Dow was up 68, advancers slightly ahead of decliners & NAZ gained 4. NYSE volume continues light just over 1B. My chart on the right shows Dow, while in green territory, was generally not too far from break even. Fannie Mae (FNM)/Freddie Mac(FRE) shared center stage in the markets, they are each below 5 (not eligible as margin collateral). Despite reassurance from the Treasury, their future is unclear. The S&P 500 FINANCIALS INDEX is taking this fuzzy outlook well, up 3 to 270 (getting off its monthly low). Bank of America (BAC) & US Bancorp (USB) were each up 3% today despite the overall dreary thinking about mortgages. The motivating force behind today's rally in bank stocks may have been bargain hunting (BAC yields 9%). After a volatile day, oil was up pennies to 115 on the 9MM increase in weekly oil inventories. The Alerian MLP index was up 2, near 267 allowing it to get away from the 52 week low area of 262.
Mortgage applications dropped to the lowest level in almost 8 years. The number of applications is down 61% from the peak just 6 months ago. Average mortgage loan rates are around 6½%, high priced mortgages are not the problem. The housing depression is dragging on & on.
REITs are at or near their lows, today they were soft again. The higher quality ones yield 4-6%, others have yields over 8-10%. For personal accounts, many REITs, because their flow thru to shareholders, have dividends which are partially tax free or taxed as capital gains. Junk bond funds with yields of 12%, over 800 basis points higher than the Treasury rate of 3.80%, are at record lows. They have no exposure to mortgage debts, nice yields for the brave.
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