Negative news sinks stocks

Dow fell 119, decliners over advancers 2-1 & NAZ dropped 13. For the week, Dow tumbled 248 to 7062.

Banks had a very bad day (strongly influenced by Citi news) taking the S&P 500 FINANCIALS INDEX down sharply:

Value 102.01

Change -7.21

% Change -6.6%

The Alerian MLP Index was up 2, rising thru the day then giving up ground going into the close (shown in the Yahoo badge on the right). REITs, junk bonds & the VIX were flattish to weak. Even oil & gold were only slightly down.


The 6.2% annualized shrinkage in the economy ranks as bleak. Markets took the revised GDP numbers fairly well, they were probably already discounted The next qtr may be dreary but hopefully will be less bad. H2 while showing a decline should see further improvement. Gov spending may start to show up then although may not be fully felt until next year. All this assumes the credit crunch doesn't get much worse.


Citi has changed from a stock to a call (even though it's still in the Dow). Because of gov backing (investment), its life has been extended to indefinite (maybe many months). It's selling around 1½ which will be tempting for those who don't mind playing with fire. Any form of excitement could give a quick double. Of course, Barney Frank is now the CEO. He will make/influence more & more business decisions as he will be speaking for the largest stockholder. Citi should not be viewed as the only bank in trouble. More cases will arise.


General Electric (GE), down 59¢, slashed the div to only 10¢ despite numerous reassurances that the div was safe. S&P will have another company to be removed from the Dividend Aristocrat list at year's end. In 2009, already, PFE, SST, MAS & now GE, all from the group, have cut divs. Most of the remaining ones are strong & should be able to continue & make at least modest increases to remain in the group. KO has already announced a div increase, extending their streak of paying higher annual divs to 47.

More div cuts will be coming from the many not in this group. Caterpillar, a Dow stock I like because they should do well helping the new economies grow around the world, will have tough decision about maintaining its div. Earnings are projected to provide only limited coverage, if that. Many more companies will also face tough choices about continuing their divs.

•GE Slashes Dividend 68% as CEO Immelt Tries to Protect Top Credit Rating


Dow has adjusted to living between 7-8K. It's always difficult to predict to next breakout move, but it has been playing defense after the move down into the 7K area & it closed just above the new floor.


Dow Jones Industrials --- 2 weeks

The government becomes largest Citigroup stockholder

Dow sank 85, decliners over advancers 2-1 & NAZ was down 8. The economy reported dismal numbers for the last qtr, but that was outweighed by Citi's news.

Adding confusion to an already chaotic situation, the gov may convert up to $25B in Citigroup (C) loans to preferred stock with an 8% div. This would have the immediate effect of boosting the equity base for Citi (C) & they could potentially seek more bailout funds. The markets responded with a strong, DUHHH!! Citi now has a 1 handle & could be delisted if the stock price goes below 1. But then again, it's a Dow stock. Nobody knows what's going on, but Citi is clearly very desperate. Below is their chart for JUST the last year:


Citigroup (C) --- 1 year





On the dreary Citi news, S&P 500 FINANCIALS INDEX is down (96 is the low, reached last week):

Value 105.12

Change -4.10

% Change -3.7%

Somewhat related, Following on the news yesterday about the rising number of bank (primarily smaller) failures, FDIC is raising the fees to banks along with an emergency extra fee. Their insurance fund has dropped to lowest level in 25 years & they estimate $65B will be needed for the next 5 years to handle more failures. Ugh!

• Government could own up to 36 percent of Citigroup- AP
• FDIC raising fees on banks, adds emergency fee- AP

The Alerian MLP Index was flat at 188 (as shown in the Yahoo widget on the right) while REITs & junk bonds were soft. VIX rose 1.


No great surprise that the US economy shrank at an annualized rate of 6.2% in Q4, the worst performance in 26 years. Worse, there is no indication that this decline will end anytime soon. Following thru, the US business activity shrank in Feb for the 5th straight month. The Institute for Supply Management said its business barometer increased to 34.2 (less than forecasts), up modestly from 33.3 in the prior month (the lowest reading since March 1982). Readings below 50 signal contraction.

•U.S. Economy Shrank 6.2% in Fourth Quarter, Weakest Performance Since 1982
•U.S. Business Activity Contracts for Fifth Straight Month, ISM Index Shows


This is what 1T look like:

1,000,000,000,0000

It's a new term being bandied about. Now the only question whether the number in front should be 1 or 2 or 3, whatever. This number was barely heard of just a few weeks ago. Now its used in everyday discussions. When gov people throw this number around, it's scary!

Buyers went home early

After an encouraging start, stocks kept sliding during the day. Dow started with a gain of 100+ in the AM, but finished with a loss of 88, decliners over advancers by only 25% & NAZ declined 34 (awaiting & dreading Dell, DELL, earnings, now an $8 stock).

S&P 500 FINANCIALS INDEX slipped from its high, ending up 2 (but off 5 from the high). VIX after being down much of the day, ended even in the 44s. The Alerian MLP Index finished with a 1½ point gain (down 5 from the high of the day) while REITs & junk bond funds were lower. The Dow Jones REIT Index dropped 5+ taking it just under the important 100 level.


Dow Jones REIT Index --- YTD




Barclays Capital High Yield Bond ETF is representative of the junk bond fund market. Junk bonds had a nice run off overly depressed levels. Yields of 20-30% attracted buyers late last year & into Jan. But enthusiasm waned this month. This ETF pulled back 10% in the last 2 weeks & is off 20% from its highs last month. Individual junk bond funds fared worse, driving yields back into the 20+% area.


Barclays Cap High Yield Bond ETF -- 2 weeks






Oil was strong after yesterday's weekly inventory report, but remains near multi years lows. Gold couldn't handle 1000 a few days ago, it's now down 6% from those highs.

CLJ09.NYM

..Crude Oil Apr 09

..45.22

.. 2.72 ......(6.40%)

ZGH09.CBT

Gold 100 oz. ..Mar 09

..943.00

.. 22.50 ......(2.3%)

There are new worries that the "stress test" applied to banks could have unintended consequences. More gov meddling might encourage banks to pull in their horns (make even fewer loans). In the "making it as we go along" atmosphere, it's risky to guess how changes will play out. Many of the biggest banks subject to the stress test have familiar names. But new names will be included such as Goldman Sachs (GS), Morgan Stanley (MS) & American Express (AXP).

• Bank 'Stress-Tests' Could Discourage Many to Lend- CNBC

Problem banks are another worry to deal with. So far, according to FDIC, 14 banks have failed & the number on the problem list with the potential to fail is 252, up from 171 in the prior qtr. These tend to be smaller banks with weaker finances. A string of failures would be one more kick in the head markets don't need.

