Monday, June 30, 2008

Asian markets start 2nd half of 2008 lower

Asian markets pulled back in the 2nd half of 2008 (Tues). Shanghai, Taiwan, Korean & Australia markets are down a little while Tokyo is higher. This shows nothing dramatic & also suggests markets continue to muddle along with the downward bias. Oil is up 45¢ out of the gate in the second half of 2008.

Worst June since the depression

This was the the worst June since the depression. Bloomberg TV mentioned that a lot! Today Dow & S&P 500 inched up, but decliners beat advancers 3-2 & NAZ got hit hard, down 22. For June, Dow dropped 1300, which should rank it as one of the worst monthly declines in history! Most popular market indicators in the first half were down around 15%. Overseas markets have also been hammered. Grrrrr!

Oil settled little changed at 140 after going over 143 earlier in the day. There were more reports indicating the economy is in a slow growth period or a full recession, take your pick. Another analyst cut bank estimates because of greater credit worries, so they got hammered once again. Most are selling at multi year lows (some are at the lowest prices in over a decade). The Alerian MLP Index was essentially even, at 279 but still below it's recent sideways trading range. CNBC has some investment ideas for H2, maybe that will help. I don't know!

Larger, macro kind of problems persist. Oil, housing & the credit crunch are each a mess with no quick fixes. A huge problem for oil is that higher prices is not bringing more supply & none can be seen over the near term. Meanwhile, demand is a growing as conservation measures are doing little to cut demand in the short term. Credit problems will continue and the oversupply of housing is not going away. This is a time to hunker down & look for investments with higher yields to help make the waiting period go a little easier.

Markets up in quiet trading

Markets were up a little in quiet trading day. Dow is up 74 thanx to Exxon (XOM), Chevron (CVX), Merck (MRK), Verizon (VZ) & Wal-mart (WM) but advancers are only 25% over decliners and NAZ is up marginally. This will be a short week with only 3½ days of trading, many traders are away for a long holiday. The European Bank is expected to raise its lending rate (it rarely does) which should strengthen the Euro. Oil went over 143 in its crazy world. This time buying was based on tensions in the Mideast, but it just slipped to "only" 141. Because of extensive flooding in the Midwest, farmers will plant corn on 8.7% fewer acres. This is a bullish signal for corn, but it pulled back 29¢ from record territory of 7½. Still 7.26 is plenty high. Corn is the #1 crop used to feed farm animals, so it has a vary large impact on inflation.

Here is an interesting report on the global economy facing a very ugly time. I also like the comments from Bill Gross, the bond expert of Pimco, that the gov needs to do even more for the economy. Trading for the balance of the day will be influenced by last minute buys & sells for quarter end portfolio adjustments.

Sunday, June 29, 2008

Asian markets up a little

Following the big sell-off in stocks last Thurs & Fri, Asian markets are beginning June 30 generally up a little. They've all had a rough 6 months, like in the US. Shanghai at 2750 is down almost 50%, Hong Kong is down 20% & Tokyo is down 15%.

Oil has been trading up 1½ (at 141½) from the Fri close in NY. Major worries for oil traders revolve around possible conflicts between Israel & Iran. These markets along with European trading will influence the start of trading in NY. Mon is also end of month/qtr here, always worth a little extra in unexplained volatility. Later in the week, the European Central Bank is expected to raise their rate, a rare occurrence, to help fight inflation which should raise the price for the Euro above 1.58.

Investment assessment - midyear 2008

This is a fraidy cat, of the most extreme! He is called Tom Cat & as a fraidy cat spends most of the time hiding in a closet or under a futon. During these time, a lot may feel a kinship to Tom Cat, but it's not necessary. He's well fed & will be fine. Very smart investors will recognize the value of using this time to prepare for selecting good investments.

The widely watched S&P 500 Index chart below shows stocks have had a very tough going in recent months. In the first 6 months of 2008, S&P 500 is down 190 or 13%. That qualifies as a major kick in the head. Even worse, there are no signs of an early end to the market decline. But positive actions taken now will pay off!

S&P 500 Index

Chart for S&P 500 INDEX,RTH (^GSPC)

The 2 year chart is not pretty. This year, the S&P 500 has lived under the 200 day moving average. Even without being a technical expert, the picture it shows is ugly! June is shaping up as the worst June in many years, but don't lose heart.

High yields will help a very smart investor weather the storm. Junk bond funds yield over 10%, over 600 basis points above the Treasury bond rate. This is considered a very high premium for the added risks on these bonds. For the brave, modest investments in these could do well.

Real estate trusts, REITs, commonly yield 6-10%. Some will go over bumpy roads ahead, but careful selection can lock high yields for the coming years. There is also a tax advantage for personal money invested in REITs. Many pay divs which are partially tax free & another portion of the div could be considered capital gains. Something to think about.

Master Limited Partnerships, MLPs, commonly yield 7-10%. Their structure is built around 80-90% of the distribution being tax free. However, there is a fair amount of tax hassle associated with distributions. Partners get K-1 tax forms late, after Mar 15. The tax cost basis has to be recalculated yearly after the K-1 forms are received. Being a partnership requiring annual tax filings, these are generally not IRA friendly. But for a personal investment, the largely tax free yields are high & the long run track record of of the index (Alerian MLP index) is excellent.

Alerian MLP Index

Chart for Alerian MLP Index (^AMZ)

The S&P Dividend Aristocrat list is a little more spotty. These are the "big guys" in the S&P 500 with track records of at least 25 years of yearly div increases. Unfortunately, past success does not necessarily predict the future. Just a few years ago, there were 7 banks on the list. 2 dropped off this year & another 2 are expected to cut divs this year, taking them off the list. Bank of America (BAC), US Bancorp (USB) & State Street (STT) remain. BAC yields 10½%, an indication that some consider their div at risk. Masco (MAS), maker of bathroom & kitchen fixtures, is not expected to cover the div. Pfizer (PFE) has a high yield because their #1 drug Lipitor has only a limited life left under patent protection. But many others in the group, while struggling to achieve higher earnings, are expected to persevere with increased divs, come what may.

Next week probably will be grim & the coming months should require dedicated investors to maintain a "stiff upper lip." Earning high yields while waiting for a major correction in the markets can make it easier (& more profitable) to adjust to difficult market times

Friday, June 27, 2008

Markets tumble again

Markets had another rough time despite the "minor rally" at day's end. Dow declined 107, decliners ahead of advancers 3-2 and NAZ dropped 6, all on low volume of 1¼B shares. This was not a good performance for the bulls, it shows nothing was resolved. There were almost 500 new lows on NYSE, led by: C, BAC, GE, JPM, WM, F, PFE, WFC, AIG, MER, GM, MOT, AXP, PG. This small group of leaders contains 9 Dow stocks. Dow fell 1000 in Q1 & is down another 900 in Q2. For what it's worth, S&P500 held above 1270 all day, closing at 1278, down 5. Many say by classical definitions we are in a "bear market." My favorite Alerian MLP index was down 3 to 278.

