Markets extend gains to consecutive 2 days

Dow rose 144 (after losing almost 200 of earlier gains in the last hour), advancers were ahead of decliners 2-1 & NAZ gained 22. That performance was good enough to give the markets a 2 day winning streak.

S&P 500 FINANCIALS INDEX held the gains from the AM, up 11 to 209. The Alerian MLP Index was up 1½ to 223, digesting its recent gains which took it back over 200, The Dow Jones REIT Index rose a big 11 to 172 as bargain hunters are back in action in this extremely oversold market. High yield (junk) bond funds rallied as they found buyers (although for them rallies are measured in pennies). The VIX dropped 2½ to 60, however, as the chart shows, they remain in heavenly territory:


VIX --- 2 months




I like the article below about oil better than the used in my prior post. Oil was down 36% this month & 56% from the peak. This is the biggest monthly decline since trading began 25 years ago. Today it rallied, but it is still 80 below the July peak. The decline is predicated on a major global slowdown, not so good when you think about it.

CLZ08.NYM

Crude Oil Dec 08

....67.83

.... 1.87 (2.8%)

• Crude heads for worst monthly Nymex decline- AP

I seems like about everybody is borrowing from the Federal Reserve & they are only too anxious to be there. The chairman of the FED said in a prepared speech that the FED will be there to lend to Fannie Mae/Freddie Mac. However, a big problem is that banks are NOT lending to customers.

• Banks borrow record amount from Fed- CNNMoney.com
• Bernanke: Backing of GSE debt must be maintained- Reuter
  

Investors pulled $71B out of mutual funds in Oct (including $52B in the week prior to Oct 9), a major part of the story about the big Oct decline in stocks. In Sep the outflow was "only" $56B.

•Stock-Fund Investors Pull Record $70.7 Billion From Markets, TrimTabs Says


While Oct was a month everybody would like to forget, the dreary economic background will drag on. Investors will be getting monthly statements soon reminding them about the damage to portfolios. Macro economic problems are continuing. Banks are not lending to customers even though the capital squeeze is easing for them. More companies announced layoffs in just the last few days. Intel (INTC), a Dow stock, said today that the economic slowdown could hurt them. Ouch!! They were up pennies today.

Intel Says Financial Crisis Could Hurt Its Business (Update1)

I can't wait to see what Nov has in store for the markets.

Stocks trying for 2 straight up days.

Markets in pre-trading were showing a strongly negative opening. However after October showed one of the biggest markets declines in 70 years, it looks to be closing out in a mild manner. In recent mins, buyers returned bidding up prices. Dow is up 69, advancers over decliners 2-1 & NAZ is up 13. Indices I follow are only showing modest changes. The major exception, the S&P 500 FINANCIALS INDEX, is up 6 to 204 taking it above 200 for the first time in 10 days. The VIX, Volatility Index, is down 3 to 60.


Dow Jones Industrials --- 2 months




The Dow started Sep in a meandering way but ran into a brick wall around Sep 15 when the hearings on the bailout package began. Since then it suffered probably the ugliest 5 weeks in history followed by a couple of weeks drifting around the 9K level. In a few days, mailings for Oct 31 statements will be going out to stockholders reminding them how bad the damage was for their portfolios. Tax loss season is approaching, this year many may sell to lock in losses for tax purposes.

Dow history:

Aug 29.....11,544
Sep 30.....10,851
Oct 31........9,203 (as of noon)

With our focus on stocks it is easy to forget about the enormous damage done to other areas, i.e. commodities. 19 raw materials plunged 24% in Oct, the steepest decline in at least a half-century. Oil dropped 36% this month, surpassing a record 30% plunge in February 1986. There is no indication that these prices will rebound anytime soon as worldwide demand is anemic at best.

•Commodities Head for Worst Month in 52 Years as Economies Slow Worldwide


Consumer spending dropped sharply in Sep, probably influenced by all the press on the banking bailout package. Businesses have been warning that demand fell off a cliff after Sep 15 when that news made headlines. Spending slipped 0.3% in Sep after the 2 prior months were flat, making for the worst qtr in 40 years. This is the kind of behavior which precedes a recession.

•U.S. Consumer Spending Falls 0.3%, Capping Worst Quarter in Three Decades


Chevron (CVX), the other Dow oil, also reported excellent earnings, but the stock pulled back 1.36 on a weak outlook.

• Chevron's 3Q profit soars on oil prices- AP

Markets hang on to most of early gains

After losing the initial surge upward in the AM, Dow started marching upward at noon from break-even, gaining 190. Advancers were ahead of decliners almost 4-1 & NAZ rose 41. Markets were encouraged that the negative reading for the GDP growth rate came in below expectations.

S&P 500 FINANCIALS INDEX added 2 to 198, the Alerian MLP Index rose 7 to 222, at the high end of its 2 week trading range, the Dow Jones REIT index was up 6 to 161 & high yield or junk bond funds crawled their way up a very steep ladder (still offering outstanding yields). The VIX, Volatility Index, pulled back 4 to 66, however it remains in heavenly territory. A lower fear level encouraged some of the buyers.

Commodities such as oil & gold were little changed in PM session.

30-year, fixed-rate mortgages averaged 6.46% this week, up from 6.04% in the prior week. Rates on 30-year mortgages reached reached a high this year at 6.63% in July followed by a drop to a 7 month low at 5.78% in Sep. This increase was caused by the impact that the financial crisis is having on bond markets, just check high yield bonds about it affects other bonds. Investors sold Treasuries last month, willing to give up safety of Treasury bonds for other investments. As a result, Treasury bond yields rose pushing up rates on mortgages.

• 30-year mortgage rates rise sharply- AP

Times continue tough. American Express (AXP), a Dow stock, will lay off 7K or 10% of its staff to better deal with tough times ahead. The stock was up 85¢ on the news (aided by an up market).

American Express to Cut 7,000 Jobs- AP


The Dow ended Sep at 10,851. Today it's about 1700 lower, Oct has been one more tough month.

Early market gains don't last

Last night was an exciting time for Asian markets. They put in their 3rd straight day of rising markets with the biggest 3 day gains ever. However, this is coming off huge bear market lows, most were down 60% from their peaks a year ago (Shanghai was down 70%). They were encouraged by the greatly oversold markets & local bank rate cuts. The Hong Kong central bank cut their base rate & China had its 3rd interest rate cut in 6 weeks, bringing back buyers as was the case in Europe.

Dow futures this AM in pre-trading were up 300 but were up only 250 just after trading started. Enthusiasm subsided, its now up 35. Advancers were ahead of decliners less than 3-1 & NAZ rose 9.

S&P 500 FINANCIALS INDEX rose 4, the Alerian MLP Index was up 3 & the Dow Jones REIT index was even. High yield (junk) bonds funds were up 1%, their kind of rally. The VIX, Volatility Index, dropped 2 to 68 on slightly easing fears in the markets.

