Monday Morning Musings

Markets in the US are a bit lower this morning, while overseas markets were higher overnight. 

The Nasdaq is underperforming after reports from the WSJ that indicate that AAPL is cutting production for iPhone 5 parts due to sluggish demand.  AAPL stock is down 3% and other tech stocks along the supply chain are also down in sympathy.

Asian markets were up across the board overnight, although Japan was closed for a holiday.  China surged +3.1% after Beijing announced that it will allow foreign direct investment to increase by 10 times.  In 2012, China said the country allowed $16 billion in foreign investment.  The Bank of Japan said it agreed on a 2% inflation target.

European markets are also higher.  The EC said it is considering less stringent measures for Spain and France. 

There is no economic data scheduled for release today.  Fed Chairman Bernanke is going to speak at the Univ. of Michigan, where he may comment on the Wolverines losing to Ohio State yesterday.  But that's just a rumor.

The dollar is lower this morning, and commodities are mixed.  Oil prices are weaker near $93 while gold prices are rising to $1667.

The 10-year yield is lower to 1.84% and the VIX is up slightly near 13.80, still a low absolute level.

Trading comment: The market held up last week when it could have given back some of the previous week's outsized gains.  I expect more backing and filling this week and the market consolidates its recent gains and works off its current overbought condition.  I still think the markets will make another push higher before we get the usual first quarter pullback, the timing of which is always difficult.  Investor sentiment continues to grow more bullish, but is not at extreme levels yet.  And earnings season is still ahead of us, which could also set the tone for the short-term. 

KAM Advisors has long positions in AAPL