Count on oil to bring ugly news. Oil settled at 140.21 after reaching almost 143. Adding to the woes of the markets, Moody's said it's likely to cut the credit ratings for Morgan Stanley (MS), one of the largest investment houses, MS stock was little changed.

This looks, feels & quacks like a bear market. An overdo rally from the oversold conditions is likely, but while economic news continues glum sellers will have the upper hand. AAA is forecasting reduced driving over the July 4 holiday weekend which will be a kick in the head for leisure companies. Travel & related activities will remain soft through the summer. This kind news reinforces the idea of doing homework to get ready for buying opportunities!

Markets mostly muddled

Markets are mostly muddled. Dow is down 30, decliners over advancers 3-2 and NAZ down 6. On the economy, housing, inflation, unemployment fronts, etc., things look bleak. Yesterday's 2 big sells in the Dow, GM & Citi, are selling at multi year lows (11 & 17 respectively). CNBC reports that GM's market value of $7B is about equal to that of Mattel (MAT) & ½ that of Avon (AVP). Oil is trading at a new record, 142. There are calls for the price to go to 150, 170, 200, whatever. Consumer confidence fell to a 28 year low of 56.4 for the usual reasons. Merrill Lynch (MER) and American International Group (AIG), a Dow stock, are getting ready to report more ugly write-offs. KB Homes (KBH) posts a larger loss, but nobody seems to care these days. The Alerian MLP index is also down over 2 to 278, looks like it's headed for a test at 262.

Markets are greatly oversold, i.e. the sellers will just give up & shorts will start buying back. A relief rally is to be expected (probably this PM), but the outlook remains dreary. S&P 500 is the most closely watched index and the 1270 line is considered very important. Next week, it could be tested.

Thursday, June 26, 2008

Asian markets selling off

Asian & Australian markets collapse, typically down 2-4%, following sharp declines in the US. Shanghai is under 2800, down 3.7% (half its value at the start of this year). Oil reaching 140 is making headline news as most of the countries have to buy oil. High oil prices are driving their inflation numbers higher. Also the US market is generally their biggest for exports, a weak US economy negatively impacts them. Fri could be another ugly day for US markets.

One Ugly Day!!

Dow declined 358 to a new yearly low (11,453), decliners over advancers better than 5-1 while NAZ dropped 80. The S&P500 closed at 1283, within striking distance of the important 1270 level. This is watched more closely than the Dow, if that doesn't hold look out below!

Bleeding will Continue
NYSE volume increased to 1.5B, with 90% downside trades. While above recent low numbers this is not exceptional, more in line with figures from last year.
Helping to bring out sellers, oil reached another record topping 140 with a close at 139.64, up 5.09. Obviously the implications for future inflation numbers are not pretty. Just about everything went down, even oils! There were 424 new lows on NYSE, led by some of the biggest names out there. The Alerian MLP index dropped 5 (its biggest drop in some time) to under 282, a new short term low. Sellers may be getting ready to test the 262 low in March. Not much to say when there was bleeding all day which decided nothing.
There were a few comments by analysts on Bloomberg TV talking about doing your homework, getting ready to take advantage of buying opportunities. Maybe they read my blog, I agree. When Citigroup (C) and General Motors (GM), 2 Dow stocks, are given prominent selling recommendations, markets have problems. Over the short term it looks like there will be more pain.

Stocks tumble after Federal Reserve meeting

Stocks tumbled badly after the FED's meeting yesterday. Dow is down 180 (trying to test yearly lows), decliners over advancers 3-1 & NAZ is down 51. Times are tough! The FED issued a statement that didn't say much because there wasn't much to say, after all they're trying to juggling many balls at once. They did signal rate cuts are finished, so the main question is when do rate hikes start? Banks have a ton of problems. Goldman Sachs gave a very ugly assessment for Citigroup (C), a Dow stock, pushing C down 1. In sympathy all banks are getting hammered with Bank of America (BAC), another Dow stock, yielding over 10%! Some of the leading new lows today are: C, F, BAC, GM, WM, AIG, AXP, BA, MMM, LLY & UPS (not a lot of wimps in this list, many are in the Dow). The Alerian MLP index is down 3.38 to 283. Looks like it may be going after the Mar low.

Oil is back up, pushing 139 in it's confusing world. The longer it remains above 130, the uglier its news will be. This is a time for a stiff upper lip, use the time to study for good buying opportunities.

Wednesday, June 25, 2008

Fed leaves rates, stocks generally up

The Federal Reserve bank left rates alone plus lower oil sent many stocks up. Dow was essentially even, but advancer led decliners 5-2 & NAZ put in a good showing, up 33. Dow was held back by United Tech (UTX), Boeing (BA) & American Express (AXP) with major declines. AXP is more troubling since they said they're having trouble collecting on their cards. Uh-oh! Dow was also held back by financials. They had been up nicely by midday, but pulled back to break even after digesting the FED announcement. The FED talked about higher energy limiting grow & resulting in inflation. Oil had a very wild day, ending down 2.41. Higher inventories won the day amidst all the confusing reports for oil.

Oracle (ORCL) came out with nice earnings after the close, up 32¢ & another 35¢ after hours, which should help tech stocks start off on the right foot tomorrow while the rest will try to assess the FED's words.

Markets up while awaiting Federal Reserve announcement

Markets are up before the Federal Reserve announcement. Dow is up 70, advancers ahead of decliners 5-2 & NAZ up 37. While everybody is waiting for results after the FED's meeting this PM, bulls have already starting buying. Banks, in particular, are seeing nice gains, typically up 2%. FED is expected to talk tough on inflation, not much to do now except bite fingernails. Oil was down 74¢ while waiting for the weekly inventory report expected to show lower supplies. Sadly record high oil prices are not reducing demand or bringing more supply online, the worst of all worlds (for oil)! Data on new home remains bleak. Sales of new home fell 2½% in May & prices also declined. In addition, orders for big-ticket goods were essentially even in May after declines in prior months. Strong demand for aircraft & computers offset widespread weakness in other groups.

General Mills (GIS) reported lower earnings in their Q4. EPS of 53¢ was down from last year & below forecasts, stock down 44¢. They also expect costs (i.e. wheat, corn, fuel) to rise 9% in FY2009. Sales should grow about 5% & the EPS forecast was kept in line with analysts expectations.