• Problem bank list keeps growing- CNNMoney.com

The Pres wants to impose higher taxes on the very rich as a way to help finance whopper sized gov spending. Such moves are popular with the masses, but doesn't play well with business leaders (especially those who are part of the very rich). Today's proposals represent a shot across the bow, but is not welcome by many investors.

•Obama Seeks $1 Trillion Tax Increase on Highest-Paid Americans, Companies


The chart below shows The Dow is operating on a lower tier. 8K seems a long way away!


Dow Jones Industrials --- YTD





Dell (DELL) reported lower sales & earnings after hours. The stock was down pennies based on the gut reaction. It will help set a negative tone for Asian markets opening in a few hours.

Dell 4Q profit dives, recession stunts tech spendAP(Thu 4:25pm)

Wall Street shrugs off negative news

Despite dreary reality, buyers are back. Dow is up 89, advancers over decliners 3-1 & NAZ was up 8. But averages are off from their highs.

Financials are leading the way, with the S&P 500 FINANCIALS INDEX up 5.

Value 112.20

Change 5.13

% Change 4.8%

The President is ready to provide (throw at) even more money to the troubled financial industry. The gov deficit is now expected to approach $2T!! Sure hope this works. The Northern Trust story indicates problems ahead. This Chicago bank threw a whopper size party for its fat cats after receiving $1B in gov aid which they needed (or maybe didn't need). They claim the money for the party was paid with other money!!! Duhhh?? Apparently Congress learned about this by watching TV. This raises questions. Where was Congress & will the $Bs thrown around lead to other excesses? How much more meddling will there be by Congress trying to regulate banks getting all this money?

•Obama's Budget Proposes Up to $750 Billion in New Financial Industry Aid
Northern Trust CEO Defends Sponsorship of Golf Events

• Obama forecasts $1.75 trillion deficit this year- Reuters

High yield sectors rose. MLPs, REITs & junk bonds are up while VIX dropped another 2 to the 42s (down 10 points in 3 days).

Oil is having another good day, benefiting from all the optimism in the markets

CLJ09.NYM

..Crude Oil Apr 09

...44.41

... 1.91 .......(4.5%)

Labor Dept reported that unemployment claims jumped to 667K last week, up 46K from the prior week (a modest decline had been expected). The number is the highest in 26 years. The 4 week average, a less volatile number, went up to 639K, again the highest in more than 26 years.

The number receiving unemployment insurance increased to 5.1M, above expectations. Last year only 2.8M were receiving benefits. An additional 1.4M received benefits under an extended unemployment compensation program (as of Feb. 7, the latest data available) bringing the total jobless benefit recipients to 6.5M.

• 667K new jobless claims; continuing claims top 5M- AP

General Motors, still in the Dow, lost $30B last year & is burning cash fast. It's auditors will state in the annual report if they think GM will be a going concern. One tiny ray of optimism for them. Nissan in Japan is cranking up production slightly (after its major cutbacks). But that may have more to do with the ¥ weakening in the last month.

• GM posts $9.6B 4Q loss, burns through $6.2B cash- AP

AIG has not had luck trying to sell businesses to pay off gov loans. Last night during trading for Asian markets, it was reported that they were not able to sell their Asian insurance business (i.e. asking too much). Today it's been disclosed that that can't sell their US auto business. More gov money may be needed. Sadly, this company is too big to fail.

•AIG May Take Auto-Insurance Unit Off Market as Zurich Financial Pulls Bid


New home sales plunged to a record (45 year) low (records go back only 45 years).

•U.S. New Home Sales Drop to Record Low as Job Losses, Foreclosures Mount


Reality is being ignored, maybe markets are just too much oversold. But that whopper budget deficit is very scary.

Bernanke spoke, traders listened

Dow was 7200 when Congressional hearings began. It rose 100+ after the hearings concluded, but slipped badly in the final hour. Enthusiasm is fragile. Dow ended down 80, decliners ahead of advancers 3-2 & NAZ was down 16.

Movements in the Dow were mirrored in the S&P 500 FINANCIALS INDEX. It responded nicely to testimony. After being down, it rose 10 (10%) off the low but succumbed to late day selling & remains near records low levels set a few days ago. Bank of America (BAC) jumped sharply off its low early in the day, but pulled back ending up 43¢ at 5.16.

Value 107.07

Change 0.50

% Change 0.5%

The Alerian MLP Index rose 5 to 186, REITs & junk bond funds were down while VIX dropped another 1 to the 44s.

Oil had a big day, up on news that US gasoline inventories fell 3.4M barrels last week. Gold was quiet, slipping a couple dollars.

CLJ09.NYM

..Crude Oil Apr 09

..42.72

.. 2.76 ......(6.9%)

• Oil jumps 6 percent on U.S. gasoline stock draw- Reuters

Chairman Bernanke gave soothing testimony before Congress. The Federal Reserve has an exit strategy, to get out of financing banks, once the economy recovers. However Congress may have different ideas, especially with regards to their meddling. The Treasury better defined its role in providing aid to banks.

Banks were given 6 months to raise money (public or private) if stress tests show they need additional capital. Meanwhile banks will be able to obtain further support under the $700 TARP program.

• Bernanke confident can keep U.S. inflation at bay- Reuters

•U.S. Banks Will Get Six Months to Raise Capital After Balance-Sheet Tests
Treasury: Big Banks Can Get More Bailout Funds- AP


The eyes are now off DC. Banks will get back to the lending business (or whatever they do), car makers will try to straighten their businesses & retailers will carry on. It's difficult to see that the hearings accomplished very much. The sell-off in the last ½ hour (shown in the BigCharts widget in the right sidebar) must be discouraging to the bulls.

Yesterday's gains evaporate

Stocks returned to their sliding ways. Dow dropped 175, decliners over advancers 4-1 & NAZ was down 32. Reality about the banking crisis plus the president's speech last night did not inspire buyers to come back. Even last night following the nice gains in NY, Asian markets followed thru with a more mild up performance (Tokyo was up over 2½% primarily on the recent weakness in the ¥ which has dropped from 88 to 97 to the dollar). Today the Dow has no strong gainers, but 1+ point decliners include:

3M (MMM)
American Express (AXP)
Boeing (BA)
Caterpillar (CAT)
Chevron (CVX)
Exxon Mobil (XOM)
IBM (IBM) - down 2½
United Tech (UTX)


Banks have already given up half of yesterday;'s gains. The S&P 500 FINANCIALS INDEX is down 6:

Value 101.90

Change -5.67

% Change -5.3%

MLPs, REITs & junk bond funds are pulling back while VIX is up 1½. Commodities are fairly quiet.

There has been a lot of discussion about nationalizing banks. We are already there, it's just a matter of defining how much interference represents nationalization. Major banks which have obtained gov money (investments?) will now have to prove their credit worthiness. If the gov doesn't like what it sees, the gov will get more involved. To me, this looks like, sounds like & walks like nationalization.