The Libor (London interbank rate) for 3 month loans was down 23 basis points to 3.19% for the 14th consecutive daily drop. Lower rates are vital, they enable banks to feel better about lending to each other. The Fed agreed yesterday to provide swap lines of $30B to each of 4 central foreign banks aimed at containing a funding squeeze in emerging markets. Meanwhile the International Monetary Fund essentially doubled borrowing limits for emerging-market countries & waived demands for economic austerity measures.

•Money-Market Rates Drop as Fed Cut, Cash Infusions Start to Unlock Lending


Oil pulled back after the big gains yesterday while gold rose slightly:

CLZ08.NYM

Crude Oil Dec 08

....66.06 ET

.... 1.44 (2.1%)

GCX08.CMX

Gold Nov 08

....754.40 11:04am ET....

1.60 (0.2%)

• Oil rises to $68 on weak dollar, rate cuts- Reuters

Banks are having success working their way out of the credit mess with fairly coordinated help from central banks around the world. However, the economies are still struggling. GDP in the US shrank by 0.3% in Q3, less than feared but if shrinkage continues in Q4, that would make this period into an official recession.

•U.S. Economy Shrank 0.3% in the Third Quarter as Consumer Spending Dropped


Last week, new jobless claims were steady at 479K (above 400K is considered worrisome) but expectations were for a modest decline. The number collecting claims remains at 3.7MM up from 2.6MM last year, another signal about being in a recession.

• Jobless claims hold steady at elevated level- CNNMoney.com

Company news continues mixed but with a strong bias on disappointing side. Exxon Mobil (XOM), a Dow stock, reported record earnings resulting from record high oil prices. However, the stock is down 2.45 on expectations that recent lower oil prices will cost them. Royal Dutch Shell (RDS.A), the largest oil company in Europe, reported similar results, stock down 3.10. Cigna (CI), a leading insurer, reported disappointing earnings costing the stock 2.70. Motorola (MOT), now a $5 stock, reported an ugly Q3 loss along with plenty of other problems taking the stock down 30¢.

• Exxon Mobil posts biggest US quarterly profit ever- AP
• Cigna reports 53 percent drop in 3Q profit- AP
• Motorola posts $397M 3Q loss; postpones spinoff- AP

It's good to hear that central banks are making changes which will help banks get back into the lending business. However, macro economic stats keep coming & they aren't getting prettier. Autos & housing remain in their worst depression in 70 years & retail sales at stores are lousy. Tomorrow closes out a brutal Oct when the Dow will report a loss of about 2K as. It now looks like the US is caught up in an official recession.

Stocks fail to rally 2 consecutive days

The widely expected Federal Reserve rate cut turned out to be 50 basis points, sending markets higher. The Dow tried to start a rally (prior to announcement) at lunchtime but slipped back towards even. After the announcement, it shot up 300 points & looked very good. However, in closing mins, the Dow plunged 400 (those hedge fund guys selling again) giving the Dow a 77 point loss to bring it under 9K. This was an attempt for the first 2 day rally in Oct, but failed.

However advancers were over decliners almost 2-1 & NAZ managed a 7 point rise. S&P 500 FINANCIALS INDEX dropped 6 to 196, the Alerian MLP Index was stronger, gaining 3, & the Dow Jones REIT Index dropped 5 after yesterday's very strong day in a greatly oversold sector. High yield (junk) bond funds were mixed, their version of a big rally where 16+% are accepted as common. The VIX, Volatility Index rose 2 to 69, remaining in heavenly territory (it ticked up from the low 60s in closing minutes).

Good gains in oil led a strong commodity sector. For example, gold rose 13.50:

CLZ08.NYM

Crude Oil Dec 08

....68.78

.... 6.05 (9.6%)

MLPs deserve special attention. After the sharp falloff at the end of Sep into early Oct, they have recovered nicely, to over 200, where they have remained. High yields, the index still yields over 10%, is attracting a few buyers. Maybe this is a start of base building:


Alerian MLP Index --- 1 month





Lower rates caused the dollar to weaken. The Japanese ¥ rose to 96 to the dollar vs 98 at yesterday's close (but still below 92 earlier this week). The € rose to 1.28½ up from 1.268 at yesterday's close. Exchange rates are very important for setting prices in international trade.

• Dollar falls after Fed decision- CNNMoney.com

The Commerce Dept reported that orders for durable goods rose 0.8% in Sep vs an expected decline. While this was the strongest showing since June, it was due to strength in orders for commercial aircraft & autos. Orders less transportation fell 1.1% after a 4.1% drop in Aug.

• Sept. durable goods rise by largest since June- AP

Ford Motor Credit and Chrysler Financial were granted access to the Federal Reserve's new finance program. This program was made to unlock short-term commercial credit markets, they join GMAC.

Ford, Chrysler Finance Units May Access Fed Short-Term Funds


Selling in closings mins may have been more than just those hedge fund guys cashing out. Nervousness remains at extraordinarily high levels (VIX rallied sharply when Dow sold off), major economic problems just keep dragging on.

Before FED announcement, stocks up

Dow & NAZ are pretty much even but advancers were ahead of decliners 3-2. S&P 500 FINANCIALS INDEX was down 1, Alerian MLP index up 7 on strength for oil & the Dow Jones REIT index pulled back 4 after yesterday's very strong rally. High yield (junk) bond funds sold off, as usual, for no reason other than fear of the unknown. The VIX, Vollatility Index, was up 2, fear isn't going away soon. Everybody is waiting for the Federal Reserve announcement this PM. A 50 basis point cut is widely expected, some even see a cut of 75 basis points (or even 100).

Oil was very strong, betting that stock market gains signal stronger economies around the world:

CLZ08.NYM

Crude Oil Dec 08

....68.35

.... 5.62 (9.0%)

• Oil prices jump on strengthening markets- AP

Today is the anniversary of the ugliest stock market day of 1929. Today looks it will be a relatively mild day. The FED announcement & guidance will move markets in the PM, but after yesterday's monster gains, extremely wild movements are not expected.

The dollar has been going through its versions of wild swings this week. Today the Japanese ¥ rose a little to 97s but is down from the 93s just a few days ago. The weaker ¥ is a big help for their export companies. Meanwhile the € rose to 1.29 in just a few days.

•Dollar Drops Most Since 1985 on Speculation Fed to Cut Rate by Half Point


Company news varies. General Motors (GM), the lowest priced Dow stock, is now #2 in autos worldwide with Toyota (TM) promoted to #1. Sony (SNE) saw profits plunge. Some divisions reported good results but the strong ¥ hurt them badly & looking forward it may do more damage. Kraft (KFT), newest Dow stock, had very good earnings largely related to selling Post & Oscar Meyer. The ongoing business generated 44¢ EPS, a penny above expectations, stock up 18¢. Kellogg reported good earnings & upped guidance but the stock pulled back from early gains to a modest 12¢ gain.

• GM 3Q global sales drop 11 pct, trail Toyota- AP
• Sony profit plunges 72 percent on strong yen- AP
• Kraft Foods 3Q more than doubles on Post sale- AP

•Kellogg Profit Rises More Than Estimates on Price Increases; Shares Climb

I just looked & the Dow is up 93 while NAZ is up 15 as buyers are anticipating great news from the FED. Tomorrow the rate cut will be history, back to macro economic reports & earnings.