Tuesday, June 24, 2008

Higher bank stocks fail to lead markets upward!

Higher bank stocks did not lead the markets forward today. Dow was down 35, decliners over advancers better than 2-1 & NAZ declined 17. There were 406 new lows including many from the banking sector. However banks had a very good day from an extremely oversold condition. For example, Bank of America (BAC) dropped 15% in a week to new 6 year lows. Today it went up 74¢, closing near its high. Banks got encouragement from Wachovia (WB) on news that they are seeking advice on what to do with the billions in loans they're stuck with. Tomorrow banks should be pretty much absent from the new lows list, instead it will focus on regular struggling companies. REITs went up a little & junk bond funds were mixed to slightly up. But markets in general were down on more dreary news. The Alerian MLP index pulled back 1.56 to 287.49, remaining below the important 290 support level. Oil rose slightly to 137 amidst all the confusing news on supply problems, whatever.

Tomorrow the FED will announce any interest rate changes, none expected, & the outlook for the future. Investors will be hanging on every word in their outlook.

Falling consumer confidence hurts stocks

Falling consumer confidence hurt stocks. Dow is down 61, decliners over advancers 4-1 & NAZ is down 25. Consumer confidence in June fell to the lowest level in 16 years. The number dropped to 50.4, the bottom of the 50-60 range of forecasts. Home prices were down 1.4% in April, bringing the yearly decline to 15.3%. No surprise with a larger supply of homes between foreclosures & regular selling. Oil rose above 138 on supply worries, this time from Nigeria & Iran. Trading for some time in the 130s, that's becoming an accepted price level which the world is just starting to get used to. Congress has a bunch of bills trying help with the high oil prices. It's difficult to imagine anything meaningful will be passed let alone that any bills would do much good, especially since they have no control of foreign countries, from Saudi Arabia to China, where the real power lies.

Kroger (KR) reported improved earnings, up 15%, & raised guidance a little, sending the stock up 1.82. The gains were helped by improved sales for food, gas & discount drugs. They claim to be helping consumers stretch their budgets. Good for them, but sot so good at the macro economy level. The MLP index dropped 2 to 287, even with higher oil prices. Banks had a tiny relief rally, but are falling back again. Bank of America (BAC) now yields 10%, if the div is at least maintained. They are a long time member of the S&P Dividend Aristocrat list, but there are questions about staying on the list. Other member banks have been dropped recently.

Monday, June 23, 2008

Banks lead markets lower

Markets were down thanks to banks getting hammered on all kinds of negative thinking. Dow was even from gains in energy stocks, but decliners led advancers 2-1 and NAZ declined 20. Banks led the way down, most majors were down 1. NYSE had 333 new lows including: BAC, MOT GM, WFC, AIG, Q, MER, MBI, UNH & UBS. Many are financials & 3 on this list are Dow stocks. There was a lot of talk on Bloomberg TV about the Goldman Sachs analysts making a wrong call a couple of months ago for banks & consumer discretionary sectors. This announcement probably brought a lot of selling after Goldman previously urged investors to overweight consumer discretionary stocks & maintain a neutral weight in financials. Oil rose 1.38 to 136.74 amongst all the confusion about oil demand & supply. Energy did very well, putting points on the Dow & the MLPs followed along. The Alerian MLP index rose over 3 to 289, reversing its recent downward slide. Keep in mind, they are not linked directly to the price of oil as some think!

The FED meeting looms, but the main suspense involves what will be said in their press release. Generally, after all their talk about raising interest rates, it's assumed they will not be changed, but the FED's discussion on the economy & future directions will influence markets.

Dreary news sends markets lower

Dreary news sent markets lower. Dow declined 14, decliners over advancers 3-2 & NAZ was down 16. The banking/financial sector of the Dow is being hit especially hard today. Goldman Sachs cut ratings for financials & consumer sectors, sending many of those stocks down 1. Oil rose 1.73 to 137 on news after the oil summit meeting in Jeddah, Saudi Arabia, this weekend. Markets were not impressed by Saudi's agreement to raise oil production 200K per day. Nigeria is another major source of oil & that situation remains iffy from day to day.

Citigroup (C), a Dow stock, is halfway though laying off 6500 staff members. Below is their chart showing a $50 stock for many years is now under 19 with dismal prospects for the div. This story is repeated for many banks:

Chart for Citigroup Inc. (C)

A Harvard study says that this housing slump is deeper than past ones & may take longer to straighten out. Nothing new. I think that's enough dreary news for the time being. Looks like markets will be testing their lows earlier this year, around 11½K for the Dow. Leaving on an up note, The Alerian MLP index is up 3 nearing the important 290 support level, probably on the "good news' for oil.

Friday, June 20, 2008

Witches sink stocks

Quadruple witching was too much for the markets. Dow tumbled 220, decliners over advancers 5-2 while NAZ pulled back 56. Dow is solidly below 12K, next step is testing the lows from a few months ago. S&P500 at 1317 is nearing the magic 1270 support line. Both of these may be visited next week. Volume was a little stronger at 1½B. gives a slightly different number than Yahoo for new lows, they're showing 173 new lows vs 36 new highs on NYSE. Banks are still struggling to cope with negative comments yesterday, pulled back. REITs & just about everything else was weak. The Alerian MLP index pulled back 1 to 285, another index that may have to test lows from earlier this year. Oil settled up 2.69 to 134.62 on more supply worries, what's new?

Ford warned about soft sales for cars, no surprise. Moody's cut the outlook for their ratings to negative. Merrill Lynch after issuing the negative forecast about banks yesterday fell 1.74 on fears they may have to take more write-offs relating to bad loans they have. Reuters has a story about bank analysts cutting forecasts for bank earnings. It looks like the witches carried the day today. Next week, markets will be starting on defense!

Lower stocks on quadruple witching day

Markets were down on quadruple witching Fri, 4 types of options expire today adding an extra degree of volatility to already volatile markets. Dow is down 145 putting it below the important 12K line, decliners over advancers an impressive 4-1 & NAZ down 43. The Alerian MLP index slipped slightly, still in the 286s. Merrill Lynch (MER) said banks appear to be in a capitulation mode & will trade below fair value with div cuts looming. Ugh!! Div cuts were forecasted at:

Bank of America (BAC)
Regions Financial Corp (RF)
SunTrust Banks Inc (STI)
Wachovia (WB)

The first 2 are on the S&P Aristocrat Div list (more than 25 years of year over year higher divs) & BAC is a Dow stock. The banks mentioned took the gloomy forecasts fairly well with only moderate changes.