• Big banks get ready for White House stress tests- AP

Last night on TV, a money manager who said he was up 75% last year, had interesting thoughts. He said last year there was no point trying to guess which ones of a handful of stocks would go up. They focused on short instruments & had an exceptional year while about everybody else was in mourning. Going forward, he said Dow has been trading sideways for 17 weeks. Last week it dropped, breaking the sideways trend (chart below shows what he was talking about). They are getting ready to short more anticipating the Dow could drop another 2-3K.


Dow Jones Industrials --- 6 months




Yesterday I discussed the Dow maxing out at 1K at the start of 1973, after which it had a terrible sell-off. However the long term track record has been surprisingly good. Starting from a high & ending at a low today, the compounded annual growth rate for the Dow is almost 6%. Not bad & should keep hopes alive that the economy will work its way out of this financial mess. Money can still be made by very smart investing.

Bernanke testimony raised spirits

Markets liked what they heard when Chairman Bernanke testified before Congress. He tried to clear the air about nationalizing banks. However, the concept will remain murky especially when the Federal Reserve has to make it up as they go along. Dow rose 236, advancers over decliners 4-1 & NAZ was up 54.


Banks had an excellent relief rally giving the S&P 500 FINANCIALS INDEX one its best days in some time. Of course, it came off extremely depressed levels.

Value 107.57

Change 11.39

% Change 11.8%

High yield securities found buyers today. The Alerian MLP Index gained 5 to 182 as shown in the Yahoo widget on the right. REITs & junk bond funds also had an excellent day while the VIX plunged 8 to 44½.


Oil rebounded while gold was hit with more profit taking. Maybe some of that money from gold sales was used to buy stocks.

CLJ09.NYM

..Crude Oil Apr 09

..39.93

1.49 ....(3.9%)

ZGG09.CBT

..Gold 100 oz. Feb 09

..970.20

24.30 ....(2.4%)

Chairman Bernanke made investors feel better saying that the FED would not nationalize banks & the recession could end by later this year. He also talked about banks lending more & being prepared to cut divs to conserve cash for the balance sheet. His ideas sounded good but the FED's role in bank business & lending activity still has to be better defined.

Stocks Jump After Bernanke Says Recession May End This Year- AP
Fed urges banks to lend bailout funds: source- Reuters


The decline must the worst one since the depression. By way of comparison, at the start of 1973 Dow just touched 1000 on a wave of optimism. That year was awful, highlighted by the oil embargo driving up oil prices & inflation to what were record levels for modern times. The Dow kept dropping for more than a year. The total decline was more than 40%, dreadful. Then it took almost another decade before it tested 1K again.

The current peak was 17 months ago. After today's rally, Dow (7350) is down 48% from the recent peak.

Oct_9,_2007.........14,164


Asian markets will begin trading in a couple of hours with a strong upward bias. But economic reality will keep playing out. The markets will tell us if this relief rally has legs.

Dow gains 86 on oversold rally

Dow rose for technical reasons, after going down for 6 straight days it's expected to rise. The strongest are: Chevron (CVX), Exxon Mobil (XOM) & Home Depot (HD) which reported lower earnings that beat expectations. Dow gained 86, advancers ahead of decliners 3-2 & NAZ recovered 22.

Financials were up, if you can call it that. S&P 500 FINANCIALS INDEX was up 2½ trying to get back to 99, swell! A major news story was JPMorgan (JPM), Dow stock, cut the div to a nickel per qtr, tying to keep gov regulators at arms length. US Bancorp (USB), the last bank on the Dividend Aristocrat list, is now widely viewed as having a div waiting to be cut.

The Alerian MLP Index was hit with more selling. The index ended 2008 at 176 (followed by an eye popping 12 point gain the first day of trading in 2009), today it's down 2 to 175. REITs & junk bond funds are up today, but still selling at drab levels. Junk bond funds are back to 20-25% yields & 10-20% yields are common for REITs. VIX was down 3, remaining at an elevated reading of almost 50.


Alerian MLP Index --- 2 weeks





Oil was up pennies in the 38s while gold pulled back 10 to 985 on technicals (after its recent rally to 1000, this was expected).

The Conference Board reported that consumer confidence fell in Feb to an abysmal 25 (expectations were for 35½) from a revised 37.4 last month. By way of comparison, a year ago it was 76. Their Present Situation Index & Expectations' Index sank to similar dreary levels. These readings signal more very tough times ahead for retailers.

• Consumer Confidence Plummets to New Low in Feb.- AP

Home Depot had sharply lower earnings (after adjusting for special charges) but they beat expectations sending the stock up 1.50. They expect 2009 will be as a challenging as was last year. Macy's (M) reported similar dreary results, but beat expectations sending the stock up 35¢ (it's a $7 stock). Their CEO said last year reflected the worst economic situation in a generation, they are working to maintain profitability & conserve cash.

• Home Depot reports 4th-quarter loss of $54M- AP
• Macy's reports 59 percent drop in 4Q profit- AP

Bernanke is testifying before Congress, no great revelations. The contraction in the economy & stock markets is still out of control. AIG will need more $B to stay alive, the gov will have to work that out. Gov is providing large sums of money for many financials, but they are learning about the strings tied (more gov interference). Markets are already pricing that worry into valuations.

Dow descends to 12 year lows

Damage done to the Dow, representing all stocks, is unbelievable. YTD the Dow is already down over 1600 or 19% & down almost 50% from its peak a little over a year ago. Today, Dow dropped 250 on more dreary news with only promises of help. Decliners were over advancers 6-1 & NAZ dropped 53.


Dow Jones Industrials --- 29 years





S&P 500 FINANCIALS INDEX dropped 3 to 96. I guess it could have been worse. The bulls would say, at least banks didn't sell off even more. General Electric (GE) has an 8 handle with a yield of 14%, as it's considered just another big bank in trouble.

Following a very bad week, the Alerian MLP Index dropped 8½ today (one of its worst days ever) to the 176s, taking it back close to the starting point this year. At the lower value, its yield is near 12%. REITs & junk bond funds also sold off. In the meantime VIX jumped 3 to 52 on increased fears.


Alerian MLP Index --- YTD




In commodities, oil sold off badly while gold slipped a little taking it just below 1000 an ounce. It's easy to see where frightened money has been going.

CLJ09.NYM

..Crude Oil Apr 09

..38.07 ..

1.96 ......(4.90%)

ZGG09.CBT

Gold 100 oz. Feb 09

995.20 ..

5.20 ......(0.52%)

The President gave a speech, asserting that he is against waste. Unfortunately, there is no dept of waste which can be wiped out with a stroke of the pen. Eliminating waste means the gov has to stop giving money to groups & lay off gov workers. When that happens waste only applies to "other" programs, never mine. We'll see. He is going to release $15B to help states with Medicaid plans. Unemployment benefits will be expanded, but that gets touchy when it becomes more inclusive. When he gave the speech, Dow was down 140. After the speech, it was down 200.