Dow soars 889, heading for the heavens

Stocks sputtered after initial big gains, then markets skyrocketed in the last 2 hours closing at the highs. Bargain hunters were out in full force. Dow rose an astounding 891 (what must be a record breaking 11%) taking it over 9K, advancers over decliners by a relatively modest 3½ -1 & NAZ rose 143. Every Dow stock was up including General Motors (GM) which rose 15% to reach the magic price of $6.25.

Tech stocks did very well with 10% gains led by Amazon (AMZN), Cisco (CSCO) & Dow stock Microsoft (MSFT). The Bigcharts charts on the right show what record breaking gains look like, with most buying coming in the last 2 hours. This rally will help limit damage done in Oct from falling markets, but keep in mind Dow started the month at 10½K (a long way up from here). The VIX (Volatility Index) dropped 13 to 67, remaining in the heavens.

In an extremely oversold market where it was hard to find a loser, the S&P 500 FINANCIALS INDEX up 22 to 201, the Alerian MLP Index was up a more mild 6 to 211 remaining in its recent range-bound area near 210, the overly beaten up Dow Jones REIT Index jumped 24 (18%) to 160 & even boring junk bonds funds were generally up although many did not really participate in the broad rally. All these securities are noted for extremely high yields, many well into double digits. Maybe buyers have been reading my suggestions about locking up high yields going forward into a very difficult economic period.

Meanwhile, the most watched commodity, oil, was down pennies & gold sold off a couple of dollars. Call that essentially even.

Let's forget about trying to figure out what the rally means other than we were in an over, over, oversold market & this is what can happen under these conditions. "Bargain hunters bid up prices" was my headline last Thurs when Dow rose 102. Today was a bigger version of that day. Clearly caution was thrown to the winds. Dreary consumer confidence numbers meant little. Yes the Federal Reserve rate cut is coming, but that has been pretty well advertised. There will be more rate cuts around the world to help increase lending for restarting economic growth. Bloomberg TV reported today that the Japan central bank will cut their rate by 25 basis points (i.e. a 50% cut). Enjoy today's gains!

Early gains in the Dow fade fast

Last night, Asian markets started off very weak. Tokyo was down to another 26 year low. However Hong Kong rose following the prior day which was the 2nd worst point loss day in its history. In their PM, stocks rose & Europe followed thru with strong gains. Encouraged by that performance, Dow futures were up 350 before the opening today. Dow rose to a gain for over 300 after the opening, but enthusiasm faded fast with gains reduced to only 120. Advancers were ahead of decliners 2-1, NAZ was up a meager 6 & the indices I follow were showing only minor changes.

Markets were encouraged by extreme oversold conditions bringing back bargain hunters looking at what was called the cheapest valuations in years. But macro economic conditions remain dismal. The Conference Board reported the index of consumer confidence fell to 38, its lowest level in 41 years & far below the expected number of 51.

•U.S. Consumer Confidence Drops to Record Low on Stock Slump, Credit Freeze


Oct is shaping up as the worst Oct in 70 years. And that follows what was probably the worst Sep in history. Month end statements will be mailed in a couple of weeks reminding those who don't use the internet about the awful beating they've endured. Nervous Nellie's may decide to cash out not to mention tax loss season is approaching which may have a significant effect on the markets this year:


Dow Jones Industrials --- 2 months




The chart shows 8K has been a line of support for a few weeks. However while writing this post, Dow dropped from up 120 to up only 59. Maybe that line in the sand will be tested today.

Stock markets sink at the close

Dow had another wild day but by comparison to many in the recent past, it wasn't all that volatile, today's range was only about 400. Out of the gate it dove more than 150 only to rise to a 200+ point gain by 2PM. Then it pulled back to waffle around break even. However there was a big sell-off in the last 15 mins taking it to a 203 point loss, at 8175, bringing to close the psychologically important 8K level. Maybe those hedge fund guys came back a little later than usual. Decliners were ahead of advancers almost 4-1 & NAZ was weaker, falling 46. NAZ is generally tech heavy & they are sensing very tough times ahead in their markets, global economy.

S&P 500 FINANCIALS INDEX slipped 7½ to 179, the Alerian MLP Index dropped 5 & the Dow Jones REIT Index was down 8 more to another yearly low. Junk some bonds actually inched up from record low levels, still offering yields of 16-20%. The VIX, Volatility Index, calmed down a bit, but after closing down 3, at 76 (after reaching 81) in the stratosphere.

Oil, as with other raw materials, settled back anticipating lower demand in a worldwide recession.

Crude Oil Dec 08

....62.15

.... 2.00 ....(3.1%)

I caught this story on Bloomberg TV about stock futures in the US may actually do more harm than good in predicting immediate stock price changes:

•`Panic' Trading in U.S. Stock Futures Overstates Declines, Rattles Europe


Thurs is the big day at the Federal Reserve when they announce the rate cut. There should be more cuts around the world as central banks are pulling out all stops trying to help banks & other financials.

Gains in the Korean market over night after a 75 point cut in their lending rate shows rate cuts can help, but only to a point. Their 7 point gain yesterday doesn't take away from the bigger picture they're down over 50% in just the last 12 months, a similar story being played out all over Asia.

S&P 500 Dividend Aristocrats

SeekingAlpha just published my latest article, this one on the S&P 500 Dividend Aristocrats. I think this list is a excellent place to look for undervalued securities with outstanding dividend records:

http://seekingalpha.com/article/102129-s-p-500-dividend-aristocrats-withstanding-the-test-of-time

World markets sink but Dow is steady

Asian markets had another awful day. Their last 2 days of trading was probably the worst 2 day period ever. In the overnight, Tokyo, the largest market, dropped to yet another low. The ¥ rose to new heights at 93 to the dollar. Just a couple of months ago, it was down at 110. Their economy relies on exports, the strong ¥ makes their products harder to sell in a world economy that is sputtering. The Australian market sank again to another 4 year low. This message was repeated in about every Asian market.

• World markets slump; Nikkei at 26-year low- AP

However, one gained:

Seoul Composite

.....946.45

.... 7.70 ..up 0.8%

The Korean central bank reduced the lending rate by 75 basis points, helping the banking sector. European markets continued the worldwide stock market slide.

However, the US markets managed to digest this ugly news fairly well. The Dow dropped 150 at the opening, but recovered to around break even. The decliners are ahead of advancers 2-1 & NAZ dropped 14. S&P 500 FINANCIALS INDEX is essentially even, the Alerian MP index is down 3 while the Dow Jones REIT index tried to recover from new last week's low levels but slipped back to only break even. Oil dropped 1 after the production cut announced last weak was seen as less important than demand destruction.

• Oil falls below $63 as investors eye weak demand- AP

The $700B rescue package is working its way into the financials, banks are jumping on the band wagon. Insurance companies are looking for similar investments to help them. Plus additional companies, i.e. autos, now also see the gov as a lender/investor of last resort.

