Skittish markets pull back

Markets sank late in the day on the drawn out process for saving the Big 3 & waiting for the interest rate cut announcement tomorrow. But a rally going into the close limited the loss, Dow dropped 65, decliners over advancers 2½-1 and NAZ was down 32. Financials continued weak, S&P 500 FINANCIALS INDEX fell 6, the Alerian MLP Index fell 2 to 177, the Dow Jones MLP Index plunged 5½ to 132, Lehman High Yield Bond (JNK) was up a few pennies (maybe benefiting from strength in Treasury bonds) while VIX rose 3 to 57. Nervousness was the overriding factor today.

After reaching 50 early in the day, oil sold off ending down 1.

CLF09.NYM

..Crude Oil Jan 09

...45.14

.. 1.14 ......(2.5%)

The schedule below (from Bloomberg) gives rates on US Treasuries. These record (or near record) rates are good on one hand but also can also cause problems. Some blame the extended period of very low interest rates a few years ago for contributing to the sub-prime mess (making it easier for mortgages agencies to promise very low teaser rates). Now there's talk about the FED buying Treasury bonds (to keep yields from rising) on top of increased demand from foreigners seeking safety. Foreign investors bought $35B in Treasuries in Oct (after the terrible decline in the stock markets), up from $21B in the prior month.

U.S. Treasuries

	COUPON	MATURITY DATE	CURRENT PRICE/YIELD	PRICE/YIELD CHANGE	TIME
3-Month	0.000	03/12/2009	0.01 / .01	0 / .000	15:00
6-Month	0.000	06/11/2009	0.2 / .20	0 / -.000	15:00
12-Month	0.000	11/19/2009	0.46 / .47	0.01 / .010	15:00
2-Year	1.250	11/30/2010	100-31+ / .74	0-01 / -.017	15:02
3-Year	1.125	12/15/2011	100-09+ / 1.02	0-01½ / -.016	15:00
5-Year	2.000	11/30/2013	102-14 / 1.49	0-03½ / -.023	15:01
10-Year	3.750	11/15/2018	110-20 / 2.53	0-11½ / -.039	15:07
30-Year	4.500	05/15/2038	129-08½ / 3.00	1-03 / -.048	15:04

•Treasury 10-, 30-Year Bonds Advance on Speculation Fed May Go Beyond Cuts


The Madoff scandal is getting bigger & uglier. Many of the biggest boys were duped. Bloomberg TV had a story on how even Madoff investors who cashed out early, may be required to give back money to his funds so that misery can shared with other investors. A court case on appeal will make decide that matter. In the meantime, this gives another excuse for doubters to throw in the towel on stocks.

Alleged Madoff fraud victims include big banks, super rich- AP


Trading is expected to be wide open tomorrow. Everybody is waiting for the president to make an announcement about bailing out the auto companies & the FED will announce the new low interest rates. In addition, there is more to learn about the Madoff swindle.