• Obama: $15B from stimulus going to Medicaid plan- AP

Below is an article from the Wall Street Journal explaining that the recession has expanded to virtually all areas of the economy. Since the bear market began a little over a year ago, the top contributors to the Dow's decline are:

JP Morgan (JPM)
Caterpillar (CAT)
3M (MMM)
United Technologies (UTX)
Chevron (CVX)
Procter & Gamble (PG)

• Stock-Market Pullback Isn't Just 'Financial' Now- WSJ.com

AIG is far from being repaired. They are expected to report a $60B loss meaning they'll need even more money. Their reach is so vast that the thought of letting them fail is not an issue.

•AIG Seeks Further Government Aid, May Have $60 Billion Loss, CNBC Reports


It feels like the entire economic system is coming unglued & nobody knows how to fix it. Major averages are selling at 12 year lows. Anybody who missed an opportunity to buy a stock 5, 10, whatever years ago can probably buy it today at a cheaper price.

Chaos & confusion continues

It's sad when markets don't have a clue whether to go up or down. This confusion has been heightened since all the gov spending measures were approved last week. Articles below discuss how the gov will keep throwing money at banks to solve the financial crisis that the economy & markets are going thru. Unfortunately, they have been throwing $B & $B already which has not done much good. The big news today is that the gov will throw (they call it invest more) at Citigroup (C), hard to believe it's a Dow stock, to keep it afloat. Technically this is not nationalization, but practically it sure looks, walks & sounds like it. Gov will be calling more & more shots at Citi. So markets wander aimlessly with a downward bias.

U.S. Regulators Stand Ready With More Bank Capital- Reuters
•Obama Nationalization of Banks Becomes Focus of Growing Market Speculation
•U.S. Regulators Pledge More Money for Banks as Stress Tests Set to Begin


Stocks are trying to figure out what's going on. In this confusion, Dow is down 41, decliners over advancers 2-1 & NAZ is down a fairly big 21. Banks are center stage, the S&P 500 FINANCIALS INDEX is flat in the 99s (just a couple of years ago it was 500). Investors are looking for direction. Meanwhile, PetroChina, the leading refiner in China, has a larger market capitalization than the ENTIRE US banking industry. Something to think about!

One group I watch closely is MLPs. The Alerian MLP Index had been having a nice year in an ugly market. But that came to an end last week. Amidst all the confusion, all yields are suspect & high yields are viewed with greater suspicion. The index had been comfortable in the 190-200 range & then fell thru to the 180s last week. Today, it's down 2 to 183. Floors are what count today & it's not clear where that floor is.


Alerian MLP Index --- 2 weeks





Other high yield securities are puling back. REITs & junk bonds are lower while the VIX is up 1 to about 50. VIX has been rising on growing fears for the last month. It's still below the astronomical levels reached late last year in the 80s, but this level is considerably above the 20 area which used to be considered high, even last year.


VIX ---- YTD





The Dow & NAZ graphs in the right sidebar show they have been sliding all morning. It's hard to figure out where all this leads.

One dreary week after another

Stocks can't buy friends these days.  Last week Dow dropped almost 500 points bringing the YTD total to 1400.  This last week was especially significant for 2 reasons.  First it's after whopper sized gov spending bills were announced & approved.  The sad performance of the Dow shows they got a thumbs down rating by the markets.  Secondly, 8K now has switched from being a floor to a ceiling & looking a bit distant presently.  A new floor for the Dow has yet to be determined while it's selling at 12 year lows.

Even the very strong MLPs got dragged down last week, shown in the first graph.  The upper line shows how well MLPs have done this year, but that came to an end last week.  Perhaps they're being viewed as just another high yield security (double digit yields are common) which deserve more selling. The second graph shows how the Dow compares with REITs.  They've been on defense all year, dropping more than the Dow.  REITs have already been suffering from fears about future div cuts.  Junk bond funds had been coming off a modest rally after being greatly oversold last year, but they have been caught up in heavy selling in the last few weeks.

Dow vs Alerian MLP Index - YTD

Dow Jones vs Dow REIT Index - YTD

Divs remain a key consideration when selecting investments, however, more than ever, investors have to be aware of the constant danger of div cuts.  3 Dividend Aristocrats have already cut their divs this year.  General Electric (GE), the only Dow stock from the original group 100+ years ago, has a mere 9 handle with a 13+% yield.  They look to be next with a div cut despite reassurances by their CEO.  However strong companies persevere.  Coca Cola (KO), another Dividend Aristocrat, increased their div last week, bringing their streak of consecutive higher annual divs to 47.  

THE COCA-COLA COMPANY INCREASES ANNUAL DIVIDEND BY 8 PERCENT; 47TH CONSECUTIVE ANNUAL INCREASE

Maybe somebody from Blogger will read this.  It's been giving me (& others in the Blogger community) a tough time of posting.  This problem seems to be linked to switching to the "new" Blogger last week.  Even though Blogger is making life tough, I'm struggling & managing to create posts.  I will fight hard to keep posting even though Blogger provides no help!

Ugly talk about nationalizing banks on Fri added even more concern to already overly nervous markets.  Given that kind of loose talk thrown around in DC, next week may be another ugly week for the markets.

Weekly decline for the Dow - almost 500

Dow down 100, decliners over advancers 3-1 & NAZ down only 1. The Dow dropped every day this week, bringing the total decline to almost 500. This follows the massive stimulus & other packages announced.

S&P 500 FINANCIALS INDEX rebounded from the lows, ending with loss of only 1. Still dreary. The Alerian MLP Index came off its lows, closing at 185 down 6. REITs & junk bonds saw buying later in the day but the VIX closed up 2 to 49.


Sen Dodd was tossing around ideas about nationalizing banks to help them get thru this mess. Good boy, good boy!! He mentioned Citigroup (C) & Bank of America (BAC). It's easy to see why even the biggest banks are heading for zero.


•Dodd Says Short-Term Bank Nationalization Might Be Needed as Shares Slide


R. Allen Stanford has been apprehended & now we know Madoff has no records for his businesses. These 2 multi $B messes give the securities business a black eye at a time when it hurts badly by inhibiting future buying decisions.


•Madoff Left No Trace of Buying Securities for Up to 13 Years, Trustee Says

Stanford Found Top Talent in Mississippi, Near Elvis Birthplace


Bloomberg TV had an article on divs, but I can't find it on their website. Basically it said that Q4 divs were cut by something like $16B & in this qtr, the cuts are already more. With layoffs, salary cuts, bonuses eliminated, etc., more cuts are coming.

Caterpillar (CAT), a Dow stock I like, has to be considered vulnerable. Earnings going forward don't look good:

2008... 5.66.........Act
2009....1.50-3.50..Est
2010....1.25-4.00..Est


Their div is clearly at risk& they are not alone. Many may have to cut. GE's div (the stock has a 9 handle) has to be considered at great risk.