Oil was up almost 4 to 136 on today's rumor that Israel had practiced an attack on Iran. Last night Asian analysts said the 18% price hike for fuel in China, 2nd largest oil consuming country, will be absorbed by them. Their last increase of 10% in Nov, didn't cause problems. The terrible winter weather followed by the earthquake probably hurt the economy more. Quadruple witching may produce more wild price swings today.

Thursday, June 19, 2008

Techs led stocks higher

Techs rose nicely, but the overall markets were mixed. Dow up 34, advancers equalled decliners & NAZ was up a big 32 largely on the strength of tech benefiting from the lower price of oil. Volume was a little stronger, nearing 1.3B on the NYSE. The 204 new lows on NYSE included: BAC, MOT, BBT, GE, UNH, RF, GM, NOK,& BMY. Banks continue to be well represented.

China raised regulated prices for fuel 18% which led to oil dropping 4.45 on the theory it will reduce their consumption. Although these days who knows what drives the wild swings in oil! Citigroup (C) warned more writedowns were coming for the usual reasons. Banks were weak although well off the lows around midday. REITs rebounded a little. The Alerian MLP index slipped 2.63 to the 286s, breaking decisively though the 290 barrier. The 2 Bear Stearns managers pleaded not guilty to charges which are complicated making them difficult to prove. In addition, another 400 or so lending officers have been arrested on practices related to loan activities.

Dow held 12K, but barely & remains only 63 above that support level. The Alerian MLP index broke 290, may be the start of another leg down. Tech was strong today, but the rest of the markets did not pay attention.

Stocks are looking for direction

Stocks were little changed but decliners were ahead of advancers 3-2. Dow is hanging in there just above 12K. Oil is down 2.80 on news that China will raise fuel prices. However Nigeria remains a sore spot for oil. Royal Dutch Shell shut their oil field in Nigeria which pumps 200,000 barrels of day after more rebel attacks. Jobless claims fell 5K last week. Leading indicators and unemployment reports gave few signals about where the economy is going. Another way to view these reports is the economy is stumbling along while the financials try to sort out huge problems. Life goes on.

Bloomberg TV had a report this morning that 2 ex Bear Stearns managers were arrested by the FBI on charges related to misleading investors in the sub-prime mess. Banks are selling off on their dreary outlook, but that varies. Look at the 2 listed on the right. Bank of America (BAC) has fallen 50% from its highs last year, while US Bankcorp (a regional bank, many have been brutally hammered) continues to muddle along in the low 30's. Maybe that's because Berkshire Hathaway has invested more than $1B in their stock.

Wednesday, June 18, 2008

Bank problems sink stocks

Plenty of problems today, but bank worries were at the top of the list. Dow was down 131, decliners over advancers 3-2 & NAZ down a big 28 as NYSE volume continues at a low 1¼B. Morgan Stanley (MS) & FedEx (FDX) came out with ugly earnings reports, but banks dominated the negative news. Fifth Third Bancorp (FITB) cut its div 66% to raise $1B with a sale of preferred stock & sold businesses to raise another $1B. Div cuts have become common for large banks, especially in the last few days. Banks were weak along with REITs & junk bond funds. Dow just barely held above 12K, tomorrow will be another test. The Alerian MLP index fell 3 to 289, slightly below its important support of 290. That index has held flat all year (excluding 2 quick downturns which were recovered quickly).

Oil rose 2.67 to 136.68 on the inventory report & usual supply worries. President Bush gave a speech asking congress to pass legislation to drill offshore & to encourage more drilling for oil. Congress is not expected to respond & these would have little effect solving today's problems.

Continuing bank problems will weigh heavily on the markets, probably taking Dow below 12K, but I think the FedEx announcement is much more worrisome for the economy.

Stocks tumble on gloomy news

Stocks tumbled on gloomy news. Where to begin? Dow fell 100 & nearing the important 12K support line, decliners ahead of advancers 3-1 & NAZ down 24. Morgan Stanley, (MS), reported lower earnings but beat lowered estimates. The stock was down 2.05 on negative expectations going forward. FedEx (FDX) reported a 4th qtr loss and sharply trimmed the estimate for next year sending the stock down 2.35. This is more troubling to me as they feel the pulse of the US economy & the a lessor extent the global economy. Oil is up pennies ahead of today's inventory report. Who knows what it will say or how the market will respond?

Banks are setting new multi year lows as shown for BAC & USB on the right. Div cuts are becoming more common for banks. Comerica (CMA), a member of the S&P 500 Div Aristocrat list, is down 2.39 ahead of their earnings announcement tomorrow. Key Bank (KEY), another member of the S&P 500 Div Aristocrat list, cut their div a couple of days ago & Fifth Third (FITB), down 2, cut today. When banks seek outside capital, new investors expect/demand div cuts. Sick banks are tough for stocks, looks like banks will lead Dow below 12K.

Tuesday, June 17, 2008

Stagflation worries sink stocks

Stagflation worries sank stocks. Dow was down 108, decliners ahead of advancers 3-2 & NAZ was down 17 on just 1.1B volume. The ugly word, Stagflation, is back. That refers to a time 30 years ago when the US economy had high unemployment, high inflation & no growth. Times are a lot less ugly today, but the word is being used a lot. Banks were especially weak on an ugly forecast from Goldman Sachs. It talks about a rebound coming early next year & the need for banks to raise $65B more in capital. Raising capital is associated with div cuts, tough to hold divs flat when asking others to invest. Oil had a relatively good day for the stock market, pulling back only 60¢ in an unusually quiet day of trading. Energy shares had a great day, as investors saw them as a good place to park money. The Alerian MLP index rose a point to 292, the 290 as the support level continues to hold.

Dow is trading at the low end of the 12K range & may be testing to see if the floor can hold. Banks are getting hammered & more selling may be ahead. The Dow has Bank of America (BAC), JP Morgan (JPM), Citigroup (C), plus related financials, American Intl Group (AIG) & American Express (AXP) which are feeling the selling pressure.

Stocks continue mixed

Stocks continue mixed from yesterday. Dow & NAZ are little changed while advancers led decliners by 25%. The Labor Dept reported wholesale prices increased 1.4% in May, the largest increase in 6 months. Core inflation was up only .2%, but the gross number was upsetting as that could trigger higher prices. Other reports on manufacturing & new housing starts were also disappointing. Oil is having a quiet day with change measured in pennies. USO, the proxy for oil on NYSE, is down 47¢ to 108.52.

