Stocks lower on negative unemployment numbers

Markets sold off sharply on larger than expected job losses in Nov. But by midday, there was some recovery. Dow was down 130, decliners over advancers almost 4-1 & NAZ dropped 16. However, S&P 500 FINANCIALS INDEX rose 2½ to 160 in an oversold market. Oil continues to fall fast as it approaches 40, a number first forecasted just a couple of days ago.

CLF09.NYM

...Crude Oil Jan 09

...41.21

.. 2.46 .......(5.6%)

Employers laid off 533K workers last month, much worse than expected. This was the biggest job loss since 1974. The unemployment rate rose from 6.5% in Oct to 6.7% in Nov, the highest level since 1993. Many fear higher numbers lay ahead. Meanwhile 10% of mortgages are in trouble which flows from the dreadful unemployment report. This unemployment numbers prompted Barney Frank, head of the Congressional Finance Committee, to say auto companies can not be allowed to fail which would make a bad unemployment situation even worse. The Big 3 will get gov help, allowing them to remain in business, at least for the time being. These ugly stories are responsible for the rough the terrible retail environment.

•Employers in U.S. Cut 533,000 Jobs, Most in 34 Years, as Recession Deepens
•U.S. Mortgage Delinquencies, Foreclosures Rise to Record as Prices Plummet
•Auto Industry Failure Would Be a `Disaster,' Exacerbate Crisis, Frank Says


The decline in the Alerian MLP Index is similar to other high yields groups (REITs, junk bond funds, et all). The MLP Index went below 160 in Oct & again a couple of weeks ago. It's testing that floor once again (down 7 to 162), only this time the floor may give way. Yields on the index are over 12%, many companies have much higher yields.


MLP Index --- 3 months




Meanwhile, REITs have are holding at extremely dreary levels, near 120 (today even at 123). Once again, double digit yields are routine, with some above 20%.

Dow Jones REIT Index --- 3 months




Fortress Investment Group (FIG) is down to 1.75 after announcing it closed the doors for redemptions on its biggest hedge fund. They are not alone, there are many more funds out here. All have to deal with redemptions which force stocks sales. The negative side of this story represents a very dark cloud overhanging the markets.

Dreary Dec drags just keep dragging on.