•Capital One, KeyCorp Among 12 Banks Receiving $28 Billion in U.S. Funding


The Commerce Dept announced sales of new homes rose 2.7% in Sep to an annual rate of 464K. Expectations were that sales would drop from the prior month. However, sales were still one-third below prior year's levels. These figures may be largely pre Sep 15 when the bailout package was in national headlines. Many businesses in the US reported that business dropped off a cliff following the negative headlines.

• New home sales rise 2.7 percent, prices at 4-year low- AP

There was some good news. Verizon, a Dow stock, had a favorable earnings report sending its stock up 10% (from depressed levels). They gave guidance for EPS to grow 8% this year which implies Q4 will be a little short of expectations by analysts. But they continue to invest for growth in the future.

• Verizon 3Q earnings up 31 percent- AP

Of the 20 most popular stocks at Charles Schwab, all are lower YTD with 13 down at least 30% each. As started in Korea, this week is expected to be a week of interest rate cuts around the world to help banks. The Federal Reserve is expected to cut 50, maybe 75, basis points. But the FED is running out of room for further rate cuts, negative rates just doesn't seem in the cards.

September - October review

The last 2 months have been nothing short of brutal for stocks. But the Dow Jones Industrials have recently settled down a bit even if the VIX, Volatility Index, soared to unimaginable records from high territory in the 20s to an eye popping close of 79 on Fri.


Dow Jones Industrials --- 2 months




The Alerian MLP Indexed with low beta characteristics, crashed in Sep as did the DJI, but recovered a bit in Oct, remaining above a support line of 200. The sharp sell-off below 160 was probably aggravated by the demise of Lehman resulting in many MLPs sold indiscriminately. That would account for its flattish performance this month, bringing back relatively lower beta characteristics:


Alerian MLP Index --- 2 months




REITs did not fare so well. The chart shows they held pretty well for much of Sep, followed by a brutal crash in the last 4 weeks. Brutal, over 100 points!!


Dow Jones REIT Index --- 2 months




Yields for MLPs & REITs are at record levels, but high yields haven't provided much support recently. The MLPs are expected to have yields about 200 basis points over the T-bond, not 700 points. Yields for the REIT Index would show a similar large premium over the T-bond yield at 3.69%. I wish there was an index for high yield bonds, but sadly none is available. It would show the disparity between their dividend yields & T-bonds would be even greater, probably about 1500 basis points. Panic selling in today's markets creates buying opportunities for brave souls who want to lock up high yields for many years going forward.

Last night, my friend who doesn't follow the markets closely, asked me about buying stocks at these low prices. I told her a month ago, while prices were low they have fallen another 25% since then. Sadly many aren't even bothering to ask about buying, they just sell. High yields have become more important to help ride out terrible times. Even ordinary industrials & service companies yield 3, 4 or even 5%. Dividends should be welcome & will help investors ride out one of the most brutal sell-offs in market history.

Just another down day

Stocks have quieted down a bit in the last few days following one of the most brutal sell-offs ever:


Dow Jones Industrials --- 2 weeks




Below is an ugly chart for the Dow over the last 2 months when it dropped 3K. The Dow is 3K below the 200 day moving average, not pretty. But at least the volume numbers have calmed a bit lately:


Dow Jones Industrials --- 2 months






Today Dow recovered from the 500 point drop out of the gate to end with only a 312 loss. Actually it cut the loss to less than 200, but a 150 drop in closing minutes made for an uglier day at the close. Not sure about the final numbers as Bloomberg, Yahoo & Bigcharts do not agree! Maybe day traders wanted to take profits & close out going into the weekend. Dow's getting used to 8K area which will probably encourage more weak stockholders to sell stocks & mutual finds, keeping pressure on the Dow. Decliners were ahead of advancers 4-1 & NAZ was down 51. Considering the start, a so-so finish.

The indices I follow have had a relatively mild day. S&P 500 FINANCIALS INDEX dropped on all the financial confusion out the:

Value... 186.85

Change -7.48

% Change -3.8%

The Alerian MLP Index was about even keeping above the 200 psychologically important line. However, the Dow Jones REIT index dropped 10 just inches away from the yearly low (& multi year low). High yield (junk) bonds keep selling off, just can't find friends.

The recovery during the day may have been stimulated by a growing expectation of another Federal Reserve rate cut, & this will be a big one. Now they are talking about a 75 basis point cut bringing a record low FED rate. That should cause a one day pop (500 points is becoming routine). But the next day, markets will have to return & absorb ugly macro economic news. Such a rate cut will not solve the credit mess. At least US stock markets have become quieter even if they have to get used to new low levels.

Just another disastrous Dow day

First sightings on Bloomberg TV this AM was Dow futures down 550, the limit. NYSE had to make an announcement they would be open today! This was on the heels of just another disastrous day for stock markets around the world. The Dow recovered a bit, down "only" 217, decliners over advancers only 6-1 & NAZ down another 25. Last night, I said the final hour 400 point rally for the Dow did not smell right. All 30 Dow stocks are lower, General Motors is a $5 stock while Alcoa is a $9 dollar stock.

This confusion & chaos is good for the VIX, Volatility (or Fear) Index. It's up 9 to 77 after reaching almost 90, levels nobody could have imagined just a few day ago!

S&P 500 FINANCIALS INDEX dropped again taking it near the 184 low set a couple of weeks ago:

Value 187.62

Change -6.7%

% Change -3.5%

Other indices are taking today's negative feelings a little better. High yield bond funds are down, but they sell off on any excuse. The Alerian MLP index is down only 1 & the Dow Jones REIT index is down 3 bringing it near the bottom levels of one decade ago which proved to be an excellent time for buying & locking up double digit yields:


Dow Jones REIT Index --- 10 years





Oil is having another down day on bearish sentiment about global recession & resulting demand destruction. Gloomy news about oil prices & global recession are dragging down Chevron (CVX) & Exxon (XOM), 2 Dow oils, with 3+ losses each:

CLZ08.NYM

Crude Oil Dec 08

.... 64.33

... 3.51 .... (5.2%)

• Oil trades below $64 despite OPEC cut- AP

Samsung, probably the largest company in Korea & truly selling to the global market, reported a 44% drop in Q3 earnings sending their stock down another 14%. All last night, CNBC-Asia kept repeating that the Korean market was down 11% for THIS WEEK, not the entire year - just this week. At the start of the week, they had a $100+B rescue plan to help save their banks. After final weekly figures were in, the market had its worst decline in the 21 year history (down 21%). This same old story is being repeated in one market after another.

• Samsung's profit falls on downturn, lower prices- AP

The UK economy shrank at an annual rate of 0.5% in Q3, pretty much signalling a recession. The decline had been predicted, another expected decline in this qtr will make it official. Their FTSE 100 index plunged almost 8% on the news.

• UK economy officially on the brink of recession- AP

After the initial plunge of 500, Dow has rallied about 300 limiting the damage to only 200. Let's leave it there for the time being. The problems markets are dealing with are unprecedented, huge & global. Market repair will be measured in months, if not years.