Goldman Sachs (GS) started the trading day reporting Q1 earnings fell 10%, but beat estimates (sound like retails chains!). That was good enough for a higher stock price of 90¢. More major brokerage firms will be reporting this week. Speaking of retailers, Best Buy (BB) reported a 7% decline in profits but higher EPS on fewer shares, beating forecasts. This time the stock is down 1.54. Adobe, (ADBE), the maker of Photoshop, reported higher earnings in Q2 largely from strong international business, down 46¢ on doubts about going forward.

Monday, June 16, 2008

Oil dominates news, stocks generally higher

Oil continues to dominate the news. It neared the magic level of 140, then pulled back to to settle at 134.62, up 25¢. The secret is nobody has a clue what's going on the the oil markets, but prices are in the stratosphere which will hurt most economies of developed countries. Speaking of higher prices, corn set another record because of the flooding in the midwest. All food & agricultural related stocks pulled back on the news. Against this background, Dow was down 38 (GE &, MRK & KO hurt the average), advancers ahead of decliners 3-2 & NAZ was up 20. Volume continues low, under 1.2B. Banks rallied on the Lehman (LEH) news, but they pulled back in the late day trading. There were 55 new lows on NYSE. GE & MRK (in the Dow) were the leading new lows in terms of volume. Other major companies setting new lows were Qwest (Q) & Kimberly Clark (KMB). KMB is another member of the S&P 500 Dividend Aristocrat list. The Alerian MLP index closed 291.40, up 1.77, getting back above the magic 290-1 area of support.

American International Group (AIG), another Dow stock, the largest insurance company in the world, has a new chief. He will take a few months to learn about their problems (among others, trading at a 10+ year low), then report to analysts in Sep on changes he will make to fix the company. This is the same kind of story we keep getting, another major financial company trying to get it's house in order. I don't know!

As oil nears 140, stocks are mixed

Oil has another big up day, approaching 140. Today's rise is blamed on the a weaker dollar plus there is a report by CNBC that the Saudis may not be able to increase production to 10MM barrels a day. Dow is down 45, advancers about 20% ahead of decliners but NAZ is up 9. Lehman (LEH) reported earnings, delivering the $5 per share loss they forecasted last week, the stock is up 2. This AM there were doubters on TV saying this does not represent the end of their problems. Banks generally were up following the news. The Alerian MLP index rose more than 1 putting it at 291, probably following the rise in oil prices even though they aren't linked.

General Electric (GE), a Dow company & member of the S&P Dividend Aristocrat list, is down 25¢ to a 4½ year low. GE yields 4.3%, but has lost investor confidence:

Chart for General Electric Co. (GE)

Coca Cola
(KO), another Dow stock & member of the S&P Dividend Aristocrat list, & Hershey (HSY), not a member of either but a whole lot of fun, were down 1.11 & 2.34 respectively. When these kind of NON FINANCIAL companies are selling off to new lows for the last few years, the markets are having big problems!

Friday, June 13, 2008

Stocks rise on interest rate hopes

Stocks rose on hopes that the FED will hold off interest rate hikes because the core inflation number for May came in at a relatively moderate 0.2% rate. Dow was up 165 (also up slightly for the week), advancers ahead of decliners 2-1 and NAZ up 50. Prices closed near highs for the day but volume continues very low, just over 1B. 157 new lows on NYSE including: GE, KEY, WB, RF, MRK, Q, UNH, CMA, FHN, CBS, SNY (i.e. a bunch of banks just on this list & 2 Dow companies). Banks & REITs were generally a little higher, nothing dramatic. The Alerian MLP index inched up but still closed a little under 290.

Oil pulled back to under 135, remaining in super high territory. Corn, our biggest crop, hit a new another record high close. We'll have a lot to think about over the weekend, but the markets remain tough with the Dow still going sideways in the 12Ks.

Prospect of stable rates sends stocks higher

Signals that the the FED may not raise rates this month sent stocks higher. Dow was up 102, advancers ahead of decliners 5-2 & NAZ was up 39. Today's inflation report was viewed as a positive. The Labor Dept reported the inflation rate for May was a high 0.6%, however the core rate was only 0.2% (in line with expectations). This is in contrast to recent signals from the FED about needing to raise interest rates for the fight against inflation. Oil dropped 1 to 135 on news from the OPEC meeting. OPEC said recent prices (i.e in the 130s) do not reflect realities. Duhhh!! Does this qualify as a news bulletin? Foreclosures in the US climbed 48% in May. One home in 483 received a foreclosure notice, the highest ratio since record keeping began 3 years ago. If record keeping went back further, it could be the highest in 20-30 years, whatever.

Lehman Bros (LEH), up 2.09, has a friend, BlackRock (BLK), up 6, which has invested in them & may be considering a larger investment. Their drama will continue to play out.

Thursday, June 12, 2008

Asian markets mixed

Asian markets are mixed to down a little. Shanghai is 2915, they've had one tough year already! It started this week above 3200. The Euro is 1.54½ & Japanese ¥ is 107.75, about even today (Fri). NYMEX oil is essentially even. These look like early indications for lower markets in NY on Fri AM.

Early gains reduced to modest gains late in the day

Markets started hot out of thee gate this AM, but lunchtime the gains slipped. At the close Dow was up 57, advancers over decliners only by 25% % NAZ was up 10, not impressive. NYSE volume continues at 1.3B. Financials (i.e. banks) were strong but much the gains were lost by day's end. Lehman Bros (LEH), down 1.05, continues as the hot story, investors are mulling over what the changes mean. Oil rebounded from early losses, ending with a gain of 36¢ to 136.74. Supply worries from Nigeria helped bring buyers back. Retail sales helped drive gains in the AM, however analysis showed that much of the larger than expected gains were due to higher gas & fuel sales (i.e. inflation driven), something we have to constantly think about in today's world. Besides oil, commodities prices were very strong. Corn, our leading crop & export, reached a record price of 7.18. The main use for corn is feeding farm animals, that price will bleed through to a lot of groceries. The Alerina MLP index broke it's support level of 290, down 1.26 to 288.74

Key Bank (KEY) & First Horizon (FHN) are banks who were members of the S&P 500 Dividend Aristocrat list. Their divs have been cut. If not off that prestigious list, they will come off shortly. There are about 60 on the list, but even a track record of over 25 year as of higher divs year does not guarantee the future.

Oversold rally

An oversold rally sends stocks sharply higher. Dow is up 150, advancers lead decliners better than 2-1 & NAZ is up 30. Pretty good, but not that impressive. Oil continues to dominate news, but his time it pulled back 3½ to 133 on a stronger dollar. The Commerce Dept reported retail sales rose 1% in May (aided by tax rebate checks), double estimated increase & the biggest gain in 6 months. My friend doesn't believe it, so I have to keep telling her that's the idea behind tax rebate checks. However, last week jobless claims jumped 25K to 384K (400K is considered one definition of a recession).

