China's is down sharply, amid concerns that a bond default by a major Chinese solar firm will stoke the embers of credit risk in the world's second largest economy.
Solar equipment producer Chaori Solar said it may not be able to make an 89.8 million yuan ($14.6 million) interest payment that is due on March 7.
This is getting a lot of attention because it would be the first Chinese default of an onshore bond. The country's solar industry is heavily subsidized by the government and has enormous overcapacity. Prices for photo-voltaic cells have dropped dramatically.
But this goes beyond the renewable energy sector. There is enormous overcapacity in many Chinese industries, such as steel and coal. Chinese companies have issued enormous amounts of debt in the past several years, so a default will definitely raise the issue of credit risk.
China's bond market is the world's third largest after the United States and Japan, so we are not talking about trivial amounts of money.
It may be time for Beijing to stop the illusion that they will step in in the event of a default. This issue came up last month when a high-yield investment product issued by China Credit Trust warned it may not pay out on maturity. The product did pay out principal, but not interest, after an unnamed white knight stepped in.
That said, allowing some companies to default, as a way of warning investors, is always risky. It's not easy to control a full-blown credit panic when it starts. Just ask Lehman Brothers.
On a separate topic, China's leaders kept their growth target unchanged at 7.5 percent but there are suggestions that the government will keep up aggressive lending to make sure those targets are achieved.
Elsewhere
1) Europe is mixed this morning, but growth there is improving. Markit's euro zone Purchasing Manager's Index (PMI) was revised up to 53.3 from the initial print of 52.7. Italy was particularly strong, at 52.9, the best since March '11.
Here in the U.S., the February ADP report was a mild disappointment, showing fewer private sector jobs created than anticipated.
2) The Wall Street Journal had a good article on the drought in Brazil and its effect on crop prices. This is not news to investors in agricultural ETFs. I pointed out the action yesterday in the PowerShares DB Agricultural Fund which saw volume five times normal yesterday. The fund is up about 16 percent so far this year, and volume was big last week as well, and it holds futures contracts on all the big commodities: sugar, cattle, corn, soybeans, coffee, and wheat.
There is a coffee ETF as well (JO) that is up almost since the start of 2014.
3) Emerging markets: what slump? While the main Emerging Markets ETF is down 5 percent this year, that's happening because of poor performances in China (down 2.9 percent), South Korea (down two percent), Brazil (down 8.5 percent), and India flat.
But get outside this well-worn group, and other emerging market countries are doing fine in 2014:
Vietnam +13.9 percent
Philippines +9.6 percent
Indonesia +9.0 percent
Saudi Arabia +7.3 percent
Thailand +4.1 percent
Brazil -8.6 percent
In January, there was a major debate among traders about getting out of the emerging markets and into more "frontier" countries like those above. So far, the frontier advocates are winning.
4) What shrinking defense budget? The iShares U.S. Aerospace & Defense ETF (ITF) hit a new high yesterday. Strange, but some noted that China's announcement it will be boosting its defense spending 12.2 percent this year indicates that defense spending will only be constrained so much, while commercial aerospace has been on a tear.
—By CNBC's Bob Pisani