Dow up on 400 point rally in last hour

Dow had a big rally at day's end, up 400 in the last hour taking it to a gain of 172 for the day. However decliners were ahead of advancers 2-1 & NAZ slipped 12. Hard to tell what's going on. Chevron (CVX) & Exxon (XOM) were each over 5 each while Boeing (BA) & 3M (MMM) rose about 3½ each.

S&P 500 FINANCIALS INDEX, the Alerian MLP index & Dow Jones REIT index were each down a couple. VIX also slipped 2, now one unit of VIX can buy a barrel of oil. Gold was up 1.66 to 68.41 while gold slipped 16 to 717.

Nearly 766K homes received a foreclosure-related notice in Q3, up 71% from last year. By yearend, more than 1MM properties will have piled up on the market, representing about 1/3 of all properties for sale in the U.S. This is key to the mess congress is holding hearings on now trying to figure out how to solve this enormous problem.

US foreclosure filings spike by 71 percent in 3Q- AP

After the closed Microsoft (MSFT) reported good earnings.

EPS in their 1st qtr:

2008....48¢

Est...... 47¢

2007.... 45¢

They forecasted $2.00-2.10 EPS, previous guidance was for EPS of $2.12 - 2.18 on higher sales than forecasted today. The stock was up 33¢ in after hours trading.

Microsoft's Profit, Sales Beat Estimates as Demand Holds; Shares Advance

Blogger, my host, was playing hardball, down for what seemed like an eternity. They're finally back up again, really missed them.

Bargain hunters bid up prices

Last night Asian markets sold off big time, following the lead of the US markets. The Tokyo market hit a 5 year low on negative sentiment plus the ¥ rose to the 97s (up from 110 to the dollar a few months ago). They are an export economy & their latest report showed net exports were close to even, not good for them. Hong Kong, Shanghai, Korean markets, etc. all are near multi year lows on fears about the global recession. Speaking of currencies, the € dropped to $1.28, lowest level in a couple years. The ¥ is seen as a safe haven currency while the € is not. Global trade is shifting dramatically which will impact US & foreign business.

Dow is up 102 & fading from higher levels today, advancers ahead of decliners only modestly & NAZ was about even. S&P 500 FINANCIALS INDEX is even, The Alerian MLP index & Dow Jones REIT index are little changed (resting a bit after big swings lately). The VIX (volatility index) is down 5 to "only" 64 in its heavenly world. Somebody pointed out that the VIX was higher than oil yesterday. Oil is up 2½ on talks of cutting back production while gold is down 28 to 705.

The markets are greatly oversold, once again. A relief rally is logical but so far there is no major conviction behind it. Bargain hunters are active but the breadth is not good, financials are still limping along & most importantly, lousy economic conditions keep dragging on.

Dow plunges again, this time 514

Another brutal day in the stock market is becoming routine as the Dow looks like it wants to test recent lows. Not sure how many times I said that before, only the numbers were different (i.e. higher):


Dow Jones Industrials --- 2 weeks





Dow sank 514, decliners over advancers 5-1 & NAZ dropped another 81. The markets sold off badly in the last couple hours, maybe the hedge funds guys are back selling again! However, this time there was buying in the last 20 mins which limited the severity of the loss for the Dow to "only" 500. The S&P 500 FINANCIALS INDEX dropped 15 to 196 approaching the 184 low reached just a couple of weeks ago. The Alerian MLP Index was down 5 to 213, giving back some of its big gains in the last couple of weeks. Junk bond funds (with yields well over 15%) sold off, but they sell off on any excuse.

The Dow Jones REIT dropped 13, that's 8%, into 5 year low territory. Many REIT yields are well into double digits in an environment where all dividends are under suspicious. This brings buying opportunities for those who think locking up high yields for the long term will make for great investments as they did at the start of this decade. Simon Property (SPG), one of the largest & best run REITs, has fallen in half from its peak last year, bringing its relatively "modest" yield to over 6%:


Dow Jones REIT Index --- 5 years






And oil continues to sink to new lows. If there is a prime mover, it's about being in a global slowdown & a long recession. In Asian trading, they keep bringing up the concept of demand destruction (high prices destroying demand). I guess they feel this is sort of payback time for those high prices in the summer:

CLZ08.NYM

Crude Oil Dec 08

....66.82

.... 5.36 .... (7.4%)

As an aside, gold plunged 45 to 721, a 14 month low. The world economy has big problems & bank fixes are nice but not solving fundamental problems.

In this atmosphere of confusion & fright, there is strong demand for T-bills where the annualized rate of interest for the 90 day T-bill is only 1%. This represents another use for proceeds from stock sales. Earnings continue to be center stage & the messages are not encouraging. Markets are bleeding & today's actions show with these dreary earnings reports there be more bleeding.

Caterpillar & its outlook

Caterpillar (CAT), a Dow stock, just reported mediocre earnings, taking it down another few points to a 4 year low. On today's sell-off it sank even lower to 36½, another fresh low:


Caterpillar -- 3 months





The chart shows how much damage has been done in a short period of time. They reported EPS for Q3 a penny lower than last year. Their business is weak in North America, Europe & Japan. The rest of the world, highlighted by fast growing Asia, is so-so at best. EPS of roughly $6 per share for 2008 was reaffirmed but wouldn't give guidance for next year because it's expected to be challenging. Their stock is selling at only 6 times earnings with a 4% yield which seems to be an outstanding value for the brave. However, lower prices may be ahead before it reaches bottom.

Caterpillar is a bell-weather for many other stocks. Many of the biggest companies are reporting lower earnings if not losses making for much gloomier outlooks explaining why Dow is kicking around 8-9K & may be there for some time.

Markets sell off on global recession worries

Asian & European markets sold off & US markets followed through. Dow is down 345, decliners ahead of advancers 7-1 & NAZ is down 41 despite Apple (AAPL) gains. In tech land, Apple & Yahoo (YHOO) rose 8% & 4% respectively on their earnings reports from last night.

Oil is back down, off 80 from its record high a few months ago, on worries about a severe global recession.

CLZ08.NYM

Crude Oil Dec 08

...68.95

... 3.23 ...(4.5%)

•Crude Oil Falls to 15-Month Low as Financial Crisis Damps Demand for Fuel


What's worrying markets is a global recession. In Asian markets, they call it demand destruction for commodities. Just a few of today's earnings reports are listed here, generally on the glum side:

• Wachovia reports $23.9B loss for 3Q- AP
• Merck 3Q net drops 28 percent, to cut 7,200 jobs- AP
• McDonald's profit tops view; shares rise- Reuters
• AT&T 3Q profit up 5.5 pct, misses Street estimates- AP
• Boeing's 3Q profit dives 38 percent- AP

Have to run, will catch up with your later.