Lehman (LEH) shook up management after all the ugly news we've gotten in recent days. Just 3 months ago it was in the 60s, today 23. Thornburg Mortgage (TMA), reported a 3+B loss for the last quarter. Their stock is 71¢ (the price, not down 71¢). They are lucky or very skilled to have remained alive this long. Major financials own billions of their debt. The bid for Anheuser Busch (BUD) was big & bullish for the markets, but now politicians may block it. They are running for elections & are afraid it may cost US jobs. Maybe that's a sign how even good things can go sour.

Wednesday, June 11, 2008

Asian markets tumble

Asian markets are following the big declines in the US. Hong Kong, China, Japan, Korea & Australia are down, typically 2%. Their banks & financials are being hit especially hard. Oil is down 1 to 135, they are also very sensitive to oil prices. Shanghai fell below the important 3K level, down over 50% from the peak just 8 months ago. The early signals for NY markets tomorrow are not encouraging.

High oil prices crush markets

High oil prices are overwhelming all news, even bank loan problems. Oil got as high as 138, but closed in the 136s. Ugh!!! Dow was down 206, decliners over advancers 3-1 & NAZ was down 55. Volume was up a tad, but still below 1.4B, or on the low side. Low means bleeding issues has not ended. New lows dominate:

New highs 31
New lows 207

Just a few of the new lows were: WM, BAC, PFE, MER, AIG, MRK, Q, RF, NOK, BMY, MBI, KEY, M, EK. Some are Dow stocks, a lot are financials/banks. As the markets are oversold, Dow will be testing 12K possibly tomorrow. The Alerian MLP index has been hovering but holding at 290, although today, USS, an MLP which owns barges, took a big hit to only 4.65 as management is suggesting the div is in big trouble. If it's cut, there could bleeding into other MLPs. For what it's worth, junk bond funds have been hanging in there pretty well as the 10+% yields have been helping.

FED 's new snapshot of the economy, just released, is very, very gloomy. The economy is weak while energy & food prices, among others, are climbing. In recent days, FED officials have been sending signals, talking more about curbing inflation. Oversold conditions may lead to a rally, but fundamentals look bad.

Higher oil sends stocks lower again

Higher oil prices are taking their toll on the stock markets. Dow is down 150, decliners over advancers 2-1 & NAZ is down 29. Oil is up 3½ to 135 (after a 3 point drop yesterday), gas at the pump topped 4.05 yesterday. Some blame volatility on currency trading, first the dollar's strong & today it fell back. Nobody knows, but it looks like we're getting using to oil at a very ugly price around 130. No announcements from Europe on changes like actions to strengthen the dollar, probably reflected in the dollar's decline today after recent strength.

Mortgage applications rose 11% last week, I guess that little piece of data is good. But there are growing worries about all loans. Auto, credit card & prime loans, among others, are encountering more problems. While not as bad as sub prime, they come from a larger base. Early signals are that these problems will plague markets, maybe even today. Washington Mutual (WM), the largest S&L, is down 83¢ to 5.83. along with about all major lending institutions. Here is their ugly chart:

Chart for Washington Mutual Inc. (WM)

Lehman (LEH), down 2.15, may yet have to seek additional financing from Korean partners. I am reminded of the cockroach analogy used, when you see one that may be an indication there are many around you can't see. That seems to be playing out for financials.

Tuesday, June 10, 2008

Shanghai Stock Market

Asian stocks are weak today (Wed AM). Hong Kong is down a little, but Shanghai is down 1% bringing the index near 3K. Shanghai banks are down 4% today, their reserve requirements were just raised. Inflation is causing big problems for China. Fuel is subsidized, food is the largest component & it affects everybody. The chart below shows the last 12 months for their stock market. It almost doubled last year, but those gains were given up in the last 8 months. The rebound in recent months was lost in May, the index sunk back to 3K (more than 50% below its recent high). China sells a lot to the US, their stock market weakness may be another drag on US stock markets.

Chart for SSE Composite Index (000001.SS)

Mixed signals, mixed markets

Mixed signals produced mixed markets today. Everybody is talking about Bernanke's comments about (maybe) raising interest rates. Also there are important meetings in Europe where they will try go figure out what central banks should do next to help troubled financial markets. The averages ended mixed today but decliners led advancers 2-1, again on only 1.3B volume. Financials rallied from an oversold position (2 up days in the last 8). The volume is above the low numbers from earlier this year, but remains below average. Oil pulled back 3 to 131 as they are trying to price in reduced demand from the extremely high prices. Adding to oil price weakness, the dollar has been very strong in recent days with the yen going to 107 (from the low 100s) & the Euro falling to 1.54½. This might be good for the stock markets, although influence on individual companies will vary. The gov raised its forecast for higher oil prices in 2008. The Alerian MLP index pulled back 3, to test the 290 support level. It's been in a sideways 290-300 band all year (except for 2 quick spikes down). If 290 doesn't hold, there could be another spike down. However, the MLPs I follow closely having been doing well this year.

High oil prices & credit crunch issues are expected to be major drivers for the stock markets in the next few months. Whatever is decided in Europe this week, these problems will drag on for some time. Expect a bumpy, if not down, ride ahead for stocks.

Higher oil sends stocks lower

Higher oil prices sent stocks lower. Dow started down 100 but rallied to near break even. Decliners lead advancers 3-1 & NAZ is 18 points lower. Tough to explain Dow's better performance but Coca Cola (KO) is the big the big winner, up 1.68. Exxon (XOM) & Chevron (CVX) both slipped back on higher oil prices. Oil rose 3 to top 137 on the usual worries, higher global demand & supply concerns. The president of the Boston FED reserve said higher energy & food prices are trickling through into inflation numbers. The slowing economy may cause prices to trend down, but that was amended with a "maybe." FED Reserve Chairman Ben Bernanke hinted that the FED might have to raise interest rates to fight inflation. From zero on the radar screen of traders, that has risen to a 50% chance.

Kirk Kerkorian's offer to buy 20MM Ford (F) shares drew an overwhelming response. More than 1B shares (nearly half of all shares) were tendered, easily allowing him to buy all the shares he wants. Today Ford is 6.08, down 28¢. At the big picture level, I think this tells a lot about today's markets.

