Commodities and commodity stocks remain under pressure as the dollar firms and traders continue to take profits.
The dollar is firmer again as now Russia (third largest holder of dollars) affirmed the supremacy of the dollar, saying they will not "significantly" change the structure of its reserves.
As was the case on Friday, metals and energy stocksare weaker. For the past month the market has been driven by buying in techs and commodity stocks as commodities like oil, copper and aluminum have been rallying on massive buying by the Chinese government as part of their stimulus program
But that trade is starting to look old--on Friday traders took profits in oil, steel, and metals and appear poised to do so once again.
I also noted that the ability of China to create domestic demand to offset export weakness is now being called into question.
Over the weekend, Li Yang, a former advisor to the People's Bank of China and director of the finance institute at the Chinese Academy of Social Sciences, said that China should not count on a quick turnaround in external demand to bring about a recovery there.
Elsewhere:
1) More capital raises this morning:
a) Lincoln Financial trades 9 percent lower pre-open after announcing a $2 billion capital raise. The life insurer will sell $600 million in stock, offer $500 million in senior debt, and ask for $950 million in TARP funds.
b) Apparel retailer Limited Brandsseeks to raise $500 million in a private offering of senior notes.
2)
Six Flagsfiled for
Chapter 11 bankruptcyprotection over the weekend. The filing will help the theme park operator reorganize its more than $2 billion in debt, but day-to-day business operations at its parks won't be affected.
3) As expected, credit card defaults rose significantly at Capital Onein May, to 9.41 percent in the month from 8.56 percent in April.
4) The Paris Air Showis on, which usually means comments from aerospace companies. Sure enough, United Technologies has reaffirmed its fiscal 2009 earnings of $4.00-$4.50 (consensus is $4.09) and $55.0 billion in revenues.