Half of yesterday's gains given back

This was one of those up & down & up & down, almost 300 points were shed in the last 2 hours. Markets just couldn't make it 2 days in a row. Maybe the hedge fund guys returned, selling in the last couple of hours. Dow dropped 231 settling at its lows just above 9K, decliners over advancers better than 2-1 & NAZ fell back 73. The Alerian MLP index was down only 2, after its recent run-up, following the lead of lower oil prices. The Dow Jones REIT Index fell 6 & the S&P 500 FINANCIALS INDEX was off 4. Junk bond funds which saw buying last week, pulled back. Even the extra wild VIX was little changed in the super high territory near 54. Oil continued weak, giving back yesterday's gains. The 2 Dow oils, Exxon-Mobil (XOM) & Chevron (CVX), gave back around 3 each, leading the Dow lower.

CLX08.NYM

Crude Oil Nov 08

....70.89

..... 3.36 ..... (4.5%)

The latest forecast is that retailers will see the weakest growth for holiday sales in many years, only 1.7%.

Retailers' holiday same-store sales to rise 1.7%: ICSC


Just the idea of a 2nd stimulus economic package is a hot potato, maybe too hot for this congress to deal with in its closing weeks after the election:

•McCain Holds Back as Bernanke Revives Debate Over Second Stimulus Package


This AM, Caterpillar (CAT) & DuPont (DD) from the Dow, reported lower sales, down 2.07 & 2.89 respectively. 3M, another Dow stock, reported good earnings & said they expect to earn 3.40+ for the year, sending the stock up 2½.

3M net climbs 3.2% on nearly $7 billion in sales

Apple (AAPL), another tech darling, dropped 6.95 ahead of its after hours earnings release. In after hours trading, it's up 1 on gut instincts.

Central banks seem to be doing a fairly decent job of straightening out the monstrous credit mess. This will take time & cost more money than we can imagine. But the ominous signs for retail sales is more troubling for me. Even lower gas prices at the pump will not be able to overcome macro economic problems built into the economy.

Stocks drift down on earnings reports

Markets may be quieting down. The effects of central banks throwing money at commercial banks is providing some degree of calm for banks & investors. One sign of relief is this morning the yield on the 90 day T-bill was above 1% (annualized). That means a Treasury bill which pays $100 in 3 months, can be bought for about a 30¢ discount (better than just a couple days ago when the interest was just a few pennies).

Dow, after dropping 100 out of the gate, recovered to break even but is back down 67, decliners over advancers 2-1 & NAZ is down 23. The other popular indices I follow are all pretty much unchanged. Oil traded higher on expectation of a production cut but has settled back to down a few dollars:

CLX08.NYM

Crude Oil Nov 08

...71.79

... 2.46 ... (3.3%)

• Oil above US$74 as OPEC eyes production cut- AP

The idea of a stimulus bill is getting a lot of attention, but in a political year it's hard to imagine it would go thru quickly. Everybody is proposing different versions, any bill may have to wait until next year with a new president & congress.

Earnings are getting more attention, as they should. Caterpillar (CAT) & DuPont (DD), 2 Dow stocks, reported lower earnings & dreary outlooks going forward. US Bancorp (USB), still an S&P 500 Dividend Aristocrat, also reported lower earnings. On the bright side they earned money & haven't gotten slammed as hard as most of the bigger banks. Eli Lilly (LLY), another S&P 500 Dividend Aristocrat, reported it will have to take a $1B+ charge relating to settlements on its main drug, Zyprexa. DD lost a dollar while the others had only modestly losses.


Caterpillar Net Falls 6.4% on Higher Material Costs (Update2)

• US Bancorp 3Q profit falls 47 percent- AP
• DuPont 3Q profit falls on charges, cuts 2008 view- AP

•Lilly Will Take $1.42 Billion Charge Related to U.S. Probe of Zyprexa Drug


Baltic Dry Index (BDI) Rates are discussed a lot on CNBC-Asia. DryShips Inc. is a global shipping transportation company specializing in the transportation of drybulk cargoes, which publishes daily shipping figures. Business is down on the order of 90% from last year because of reduced international trade, their website gives the daily index readings for those interested. While not well followed widely in the US, this indicator may be helpful in keeping up with ebbs & flows of international trade.

http://www.dryships.com/index.cfm?get=report

Energies lead Dow surge

Dow rose 413 closing at the high, taking it clearly above 9K. Advancers were over decliners better than 4-1 & NAZ was up 58. Today's gains were led by 2 Dow energy stocks. Chevron (CVX) & Exxon Mobil (XOM), each rose around 7 from oversold levels (lowest levels in 3 years) & with P/E ratios of 7 & 9 respectively. An expected production cut in oil is a key factor for higher prices. Following the 50+% decline from summer peaks in oil prices, gas went down, below the $3 per gallon level, one degree of help for the ailing economy. The Oil ETF shown below tracks oil, tagging along with every price swing even though the price look different:

CLX08.NYM

Crude Oil Nov 08

....74.25

...2.40 .. (3.3%)

Oil up, gasoline prices tumble despite likely OPEC cuts- AP


Oil --- 2008 YTD






Markets may have been encouraged by the rise in leading economic indicators. The Conference Board said the forecast of economic activity rose 0.3% last month, beating the 0.2% forecasted decline & following declines in Aug & July.

• Leading indicators rise in September- AP

The Alerian MLP index probably benefited from the strong day for oils. It rose 15 to 220, one of the best days in its history. This takes it almost 70 above the lows early last week, hard to believe these are low beta securities. S&P 500 FINANCIALS INDEX was up a more modest 6. Dow Jones REIT index was up 1, still depressed after the sell-off last week. Some of the vastly oversold junk bond funds had gains, but remain depressed with dividend yields above 15%.


Alerian MLP Index --- 3 months





Google (GOOG), one of investor's darlings, managed a gain of 6 after being down most of the day to the lowest levels in 3 years. Investors are worried about future growth in a slow economy, particularly how they can continue to grow at high rates with their already high share in the profitable market for searching on the internet.

Earnings season begins in force with the Texas Instruments report. This is after hours & they just reported Q3 results, EPS was down 9¢ from last year & a penny under estimates. The stock was up pennies based on gut reactions. They said revenues should decline substantially in Q4 from weak orders, so they will have to retrench. More of the biggest companies will be be reporting in the next few days.

TI reports financial results for 3Q08

Bank bailouts bring higher stock prices

Markets were feeling good about bank stimulus programs around the world. Last night Korea came up with a $130B bailout program for their banks & the Dutch gov added $13B to prop up ING Bank. Throwing $B & $B is having its effect, getting banks to lend to each other again so they can eventually lend to customers.

•Money-Market Rates Decline on Bank Bailouts, Government Infusions of Cash


Following this news, Dow began by rising 250 out of the gate but has pulled back to up 136, advancers over decliners 5-2 & while NAZ is up 9. S&P 500 FINANCIALS INDEX dropped fractionally & the Dow Jones REIT index dropped 5 nearing its yearly low. Junk bond funds were mixed to slightly up, those super high yields are attracting a few buyers. However the Alerian MLP index is having a great day, gaining 11 as it continues the rebound from last week. The index started the week with an 11% yield (not to mention higher oil prices) attracting buyers.

Alerian MLP index -- 2 weeks






Oil is having a nice day, helping big oils. Chevron (CVX) & Exxon Mobil (XOM), the 2 Dow stocks, were each up over 2.