Monday, June 9, 2008

Lehman problems worry markets

Lehman (LEH), down 2.81, problems continued to be a drag on the markets. Dow was up 70, but decliners outnumbered advancers 2-1 & NAZ was down 15 on 1.35B volume (a little below average). Dow was helped by McDonalds, Alcoa & the 2 oils (Chevron & Exxon). Oil was down 4 to 134, but at these levels the decline didn't have a major influence on the markets. Financials were weak, check BAC & USB on the right. Timothy Geithner, FED Reserve Bank of NY President, said there is need for more regulation of the largest banks & investment banks. Read the attached summary of his comments, the markets sold off while he was speaking. Meanwhile the Alerian MLP index only pulled back ½ a point, not bad. It's getting a lot of support just above 290, probably helped by the high oil prices even though their effect if anything might be negative for pipeline companies.

This was a very disappointing day for the bulls. Instead of the sharp sell-off, markets remained soggy. They largely had an off day, the kind which may be repeated. Banks are getting hammered & hard. For the brave, the high yields will be attractive. The trick is to separate the wheat from the chaff in the bank stocks.

Lehman raises $6B

Lehman (LEH), down 2.40, raised $6B in financing after reporting a 2.8B Q2 loss, larger than expected. They need the capital to help get thru the credit crisis. Also oil was also a couple dollars lower, but these moves did not shake markets. Dow is up 74 (below earlier highs), advancers & decliners are about equal while NAZ is down 20. Oil, subject to profit taking, fell back 2 while AAA reported gas reached 4.02 yesterday (check my AAA button on the right). CIT (CIT), a commercial finance company, up 1.07, will get $3B in financing from Goldman Sachs (GS). Times are tough, expect more such deals.

McDonalds (MCD), a Dow stock, reported May same store sales grew 7.7% including 4.3% growth by US stores. MCD was up 2.24, contributing to the Dow's big gain.

For the bulls, trading this AM was a big disappointment. They would have liked a huge sell-off following buy a nice rally later in the day. That would signal sellers bailed out, leaving buyers to take charge (especially after the LEH news). But it didn't happen. Dow is still stuck kicking around the 12Ks, if anything it's on defense.

Sunday, June 8, 2008

Markets tumble in Asia

Asian markets, following NY markets on Fri, tumbled sharply in early Mon trading. Most are down 2%. China & Hong Kong are closed for a local holiday, saving damage in these markets. Mon could could an interesting day in NY, especially if it begins with a huge sell-off in the early minutes. Given problems out there, instead I'm looking for just more bleeding,

Below is a picture of the fraidy cat, but she's not afraid of me any more. In the markets, this is not the time to be a fraidy cat. Instead prepare for better times in the future.

Friday, June 6, 2008

Stocks tumble on oil gusher

Oil prices shot up above 139, before pulling back a few cents to close at 138.87 up 11.08 (18 in 2 days). This was plenty, causing the markets to have a mild crash. Dow tumbled 394, decliners ahead of advancers 4½ to 1 & NAZ down 75. Wheww!!! All this activity on just 1.2B shares. That low level of volume is not the climactic sell-off bulls bulls would like to see signaling the end of selling. Oil is living in it's own world as speculators have taken charge, but the analyst forecast about reaching 150 by July 4 lit a fire under speculators in the last 2 days. In this sell-off, even Chevron (CVX) & Exxon Mobil (XOM) fell. Banks were punished badly, check BAC & USB in the right column. However, the Alerian MLP index help up pretty well, falling less than 1 to 293½, near the low end of a trading range where it has lived for much of the year. Boring pipelines with high yields looked attractive!

Not much to say. The weekend will be good time to check prices & valuations, preparing for buying opportunities at lower levels.

Gloomy Friday

Negative unemployment news & sharply higher oil sinks stocks. Dow was down 276, decliners ahead of advancers 4-1 & NAZ was down 43. This is shaping up as another ugly day on the news stories. The unemployment rate rose ½% in May to 5.5%, the biggest monthly rise in 22 years. Oil shot up 7 to near 135 on prediction it may reach 150 by July 4. This brings the 2 day gain to 12. Can you spell, uh-oh?

S&P reported that the number of companies around the world on credit watch in May was at a record level, 738. These companies are facing credit downgrades because of worsening financial conditions. Much of their problems come from the housing & financial sectors. American International Group (AIG), a troubled Dow stock, is facing an SEC investigation over whether it may have overstated complicated financial productions related to sub-prime investments. The stock is down 2.27 to it's lowest level in over 10 years. The US economy remains soft, getting clobbered by credit issue problems & higher priced oil.

Thursday, June 5, 2008

Retailers lead big market gains

This was one of those days all you had to do to find a winner was throw a dart. Dow was up 213, advancers over decliners almost 4-1 & NAZ was up 47. What was perceived as good retail sales numbers for May brought out buyers in droves. The sales figures were better than expected (beating lowered expectations), but not exceptional. Stores with higher priced merchandise did not do well, instead the discount types (like Wal-Mart) led the way up. Wal-Mart, (WMT), Macys (M) & COSTCO (COST) helped the lead the charge, each gaining 4%. Meanwhile, oil is back in the news. Oil rose 5.49 to 127.79 on a weaker dollar. Oil bears can not take command of oil!

Earlier in the day, a FED official said banks continue to face tough times. He predicted there will be more need for banks to raise added capital which means divs may get punished. An analyst from Goldman Sachs said Wachovia (WB) will halve the div. Wachovia was even as was Bank of America (BAC) on this strong rally day. Enjoy today's rally!

Favorable job report lifts stocks

A favorable job report lifted stocks. Dow is up 140, advancers ahead of decliners almost 3-1 & NAZ was up 34. The Labor Dept reported applications for unemployment benefits fell 18K to 357K last week, a better than expected showing. However the 4 week average for people receiving unemployment benefits remains at the highest level in 4 years. The home foreclosure rate remains gloomy. The proportion of mortgages which were foreclosed in Q1 rose to .99%, up from .83% in the prior year. The delinquency rate jumped to 6.35% in Q1, versus 5.82% in the prior year. Both rates were the highest since 1979. Retailers reported May sales above expectations although discounters still had the best performances. 13 beat expectations & 7 missed. Wal-Mart had a 4% gain for same store sales while Target (TGT) which is more upscale suffered a 0.7% decline in same store sales. Retail sales were helped by tax rebates reaching consumers in May. Oil came back rising over 1 getting it above 123.

Verizon Wireless will buy Alltel for 28B. Verizon Wireless is 55% owned by Verizon (VZ), a Dow stock & up 1.96, while Alltel was bought by TGP Capital 7 months ago. Big stock purchases help bring out buyers for all stocks. Not too much should be read into today's rally while Dow is still sloshing around 12½K.