The 8K line was very important for the Dow. The floor has become a ceiling & it looks like it may take a major effort to get back that high. At the lows today, Dow was at levels not seen in 12 years. Grrr!

Dreary Dow down on despair

Us markets followed collapsing markets around the world. Dow is down 136 to 7330 (flirting with an 11 year low), decliners over advancers 7-1 & NAZ is down a more muted 10.

Before & after the excitement over the stimulus package being passed, stocks just keep sinking but Dow had established a fairly solid floor at 8K for a few months. That collapsed this week (after the stimulus package was approved). Bailout programs are not bringing stability to banks & the financial markets.


Dow Jones Industrials --- 6 months




S&P 500 FINANCIALS INDEX sank to another new low. The biggest banks are trading as if they were going to be taken over (wiping out stockholders' equity) tomorrow. Might be, since nobody knows what's going on. Citigroup (C) is under 2 & Bank of America (BAC) is in the low 3s (both Dow stocks)! The proposed bailout package to save homeowners who got in over their heads taking out mortgages while solvent ones have to struggle to keep current on their mortgages is not playing well anywhere. If it's any consolation, foreign banks aren't doing much better.

Value 94.87

Change -5.80

% Change -5.8%

MLPs have been a holdout in this year's market decline, until now. The Alerian MLP Index, down 8 to 184, is solidly below the 190-200 trading range it had become accustomed to. It may be heading back to the 155 lows set last Nov as they've lost whatever sex appeal they had. Now they're viewed as high yield securities, all are under suspicion.


Alerian MLP Index --- YTD





Other high yield securities are also getting clobbered. The Dow Jones REIT is flattish at 100, hardly worth bragging about at these depressed levels. Junk bond funds are selling off but the VIX is heading up on increased worries in the markets.


VIX --- YTD





You know things are bad when Berkshire Hathaway (BRK.A) gets dragged down in the financial crisis. But that's what's happening. Today it's down 3500 (5%). BRK.A has been a central banker for some of the biggest name financials. This year's decline shows concerns about their good health!

•Buffett's Berkshire Declines to Five-Year Low on Concern Over Derivatives


Berkshire Hathaway --- YTD




Markets won't be able to go up when confusion reigns!

Dow slides 89 to 7465

After trying for a recovery day, markets headed back down with another major loss. Dow was even at midday, but slipped & slid in the PM. It was hurt by Hewlett-Packard (HPQ), losing 2½ (8%), after a disappointing earnings report last night. A weak stock market didn't help. Caterpillar, a Dow stock I like, has gotten pummeled (from the 80s last year to 27) in the market selloff:


Caterpillar --- 10 years






Dow dropped 89 (down over 1200 YTD), decliners over advancers 2-1 & NAZ fell 25 (tech was hurt by the HPQ report). Dow fell on all 4 days this week, after the big stimulus package was announced!


S&P 500 FINANCIALS INDEX fell 5½ to 100, just another new low. For $7, somebody can buy one share of Bank of America (BAC) + 1 share of Citigroup (C), both Dow stocks, & have change left over. When banks are in the dumps, the stock market has only one direction to go, it's not up.

The Alerian MLP Index is losing it after a nice run this year. Down 2 to the 191s, it's back at the low end of trading range (190-200) where it has spent much of January.


Alerian MLP Index --- YTD





The Dow Jones REIT Index fell 5 to 100, nearing the sub 100 low from 3 months ago. Junk bonds were mixed to weak while the VIX also fell, down 1½ to the 46s.

Oil had a stellar day on a lower oil inventory report. Inventories fell 200K barrels compared with an expected increase of 3½M barrels. These numbers bob around from week to week, but it encouraged oil buyers.


CLH09.NYM..Crude Oil Mar 09...38.81 ... 4.19..(12.1%)

Oil prices surge on report of falling inventories- AP

There seems to be a plague of massive fraud schemes which are being uncovered. Stanford is in hiding as investigators are trying to find out what went wrong & how much money is involved. With markets in the doldrums, down 40-50% around the world, this is another kick in the head they don't need.

Stanford probe widens, Venezuela seizes bank- Reuters

This has been another dreary day for the markets. Massive gov spending which will be spread over a few years is not warming the hearts of investors. The other bailout proposals are also not getting good reviews. When banks languish & drift south, markets will continue to slip & slide. Even MLPs, which have done so well this year, are getting dragged down.

Stocks flounder trying to digest bailouts

Stocks started higher trying to reverse the 3 day decline. Buyers gave up after the first hour, markets are only slightly higher. Advancers beat decliners by 25%. S&P 500 FINANCIALS INDEX is flat at its multi year low of 106. MLPs, REITs & junk bonds are inching up, a meager recovery.


News for credit cards companies is terrible. They expect this will be their worst year as measured by defaults. The previous record rate for defaults was about 7½%, this year that rate is expected to shoot up to 10-11%. The effects of this massive recession bleed into every area of the economy.

•Bank of America, American Express May Suffer as Card Defaults Set Record


Last week, 627K workers filed unemployment claims, the 4 week average, less volatile, was 619K, another staggering number. Both figures were worse than expected. A record number, almost 5M, are receiving unemployment checks. An additional 1½M are receiving benefits under an extended unemployment compensation program approved by Congress last year. This brings the total number receiving unemployment benefits to 6½M last week. The Federal Reserve expects unemployment to keep rising for the rest of 2009.

Adding to this grief, wholesale prices jumped 0.8% last month, above the 0.2% increase that was expected. Without food & energy, wholesale prices rose 0.4%, again bigger than expected.

• Nearly 5 million are getting unemployment benefits- AP

The Gates Foundation, run by Bill & Melissa Gates, is taking the advice of friend Warren Buffet & investing in quality stocks during these troubled times. Some of their blue chip holdings are: Caterpillar (CAT), McDonald's (MCD), Costco (COST), Canadian National Railway (CNI), Waste Management (WMI), Coca Cola (KO) & Exxon Mobil (XOM).

• Gates Foundation loads up on blue chips- Indie Research

Speaking of Warren Buffet, Berkshire Hathaway (BRK.A) has taken a nasty tumble after the financial crisis began last year:


Berkshire Hathaway --- 10 years




With one whopper bailout package after another, markets are not taking this news well. Make it up as we go along, now involving $Ts, is alarming many potential buyers. Averages continue to hover near recent lows, a very bearish sign.

Stocks didn't know what to do

Major averages hugged break even lines all day, ending little changed. But the internals were not pretty, decliners were over advancers 5-2.

Financials (S&P 500 FINANCIALS INDEX) & REITs were relatively quiet, while junk bonds sold off. They've had a nice run this year but are settling back on growing worries by sellers about the deteriorating economy & its impact on high risk bonds. Even the VIX reversed its climb to head south, dropping 1½ to the 47s. Oil was down pennies, but in the 34s it's at multi year lows.