CLX08.NYM

Crude Oil Nov 08

....73.80

.... 1.95 (2.7%)

China reported that its GDP rose only 9% in Q3, the slowest growth in 5 years, the growth rate has been slipping each quarter for a year. Global slowdown plus effects from the credit mess are being felt even in one of the strongest economies.

China's Economy Grows 9%, Slowest Pace in Five Years


Federal Reserve Chairman Bernanke wants to see more gov spending to help the economy. With the Dems taking over in DC, chances are a big spending package will be passed but that could mean waiting until next year. Plus there will be further delays before money gets into the economy.

•Bernanke Supports Consideration of Additional Stimulus on `Weak' Outlook

This is the heart of earnings seasons, many of the biggest companies will be reporting this week. Now that the chaos on banking business is settling down, earnings should become the market drivers this week as macro economic reports will be light.

Record volatility week

Last week was another rough week featuring very wild swings in stock prices. Markets are trying adjust to the Dow having a daily range of 500+ points. As a result, volatility keeps setting new records. The VIX topped 80 at one point but ended closing at 70, more than triple what used to be considered very high!

The Alerian MLP index did well, pretty much recovering in the Mon rally a large loss from the prior week. By way of comparison, it took a 9 month rally from late 2007 into 2008 to achieve a 60 point rise from a higher base:


Alerian MLP Index -- 2 weeks




However, REITs had another particularly brutal week. A very strong rally in Mon-Tues pretty much recovered the large loss in the prior week. However, the last 3 days got ugly again, featuring an almost 50 point drop from Hi to Lo:


Dow Jones REITs -- 2 weeks





Meanwhile, junk bonds had a nice recovery last week. Of course, they were coming off prices approaching zero with never before seen dividend yields over 25%. Most were up 25+%. One of my very low priced ones was up 1 last week. Wow!

All yield related securities are in the doghouse as they remain under suspicion. In the 3 groups mentioned here, many offer double digit yields worth checking out for the very brave. I still like them because their high income is important while trying to ride out the savage storm securities are in. This storm shows every sign of lasting for months while trying to build a base, making current income so significant.

New financial world

I just met a friend who is a very big money manager & asked him how he's sleeping. He said he's not sleeping so well. OK!

Last month I was talking with my friend about her IRA & its investments. She asked about investing in a company that would benefit from growing economies in Asia. These aren't the actual words as she's not familiar with investments, but you get the idea. I told her Caterpillar (CAT), a Dow stock, was an excellent investment (shown in my Yahoo badge on the right). They have a very good long term record of growth & are expanding rapidly especially in China. She wanted to know why I didn't buy the stock then. While I like the fundamentals, I said my expectations were for lower stock prices. At that time it was in the mid 60s, today it's 39. All this in a month!

CAT is an excellent company & should do well going forward. This is the type of company Warren Buffet would like. But investments are in a radically new world where everybody needs to rethink priorities & values. I think dividends providing excellent yields will be increasingly important as short term rates are being taken down to very low levels. Some securities with very attractive yields deserve more consideration. Junk bond funds, REITs & MLPs all have yields with many into double digits. Even ordinary industrial & service companies with excellent track records can be found with 3-4+% yields.

Stocks stumble after midday surge

Dow rose more than 550 from the early low, but dropped sharply in the last couple of hours, especially in closing minutes. It pulled back almost 400 in the last 2 hours, ending with a loss of 127. Option expiration days are always difficult to predict, especially in the last hour or 2. Economic news was pretty ugly today, maybe that was the deciding factor. Advancers were ahead of decliners almost 2-1 & NAZ ended with a nominal loss. A big driver for markets was energy. After nice gains earlier in the day, the 2 Dow energy stocks, Exxon & Chevron, slipped back to modest changes. Higher crude prices helped but options & traders closing books before the weekend hurt at day's end. Volatility reigns as the VIX, Volatility Index, kicked around the 60s & 70s today ending little changed at a whopping 68.

S&P 500 FINANCIALS INDEX slipped 5, nearer the low of the 13 point. The Dow Jones REIT Index was about even, still trying to catch up with the brutal day on Wed. Junk bond funds were generally higher & up on the week, but still offer 20% yields for the very brave. The Alerian MLP Index gained 8 to 205½, well above the psychologically important 200 line. Higher oil prices brought out buyers.

After a sharp fall in the last 4 weeks, oil popped for a couple of points while gold was weak all day:

CLX08.NYM

..Crude Oil -Nov 08

....72.46

.. 2.61 (3.7%)

GCV08.CMX

..Gold Oct 08

....785.10

.. 16.40 (2.1%)

700+ point daily swings in the Dow have become common lately. This is a major change that will not help bring back investors who have seen dreams shattered in such a short time. There are a lot new rules we all will have to adjust to.

Stocks meander, looking for direction

Last night, Asian Markets were up but only mildly. The big decliner was the Korean market which is having to deal with major banking problems that their central bank is trying to fix. Asian markets rose this week, first time in 2 months, providing a degree of hope.

After starting off down 250, Dow fought back to break even & remains nearby. Dow is even, advancers equal decliners & NAZ is up 11 ((helped by Google (GOOG) reporting good earnings last night)). Today is also an option expiration day, providing a little extra excitement for the traders. S&P 500 FINANCIALS INDEX is down 1, the Alerian MLP index rose 8 taking it back over 200 & the Dow Jones REIT Index is up 2.

As I suspected last night, the Alerian MLP Index had a glitch in its daily trade number yesterday by providing a change for 2 days, not just one. A couple of stocks had similar glitches. The important point is the MLP index is down sharply in this month alone. 2 years ago at this time, it was on a 70 point march upward which took 9 months. Last week, it dropped 70 in 3 ugly days, that's what we have to deal with now.

Oil is trying to get back over 70, but that's still over a 50% drop from its peak 3 months ago while gold has been having a tough time lately (maybe influenced by global economic worries):

CLX08.NYM

Crude Oil Nov 08

....71.61

... 1.76 (2.5%)

GCV08.CMX

Gold Oct 08

....775.90

... 25.60 (3.2%)

Macro economic numbers keeping coming & their glum. The Michigan Surveys of Consumers confidence plunged to 57.5 in Oct down from 70.3 in the prior month, the largest monthly decline in history. There have been only 4 monthly declines of 10 points or more. The report said, "All of the prior double-digit declines were based on severe economic dislocations with the losses accelerated by fear and panic." Expectations were for 65.5. Since 1952, the record low was 51.7 back in May 1980.

New home construction fell 6.3% in Sep vs expectations of 1.6%. The industry is on pace to construct the fewest new homes & apartments in 2008 since the end of World War II, no great surprise.

•U.S. Consumer Confidence Falls Most on Record Amid Job Losses, Credit Woes
•Single-Family Housing Starts in U.S. Tumble to 26-Year Low; Permits Plunge


IBM (IBM), a Dow stock, reported very good earnings sending the stock up 77¢. However, VF Corp (VFC), maker of Lees, Wranglers & other leisure clothing, reduced its estimate for Q4 earnings growth from 20% to under 5%, stock down 2.33. Their dividend was increased by 4¢ annualized (they are an S&P Dividend Aristocrat).

