said they stand by ready to provide further support to the economy. But if you're on the FOMC, you know that the Fed has already provided ample liquidity and stimulus. As such, you would probably want to keep some powder dry in case things get worse again. But impatient investors act as if the Fed should throw out more QE every time we start to see a bit of a slowdown.

The fact of the matter is that this recovery has been slow and choppy, and will likely remain so. The deleveraging process takes years, and the Fed can't do all the heavy lifting. So that's my mini rant for this morning. And I suspect while the FOMC minutes are getting the headlines, a lot of the weakness in the market also has to do with reductions in revenue forecasts and slowing economic growth in China.

Asian markets were mostly lower last night. The only one that finished higher was China. The Bank of Korea surprised markets with a 25 basis point interest rate cut (to 3.00%). Employment figures in Australia were disappointing.

Europe is lower this morning after the ECB Monthly Bulletin suggested further downside risks remain a threat to the region. The euro has moved to a new multi-year low below $1.22, and peripheral bond yields are a bit higher.

In earnings news, INFY lowered revenue guidance and its stock is down sharply. MAR and PGR are also lower after reporting earnings. On the plus side are FAST, SAP, and TXI which are all trading higher following their earnings announcements.

Commodities are also lower today with gold prices down near $1555 and oil prices lower to $84.40. Copper and silver prices are also lower.

The 10-year yield has been unable to hold the 1.50% level and has slid to 1.48%. Amazing. As for the VIX, it has been up as much as 8% this morning back above the 19 level. But I think it will get back above 20 in the near-term.

Trading comment: I have been making cautious trading comments for awhile now, and the recent weakness supports that thesis. Although we had a rally at the end of June, I didn't think it would lead to new highs as we were starting to see more signs of slowing growth and concerns I had about Q2 earnings and cautions guidance we were likely to get from corporate managements. With the major indexes back below their respective 50-day averages, defense is still the best course of action for the near-term. I think we need to see a bigger build-up in bearish sentiment again before another good trading opportunity is upon us.

KAM Advisors has long positions in FAST; short positions in INFY

Disclosure: I am short INFY.

The market is lower in early trading. It would be interesting if we could see a reverse of the recent pattern of strong opens and weak closes, with the market opening weak today but finishing on a strong note.

The Fed met yesterday and left interest rates unchanged. But they did lower their forecast for growth a bit. The market often does not have a big move on the day the Fed meets, but then experiences larger moves the next day. That could be playing out today.

In economic news, durable goods orders for May fell -1.1%, less than expected. Orders ex-transportation rose +0.9%, and figures for the prior month were revised upward. Initial jobless claims for last week slightly better than expectations.

In corporate news, Darden (DRI) and ConAgra (CAG) missed estimates, while NKE was in-line and BBBY was above estimates. But guidance was soft, and all of the stocks are lower today. The retail index (XRT) is down the most so far, falling -2.75%.

Among the sector ETFs, financials are weakest (-1.72%) followed by energy (-1.66%); utilities are down the least (-0.10%), then healthcare (-0.58%). Real estate is also getting hit by -2.62%.

The dollar is roughly flat. Gold is higher to $1237, while oil prices are lower to $75.95.

The 10-year yield is hitting new 52-week lows at 3.07%, not a sign of confidence on the part of the bond market. The VIX is up another +9.6% to 29.50. I view the VIX over 30 as a signal that investors are expecting big whipsaws in the market.

Asian markets were mostly lower overnight, but not by a lot. Europe is lower this morning, and the bad news seems to be percolating there again, as credit default swap yields are rising, with Greek CDS near record highs.

Trading comment: I have commented that the news and credit indicators I follow were flashing caution signals. That is why I haven't gotten overly bullish recently, despite the intermittent rallies. The S&P and Nasdaq are both back below their respective 200-day averages, and the flight to safety trade (US dollar, gold, Treasuries) looks to be back in force. Be careful out there.

Disclosure: long GLD, VXX