Stocks barely up on another bank bailout

Big bank news dominates the markets. Bank of America (BAC) & Citigroup (C), both in the Dow, reported big losses. This is disappointing for investors since they were supposed to be smarter & better than the weak ones we have read so much about.

BAC after posting its first loss in 17 years is trying to deal with enormous problems after acquiring Countrywide & Merrill Lynch. BAC will get a $138B bailout from the gov, things are just that bad! C is trying to figure out which end is up. They will split into 2 companies, reversing years of working to create 1 enormous company. Both stocks are little changed in price. Percentage wise the changes are bigger, but that's because they are starting out with handles of 3 & 7.

•Citigroup Will Split in Two After Posting $8.29 Billion Loss; Shares Gain
•Bank of America Has First Loss in 17 Years, Gets $138 Billion U.S. Bailout


On this dreary news, Dow is up 18, advancers over decliners 3-2 & NAZ is even (all fading fast). Banks are weak, the S&P 500 FINANCIALS INDEX is down 4 to 129 (very near the recent multi year depressed low of 125). The Alerian MLP Index, Dow Jones REIT Index are each up a few while junk bonds are mixed. The VIX dropped 4 to the 46s, as fears ease a bit on the bank bailout. Oil is still kicking around the 35s even though temps in the northern hemisphere are COLD.

While the MLP index has been stable this year, keeping its head above the 190 floor, the Dow Jones REIT Index has been weak. REITs have sold off badly on the ugliest fears about how much damage the recession will do to their rental properties:


Dow Jones REIT Index --- YTD






The Labor Dept reported consumer inflation dropped at a 0.7% rate, less then the 0.9% rate analysts forecasted. Lower gas prices contributed to this decline. For 2008 the inflation rate was only 0.1% (essentially even), the lowest rate in 54 years.

• Gas price plunge pushes consumer prices down- AP

Banks are losing just about all their fans. Yesterday I mentioned US Bancorp (USB), an S&P 500 Dividend Aristocrat, in which Warren Buffett has a large investment. In the very troubled last 12 months, their stock held quite well, around 31. But it was clobbered in the fall sell-off, then tried for a rally late in the year. That failed, now they are setting new lows after a div hike raising the yield to over 9%. I still like the stock, but enthusiasm is being tried severely as it languishes near its 10 year lows. Such a change in attitude towards stocks is common among many investors, the reason Dow is stuck around a depressed 8K level .


US Bancorp --- 1 year