IBM profit gains on software, services
Clothing giant VF Corp. cuts fourth-quarter view


Hedge funds have not done well this year & their redemptions have brought large stock sales, aggravating the declines & increasing the market volatility which has become routine.

•Hedge-Fund Assets Declined by 11% in Third Quarter on Record Withdrawals


There are optimists among all the gloom. JP Morgan has ideas about 16 major companies which they think are worth owning in these troubled times. Warren Buffet said he is buying stocks with his personal money, demonstrating his belief in their long term values.

•JPMorgan Picks 16 U.S. Stocks to Buy as Economies Enter `Global Recession'
Warren Buffett: Buy Stocks! Cash Is Trash!

Late day rally for stocks

A late day rally brought the Dow big gains, up 401 (as shown in the Bigcharts graph on the right). This is hard to figure when decliners led advancers 5-1 (down from 10-1 earlier in the day) but NAZ participated, up 89. 3M, Exxon, Johnson & Johnson, IBM, McDonalds, Procter & Gamble, United Tech & Walmart (up over 4) led the charge up for the Dow. Clearly, hedge fund sellers took the last hour off.

Other indices didn't do as well. S&P 500 FINANCIALS INDEX rose only 3½, Dow Jones REITs rebounded 8 after yesterday's terrible beating & the Alerian MLP index cut losses, down only 9. The change doesn't tie with last night's close, they should be showing a modest gain (maybe it's one of those computer glitches). Junk bond funds were also up, hard to measure without a good index. But some brave souls are willing to gamble to obtain yields around 15-20%. REITs & MLPs also have yields well into 2 digits.

Beware:

The VIX, Volatility Index, reached new heights but closed down 1.64 to 67.61 after topping 81 during the day:


Volatility Index -- 5 days





This measure, some call it the fear index, is in record territory. Fear sounds like a good way to describe as it measures anxieties about job losses, inflation worries & the credit mess, giving investors a lot to worry about (or fear). Just a couple of weeks ago 20 was considered high & 30 was a heavenly kind of maximum. No more:

VIX Options Index Tops 80 for First Time as Stocks Extend Slump


US Treasury securities are highly prized for their high degree of security. The table below shows what investors earn on them today. For the short term, they are willing to accept little interest when "risk averse" becomes their primary focus. The shortest term securities are most highly prized with only nominal or modest interest rates. Proceeds from stock sales can be used to buy Treasuries.

U.S. Treasuries rates, courtesy of Bloomberg:

	COUPON	MATURITY DATE	CURRENT PRICE/YIELD	PRICE/YIELD CHANGE
3-Month	0.000	01/15/2009	0.43 / .44	0.22 / .223
6-Month	0.000	04/16/2009	1.12 / 1.14	0.26 / .266
12-Month	0.000	09/24/2009	1.22 / 1.25	0.17 / .175
2-Year	2.000	09/30/2010	100-24½ / 1.60	-0-03 / .048
3-Year	4.500	09/30/2011	107-16 / 1.88	-0-03½ / .034
5-Year	3.125	09/30/2013	101-12+ / 2.82	0-00 / -.000
10-Year	4.000	08/15/2018	100-15 / 3.94	0-01 / -.004
30-Year	4.500	05/15/2038	104-14 / 4.24	-0-24+ / .044

Today's rally sounds like one of those attributed to "technical reasons" (short covering, whatever). Dreary economic reports during the day were forgotten in the last 2 hours of trading. I am not encouraged by this rally.

Markets struggle with gloomy news

Asian markets had another terrible day following all the bloodletting in the US, especially in the last hour of trading. Hong Kong & Tokyo, 2 of the bigger ones, were down 1K apiece, reaching new multi year lows. The declines followed an enormous rally on the previous day. European markets also sold off.

Dow is trying to rally after being down more an hour ago. It reduced the loss to 45 & remaining near the 8451 Fri closing low. Decliners are ahead of advancers a solid 10-1 (10-1 has been holding steady as I write) & NAZ is even:


Dow Jones Industrials -- 5 days




S&P 500 FINANCIALS INDEX is down 5 to 205, still above the 184 Fri low. The Alerian MLP Index is down 10 & the Dow Jones REIT Index is up 3½ after getting punished badly yesterday

Oil & gold are selling off again as stocks pull back, don't see that too often. The 10 point drops yesterday for Dow oils, Exxon (XOM) & Chevron (CVX), were responsible for about 130 points of the Dow decline. Today Chevron is down 1.44 but Exxon is up 44¢. The message from these declines is lower worldwide demand for oil & gold is coming from a global recession.

CLX08.NYM

Crude Oil Nov 08

...70.13

... 4.41 (5.9%)

GCV08.CMX

Gold Oct 08

...792.40

... 43.10 (5.2%)

Gloomy news is taking control of the markets, it's getting hard to keep track of all the negative news! These stories tell us that the recession is badly hurting the US economy.

•U.S. Industrial Production Falls Most Since 1974 on Storms, Boeing Strike
•Paulson Signals Hedge Funds Aren't Currently Eligible for Government Money
•Crude Oil Falls Below $70 as U.S. Inventories Rise; OPEC Moves Up Meeting

• Philly Fed factory activity index crashes in Oct- Reuters
• Worries over economy spread; global markets sink- AP

2 enormous, but troubled, financials, Citigroup (C) & Merrill Lynch (MER), reported ugly losses, stocks sold-off 7% & 4% respectively. Since they are low price stocks, percentage changes mean more than changes measured in cents. Now traders are paying more attention to the losses rather than worrying about "beating" lowered estimates.

• Citigroup posts another loss amid credit woes- AP
• Merrill 3Q loss widens on mortgage-related charges- AP

I don't follow specific hedge funds, but a news item caught my eye. This group had $40B in Mar which is down to $33B today (maybe even less, who knows?). This specific fund had $1½B, they've got a lot of stock to sell & fast. Let's see if today's last hour proves to be another selling period for hedge funds.

•Highland to Close $1.5 Billion in Hedge Funds Amid `Unprecedented' Turmoil

Markets are testing lows, looks like the lows may not hold.

Exxon Mobil

Exxon Mobil (XOM), Dow stock, is the largest oil company in the world with one of the largest market capitalization in the world. Today it dropped 10, what has to be a record daily decline, to a 2+ year low:


Exxon Mobil -- 10 years





Chevron (CVX), another oil stock in the Dow, only dropped 8½ to 59.98 & has a similar graph:

Chevron -- 10 years




Exxon, Mobil & Chevron were 3 of the largest companies in the original Standard Oil 100 years ago. Even in a 10 year chart, after the recent market slide, their stock performances over the last decade have been good, but not great. Exxon recently joined the S&P 500 Dividend Aristocrat list with a dividend yield of 2.6% Chevron has a higher yield at 4.3%. These are not recommendations, merely shown to view the sad state of affairs in the stock markets.