Wednesday, June 4, 2008

Mixed messages confuse markets

Mixed messages confused markets today. Dow was essentially even & decliners were slightly ahead of advancers but NAZ had a pretty good day, up 22. Lehman gossip seems to be retreating in importance. Bloomberg TV had on a former director from Lehman who spoke favorably about them. He said they have a far different story than Bear Stearns (i.e. better positioned to handle today's problems) & the chairman will be a good person to solve their problems. Oil pulled back below 123, but not much help today. Chairman Bernanke's speech got a lot of attention, at least read the summary comments attached. He said the US isn't facing the severe inflation problems as in the late 70's, but they are watching inflation problems with greater interest. The Dow had a nice gain before his speech but sold off to only break even after the speech.

Some of the major new lows today were: BAC & PFE (both in the Dow), WM, ABK, MBI, EK (also in the Dow), RF, KEY, etc. Ambak & MBIA (ABK & MBI) are facing large problems as Moody's is finally ready to downgrade their AAA bond rating grade. They are fighting the idea, since it's embarrassing to have a bond insurer with less than AAA rating (who do you trust then?). The loan foreclosure problems took an interesting turn as Ed McMahon was found fighting foreclosure on his mansion. You know this has become a big problem!

Lehman uncertainty confuses markets

Lehman (LEH) uncertainty is confusing the markets. They are little changed while trying to figure out what the future holds for Lehman & how that will impact markets. In this confusing situation, something the markets do not like, Lehman is looking for outside capital probably from Korea. Grrr! We are in a new world where the US is not always at the center. Oil fell below 124 from concerns that the slowing economy will reduce demand. At other times, that news brings out buyers in droves. The Labor Dept reported mixed numbers for Q1 on worker productivity & wages. A private report by ADP Employer Services reported that private sector jobs increased by 40K last month, a good sign for the gov's upcoming labor report on Fri.

Time for a comparison of the 2 banks shown in the widget on the right. Bank of America (BAC), in the Dow, is at a 6 year low as is the case with most of the big name, famous banks. US Bancorp (USB) has been kicking around the 30-34 range for the last year, while major banks have taken a beating. Both are members of the S&P Dividend Aristocrat list (track records of over 30 years of year over year higher divs in their cases). USB is kind of a boring bank with a modest longer term stock track record. But today, boring records look pretty good:

Chart for US Bancorp (USB)

Tuesday, June 3, 2008

Stocks tumble on Lehman worries

Stocks tumbled on worries that Lehman (LEH) was in trouble which might require borrowing from the FED. These are just rumors, but that's good enough to cause a sell-off late in the day. Dow was down 100 (down 235 in 2 days), decliners over advancers 3-2 & NAZ was down 11. Lehman, down 3.22, got the major attention late in the day with major worries about their financial health. If worries play out in the ugliest fashion, this could be another Bear Stearns situation requiring FED help to prop up the markets. Another new credit crunch worry is about credit cards. There is nervousness that aggressive use of credit cards will lead to more credit crunch problems down the road. Consumers are borrowing more while delinquencies are on the rise. MasterCard (MA) was down 12.60, but VISA (V) took the worries better, up 1.49. Meanwhile oil dropped 3.45 to 124.31. The FED's prediction what there will be no more rate cuts this year caused the dollar to rise against other currencies, a negative for oil. Energies were weak & even MLPs, recently strong, pulled back a point to 294.

Tough times will be continued in tomorrow's markets!

FED Chairman says economy will improve in 2008

Ben Bernanke, Chairman of the FED, in a speech in Spain signaled future interest rate cuts are unlikely largely because of an improving economy later in the year. The markets are mixed, not sure how to take the message. Oil prices are kicking around the 126s, a little better but still a huge problem for economies around the the world. An early measure of how high oil prices are affecting the rest of the economy, General Motors, (GM), a Dow stock, up 31¢, announced in reaction to slumping sales of pickups SUVs brought on by high oil prices, they are closing 4 truck SUV plants. Instead, GM will build a small Chevrolet car at an Ohio plant in mid-2010 the Chevy Volt electric vehicle in Detroit. More announcements are coming of companies redirecting capital investments following high oil prices.

Lehman Brothers, (LEH), has been under a cloud since the early days of the credit crunch, almost a year ago as shown in the chart. They are evaluating options, including raising $3-4B in additional capital because of a loss which may be worse than the expected $300MM.

Chart for Lehman Brothers Holdings Inc. (LEH)

This news follows the downgrades for major financials which took the markets by surprise, times continue tough for financials.

Monday, June 2, 2008

Ugly day for markets

This was another ugly day for the markets. A rally in the last hour reduced losses, but this was still a down day. Dow was down 134, decliners over advancers 2-1 & NAZ had an especially tough day, down 31. The biggest negative news, among many negatives, was the S&P downgrade of major financials including: Merrill Lynch (MER), Morgan Stanley (MS), Lehman(LEH) along with banks such as JP Morgan (JPM) & Bank of America (BAC). After a period of massive write-offs, S&P is not convinced the worst is over (i.e. more losses are ahead). All of these sold off 1-2%. In addition Washington Mutual (WM) & Wachovia (WB) after having very rough years dismissed their CEO's. The Sec of Commerce, Henry Paulson, in a speech given in Asia said it may be months before the (credit mess) turmoil ends. On the upside, MLPs did well, up 2. They benefited from favorable speculation at the beginning of hurricane season (which already produced it's first tropical storm closing 2 refineries in Mexico).

Oil was hanging around 128, at one point nearing 129 but closing at 127.64 up 29¢. These are times to test the best of investors. But they know this time should be used to study companies in preparation for future buying opportunities!

Weak economic data sinks stocks

Weak economic data sent stocks sharply lower. Dow is down 146, decliners ahead of advancers 2-1 & NAZ is down 32. The culprits are the same, economic data showing a slow if not recession economy. Construction spending declined in Apr as home building continued its multi year slide. The Commerce Dept reported that construction fell 0.4% in Apr after a 0.6% in the prior month. Meanwhile a key index showed an unexpected increase in May, the Institute for Supply Management's index of manufacturing activity edged up to 49.6 in May compared to an April reading of 48.6. However even with the increase, the index remained just below 50, the dividing line which indicates whether manufacturing is in a recession. Oil continues to hang around 127-8 while gas prices at the pump are just under $4 (check the AAA button in the blog's right column for yesterday's numbers).

Financials, i.e. banks, are taking a beating today after Wachovia (WB), down 67¢, announced the chairman who gave them a whopper loss last year is out. WB made the mistake of buying a big California mortgage business a few months before the bottom fell out of that market. He admitted in their annual, that the timing was not good. As with other banks, Bank of America (BAC), a Dow stock, is down 50¢, to the lowest price in over 6 years. These are rough times for banks following gloomy US economy news.