Following yesterday’s further and dramatic selling in the 5 companies most directly tied to the Macondo well, BP, APC, RIG, HAL and CAM, the market cap loss for these names now total $119B since the April 20th close, the day of the accident. Add to this the market cap and potential profit loss seen in so many other energy names that will be impacted by changes in how future drilling will be done and of course the devastating impact on businesses in the Gulf Coast states and we can explain how it seemed to culminate in yesterday’s broad market selloff on the heels of concerns with slowing in China’s mfr’g sector and with European banks. Spanish bond yields today continue higher and the 10 yr yield spread to German bunds is at the highest since 1996. Spanish consumer confidence for May fell by 13 pts to a one yr low.

The bright spot in the news was last night’s ABC weekly consumer confidence poll which was up just 1 pt to -44 but was led by the Personal Finance component which rose to the highest since the 1st week of Jan. The overall index is now 3 pts above its one year average. This comes before the ADP jobs report Thursday and Friday’s Payroll figure and we hope it implies a continued improvement in the labor market. Mortgage apps continue to reflect the post home buying tax credit hangover as the purchase component fell 4.1% and is now down 39% over the past 4 weeks to the lowest since 1997. Refi’s continued to benefit from low rates as they were up 2.4% to the highest since Oct ’09. US$ 3 mo LIBOR rose a touch but has been basically flattish for the past 4 days. While the Nikkei traded lower as did the yen, no one should be surprised over political turmoil in Japan as their PM resigned overnight.

II: Bulls 39.8 v 39.2 Bears 28.4 v 29.2

Category: MacroNotes

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