An earnings miss from the serial earnings misser and commodity laggard, Alcoa, guidance cuts from ERTS and CVX and further policy tightening in China are all combining for the weakness in most markets. China sold 1 yr bills at 8 bps above last week’s level, which was higher than expected and follows the higher yield in last week’s 3 month bill sale. They also raised bank reserve requirements by 50 bps to 16%. They had cut it to 15.5% in Dec ’08 during the heart of the financial turmoil. The RR news came after the Chinese market close where stocks rose almost 2%. The US$ and Treasuries are benefiting from the continued attempts by China to stem inflation pressures and commodities prices are down. The Dec NFIB small business optimism index fell a touch to 88 from 88.3 and is the lowest since July. Those that plan to hire, increase cap ex and expect higher sales rose a hair but those expecting a better economy and plan to increase inventory fell.
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