The Alerian MLP Index was a star performer this year with a nice gain compared to continuing declines for most industries. Selling pressure is taking hold, shown in the 2 week chart below.


Alerian MLP Index --- 2 weeks





The Federal Reserve sharply reduced its forecast for the economy, contraction will be greater then the previous projections & unemployment will rise even higher. They expect the unemployment rate will rise to over 8½% (the previous estimate was for about 7½%) & the economy will contract in 2009 around 1%. Formerly the economy was expected to range between a very slow expansion to suffer a minor (0.2%) contraction. The last full year contraction for the economy was in 1991.

•Fed Cuts 2009 Growth Forecast, Sets 2% as Inflation Goal Over Longer Term


Jeffrey Immelt, CEO of General Electric (GE), will be a nice guy & give up his bonuses for 2008. Under his watch, beginning 2001, the stock has gone from the 50s to under 11 with a div which he has to constantly defend. Hmmm!

• General Electric CEO declines bonus for 2008- AP

General Electric --- 10 years





Dow is sitting at the 7½K low from Nov. Today's performance shows it doesn't know what to do next.

Stocks waver on more gloomy news

Markets are essentially even although decliners lead advancers 3-1. The S&P 500 FINANCIALS INDEX slipped under 105, another new low. The Alerian MLP Index is down 2 to 196 & other indices I follow are weak. However, the VIX, rose over 1, taking it above 50 (57 is its high this year). Oil is muddling along, near break even.

Obama is bringing out a plan to help deal with the growing number of foreclosures. But markets are not greeting it with enthusiasm. Housing continues in the doldrums as housing starts last month plunged to the lowest level on record, under a ½M annual rate.

•Obama Unveils $75 Billion Housing Program to Stem Record U.S. Foreclosures
•U.S. Housing Starts Fall to Lowest Level Ever on Credit Freeze, Sales Drop


In this state of gloom, autos are not far behind housing with their problems. GM needs even more money, not to mention Chrysler. Dems are running Congress, autos will not be allowed to fail this time. But the end of next month could bring the end of gov aid. Saab in Sweden is barely alive in the GM mess, they may not survive. Auto problems are global. Toyota & Nissan, etc. are all struggling to get by on lower sales.


•GM Seeks Up to $16.6 Billion in New U.S. Aid, Plans 47,000 More Job Cuts
Saab Fans Brace for Worst as GM Threatens Disposal

In these chaotic times, a modest market rise is expected after a steep decline. Today is not giving that scenario. Markets are flying on a wing & a prayer.

I have been having posting problems with Blogger, hope to get them squared away soon.

Dow plunges 297 as stimulus bill is signed

Two consecutive days of lower stock markets around the world were too much for the US markets to overcome. Dow tried for a recovery rally late in the day, but that fizzled. Dow sank 297, decliners over advancers 9-1 & NAZ fell 63. The BigCharts widget on the right tells it all. Dow plunged on the opening & pretty much sat there for the rest of the day & closed at the lows.

Meanwhile Treasuries went up on aggressive buying. The 10 year Treasury bond rose sharply, reducing the yield 22 basis points to 2.66%. The yield had dropped to nearly 2% early this near, but climbed up to 3% a week ago.


S&P 500 FINANCIALS INDEX had a dreary day, sinking to a new low. The previous low close was not in Nov as I said in the prior post, instead Jan 20 at 108.

Value 106.39

Change -11.59

% Change -9.8%

Another big financial, now a bank, American Express (AXP), a Dow stock, fell to a 12 year low, taking it below 14, on larger than expected credit card defaults. AXP, never known as a yield stock, now yields over 5%.

•American Express Falls Most in Two Months as Credit-Card Defaults Worsen

American Express --- 29 years





The Alerian MLP Index fell 7.27 taking it under 200 to 197.91. After getting used to 200 as a floor, now it has become the ceiling again. Sudden weakness after such strength all year as a bad sign. The Dow Jones REIT Index drooped 8 to 103½, heading for the sub 100 low set last Nov. Junk bonds after their nice recent rally, sold off today. VIX popped 5 to the 47s on all this negative news coming out.

Oil continued weak closing near 35, another low for this contract (down 80% from its peak last summer)

CLH09.NYM

..Crude Oil Mar 09

...34.96 ... 3:12pm ET

2.55 (6.8%)

The drama in DC for the GM & Chrysler is only a dress rehearsal for the final showdown on Mar 31. Today's show will give Congress an idea about progress made in their attempt for a recovery. No actions are expected. GM needs another $5B from the program which they will get. The Bloomberg story below says that the administration won't rule out a controlled bankruptcy for the autos, although for the time being they should be allowed to play out this hand. Their future looks near hopeless given they are trying to turn around a failing business in an economy that is sputtering (at best).

•General Motors, Chrysler Bankruptcies Can't Be Ruled Out, Obama Aide Says


Dow managed to close (7552) just above the 7½K low set in Nov. That's close. The S&P 500 closed at 789, 800 was considered an important psychological floor. If the massive gov spending package can't excite the markets, it's hard to figure what will!

Dow plunges 243

Stocks sold off sharply following the leads of Asian & European markets in the last 2 days. Dow is down 243, decliners ahead of advancers a very big 9-1 & NAZ fell 30. It's hard to shake worries about a very weak global economy not to mention the stimulus package, which is being signed today, is not selling well.

S&P 500 FINANCIALS INDEX led the markets, down 8, nearing the 108 low of Nov. Bank of America is down to 5. The outlook for financials (& the markets) is bleak.

Value 110.42

Change -7.56

% Change- 6.4%

In this terrible market, everything is getting taken down. The Alerian MLP Index dropped a very large 5, returning the index back to 200 which has served as a ceiling then a floor in recent weeks. It's being tested again. REITs & junk bonds were weak but VIX shot up 6 (2nd chart below), heading for the 57 peak achieved last month. This is another sign that fears keep growing.


Alerian MLP Index --- 2 weeks





VIX --- 2 weeks





Oil sinks on greater concerns about the global economic slowdown. Generally lower prices are good for the economy, but this time it has a strong bearish tone.

CLH09.NYM

...Crude Oil Mar 09...

35.10

2.41 ....(6.42%)

General Motors (GM) & Chrysler have to explain to Congress the progress they've made in getting squared away. The unions & bondholders are playing tough, but the Dems are in power & they will give the autos a little more time. But even the Dems will run out of patience, shortly.

• GM, Chrysler race to finish plan as deadline looms- AP

In the midst of all this gloom, there is some good news (well sort of). Wal-Mart (WMT), a Dow stock & Dividend Aristocrat, reported their version of good news. Q4 earnings were down 7% from prior year, hurt by the stronger dollar & a charges on a lawsuit. WMT toned down Q1 EPS guidance, it will be a little under forecasts. That didn't keep buyers away, the stock rose 1.45 in a down market.

• Wal-Mart beats street, shares rise- AP

There are growing worries, among many, that the whopper sized US bailout plan which was done in a hurry & then rushed thru Congress, reeks of sloppiness. Much of the money for the recovery won't be used until next year. President Obama's negative tone last week about the economy is hurting markets this week. Dow is only 100 above the Nov low, it's getting tested. Others who watch the S&P 500 consider 800 an important floor. Right now it's under that by 4.

Lower stock prices persist

Despite the encouragement about the largest US spending bill in history, stocks keep sinking. Last week the Dow fell 400, bringing the YTD decline to over 900 (or 10%). There is recognition that "make it up as we go along" carries risk of failure or only mediocre success. It's sad that all this spending had to be rushed thru Congress. There is an old saying, "haste makes waste." That thought is probably weighing down markets.

Even though stocks have gotten off to a bad start, one group, has done very well, MLPs. The first chart shows their rise this year compared to the sinking bars for the Dow. Record high yields of 12% at the start of the year for the Alerian MLP Index brought back buyers. Higher MLP prices caused the yield come to fall to 10.3% (& some distributions were raised in the last few weeks).

Meanwhile REITs (represented by the Dow Jones REIT Index), another high yield group, as shown in the 2nd graph, have followed the Dow down & did much worse in the last week. The strongest in the group have 10% yields, others offer yields well into double digits.


Dow Jones vs MLPs --- YTD





Dow Jones vs REITs --- YTD





How long the REITs can buck the negative trend in the market is uncertain. This performance has come in spite of the decline in oil prices (much of their business is moving oil). REITs are facing the threat of losing tenants while they have to continue paying expenses (i.e. interest). Uncertainty about their future is being priced into the stock prices, producing record yields.

Passing the stimulus bill is only another step in trying to help the economy. Bank bailout II has to be dealt with. Because of the lack of success with the first $350B, there is more scepticism in Congress. It's future is uncertain. In addition, auto companies will give Congress an update report of what they've done with their bailout money. Markets have to decide whether to go with the optimism shown by the MLPs or succumb to the pessimism of the REITs.

Late day sell-off again

Dow was weak, but got back to break even around 2 PM. Then selling began as the House passed the spending bill. Dow sank 82, decliners ahead of advancers by 20% & NAZ fell 7.

Banks have been leading market moves all week, that continued today. S&P 500 FINANCIALS INDEX fell, getting nearer its Nov low of 108. $12 buys 1 share of Bank of America (BAC) + 1 share of Citigroup (C) + 1 share of General Motors (GM), all in the Dow.

Value 117.97

Change -5.20

% Change -4.2%

The Alerian MLP Index rose 2 to the 205s (3 month high), but REITs fell & junk bond funds were weak. Oil had a good day, but remains near recent lows.

CLH09.NYM

..Crude Oil Mar 09

...37.76

.. 3.78 ......(11.1%)

The House passed the stimulus package & cut another couple billion $ out of the total. Now, on to the Senate

•House Passes Obama's $787 Billion Economic-Stimulus Plan in 246-183 Vote


Economists & consumers have dreary outlooks for the economy. The US economy is expected to shrink at a 5+% annualized rate during this qtr, worst performance in 27 years. Consumer confidence fell to 56.2, the lowest level since they aren't sure when. It may be headed for the lowest level on record, 51.7, set in May 1980 (when inflation, interest rates & unemployment were well into double digits). However, some economists see growth returning to the economy by late this year while unemployment will peak at 9% next year. No matter what, forecasts are grim.

• U.S. consumers, economists unanimously grim- Reuters
• This Counts as Wild Optimism: Economist Sees Modest GDP Growth in Late 2009- Tech Ticker

The administration will announce a plan next week to help home owners facing home foreclosure notices. Foreclosures hit 274K in Jan, 10th straight month with more than a ¼M filings. Already, JPMorgan (JPM), Citigroup (C) & Morgan Stanley (MS) agreed to suspend foreclosures until Mar, they're way of trying to be helpful.

•Obama Will Unveil Plans Next Week to Stem Foreclosures on Homes, Aide Says


Dow had another dreary week, learning to live under 8K in the last 4 days.

Dow Jones Indusrtials --- 1 week

Markets waver ahead of the stimulus package vote

Stock markets vacillated trying to figure out what to make out of the stimulus bill. Dow is down slightly while NAZ is even & advancers are 25% over decliners. S&P 500 FINANCIALS INDEX slipped 3.

The Alerian MLP Index continues on a tear, rising 2½ to the 205s:

Alerian MLP Index --- 2 weeks




REITs, junk bonds & even the VIX were weak but oil was strong (probably helping MLPs)

CLH09.NYM

...Crude Oil Mar 09

....35.96 1

... 1.98 .......(5.8%)

China's economy, 4th largest in the world, is showing signs of recovery after their enormous stimulus/recovery plan was announced in Nov. Their stock market has rocketed ahead in the last 3 months. In 2007, the Shanghai stock market virtually doubled only to lose those gains & more last year. Late last year, the Shanghai market was down to the 1700s (from a record high over 6K in 2007). Since then it has been moving up nicely. Today it closed up 72 to 2320, that's a partial recovery. Domestic growth may be giving them a lift, but export business must be soft.

•China's Economy Shows Signs of Recovery as Stimulus Package Takes Effect


Australia, like most of the other countries in Asia/Europe, has an economy that needs help. They just passed an enormous (for them) stimulus package to provide economic aid.

•Australian Senate Approves Rudd's $28 Billion Economic Stimulus Package


Toyota (TM), now the world's largest auto company, is facing the same issues as the US competitors, soft sales. In the US, they are using buyouts to lay off employees. Their Japanese business has already been hit hard between the forces of a weak local economy & high ¥ rates of exchange hurting export sales to a world in a severe recession. Their stock, however, has done much better than General Motors (GM). TM is down 1.28 today to the 66s (its all time high was in the 130s).

•Toyota Plans Wage Freeze, Buyouts in North America as Output Cuts Increase


The record spending stimulus package should be signed off this weekend. Legislators will be voting on a bill with several hundred pages written in bureaucratize (a language similar to English) after trying to assimilate its scope & meaning in just a few hours. All we can do is hope for the best. An agreement on bank bailout II still has to be reached, that will be even more complicated. Finance minister from around the world are meeting in Rome, looking to come up with solutions to the largest financial problems in history.

• Stocks waver as world's finance ministers meet- AP

Afternoon recovery limits damage from morning sell-off

Stocks bounced back, especially in the last hour (shown in the BigCharts widget in the sidebar). Dow had been down over 200 early in the day, the last hour rally brought it to essentially break even (down 6 for nitpickers). Decliners led advancers 3-2 but NAZ rose 11. Banks, as seen in the S&P 500 FINANCIALS INDEX, led the way down in the AM & recovered in the PM, ending down only 1.64.


Oil has suffered a steep sell of from its peak last summer. Today's decline of 2 is a small part of the story. Below is a chart for the OIL ETF which shows how severe the sell off has been. This index plummeted from a high near 90 to a close today of 16.87. Excess enthusiasm last summer is part of the story, however a larger part is the growing fears of a terrible economic recession/depression.

CLH09.NYM

...Crude Oil Mar 09

...34.29

.. 1.65 ......(4.6%)

OIL ETF --- 1 year





MLPs continue to defy downward pressures in the rest of the markets. In the last 2 weeks, they have been establishing 200 (really 198) as a floor which has not been broken. Today MLPs were strong, up 4.05, taking it over 203 in a weak market.


Alerian MLP Index --- 2 weeks




REITs, junk bonds & even VIX were weak. Masco (MAS), after cutting their div last night, sold off 55¢ to 6.90. Last year it was over 30. This is the third high profile Dividend Aristocrat to cut in the last month, joining Pfizer (PFE) & State Street (STT). General Electric (GE), recently reaffirmed their intention to continue their div. Time will tell. Even just maintaining the div will take them off the Dividend Aristocrat list, they'll need at least one div above 31¢ this year to remain in the group.

Tomorrow the markets will try again to make up their minds whether the stimulus packages is a plus or minus.

Hopes on stimulus package fade

The slide in world markets over night continued in the US. Dow fell 147, decliners over advancers 4-1 & NAZ dropped 13. Banks & oils (the oil contract sank to another low) led the way down.

S&P 500 FINANCIALS INDEX in the first hour of trading gave up yesterday's gains:

Value 118.42

Change -6.39

% Change -5.1%

Oil still can't get no respect as worries about the global recession dragging on, dominate thinking.

CLH09.NYM

...Crude Oil Mar 09

....34.66

... 1.28 .......(3.6%)

The Alerian MLP index went up 1, taking it into the 200s. MLPs are not giving up ground. In contrast, the Dow Jones REIT Index fell 6 to 114. Junk bonds slipped after a nice run this year. VIX rose 2 to the 46s on the worries about the cost of the stimulus package.

The yield on the US Treasury 10 year bond has been volatile in 2009. After Treasuries had an enormous rally last year bringing the yield down to 2%, prices fell back sharply this year driving the yield up to 3%. In the last week, the yield dropped to 2.77% in response to higher bond prices. Some buying in Treasury bonds may be coming from the Federal Reserve trying to bring down rates. Yields on the Treasury bond have a great influence on mortgage rates, a key sore spot in the economy.


Jan US retail sales jumped 1% in the US reversing a 6 month declining trend & above expectations. Extensive holiday sales & higher gas prices accounted for the increase. Further increases are not expected.

Retail Sales in U.S. Unexpectedly Climb 1%, First Increase in Seven Months


The number of new jobless claims slipped 8K last week to 623K, but analysts were expecting a decline to 610K. The number collecting unemployment is 4.8M, as of Jan 31 (last week for which data is available)

• U.S. jobless claims dip but by less than expected- Reuters

Coca Cola (KO), a Dow stock & Dividend Aristocrat, reported so-so earnings (they called the 4th qtr "solid"). Earnings slipped 18% but beat forecasts & good enough for annual EPS to go up 2 pennies. To keep their higher annual div streak going, they will probably increase the div 4¢ at the next meeting. KO liked the earnings news, up 2.12 in a down market.

• Coca-Cola 4Q proft falls 18 pct, still beats Street- AP

The stimulus package, largest gov spending program in history (much larger than the war in Iraq), should be passed & signed in the next few days. A key objective for the program is to create 3½M new jobs. Because it's so expensive, there are doubters, time will tell. Knee jerk reaction from around the world has been negative.

• Economic stimulus package on track for final votes- AP

Dow is now below 7800, 8K is becoming its ceiling.

Economic stimulus bill appears near

Dow hugged the break even line for a 2nd day. Dow ended up 50 to 7939, advancers 30% ahead of decliners & NAZ rose 5 (dragged down by RIMM's disappointing guidance). Traders had their time divided between making trades & watching TV to see what was happening in DC.


Banks had a good day on hopes for their bailout package, S&P 500 FINANCIALS INDEX up 6. Bank of America (BAC), as a representative bank, gained 51¢, recovering part of yesterday's decline.

Value 124.81

Change 6.15

% Change 5.2%

US Bancorp (USB), the last remaining bank in the Dividend Aristocrat group, keeps getting mentioned as one of the stronger banks, having avoided the ugliest parts of the credit crisis. Berkshire Hathaway has a large holding, although diminished in size after the stock has fallen in half in just a few months. USB has an 11+% yield & a decent 10 year track record (i.e. it doesn't look overly ugly, a positive signal today).


US Bancorp --- 10 years




Bank execs are earning their multi $M salaries today testifying before congress. Just a few of the questions mentioned getting rid of divs (they will accept one penny/qtr) & selling corp planes so they can pay back credit holders (i.e. taxpayers). The bigger issue for congress is they would like to see banks get out there & lend.

•Bank Chiefs Urged to Boost Credit as House Cites Ire Over Taxpayer Support


The Alerian MLP Index pulled back pennies, closing at 199.02 (shown in the Yahoo badge in my right sidebar). The index can't decide whether it wants 200 to be a floor or ceiling. At least MLPs have had a good year (coming off depressed levels) so far. Other indices were little changed.

Oil pulled back to a contract low, well below 40. Oil has been weak on higher inventory levels in the US. Inventories rose 4.7M barrels last week, 30M barrels in the last 5 weeks. With the cold weather of winter easing, inventories may rise further in coming weeks. Oil stocks were weak (affecting MLPs) but Chevron (CVX) was down only pennies.

CLH09.NYM

..Crude Oil Mar 09

...36.15

.. 1.40 ......(3.7%)

• Oil prices tumble below $36 on bulging inventories- AP

The Senate reportedly has trimmed back the stimulus bill to "only" $789B. The goal is to have it ready for final signing on Fri. Details will be announced. The reduced amount is necessary to get agreement for a final bill needed in both houses (not to mention the pres).

•U.S. Lawmakers Agree on $789 Billion Compromise Stimulus Bill, Baucus Says


Buyers should return as the biggest fiscal spending package in history approaches final approval. Dow had gotten used to trading under 8K, but a rally would reverse 8K from a ceiling to a floor.

After hours, Masco (MAS), a Dividend Aristocrat with a 50 year record of paying higher annual divs, announced lower earnings & will recommend the annual div rate be cut from 94¢ to 75¢ to help conserve cash.

Masco Corporation Reports 2008 Results, Provides 2009 Full-Year Guidance and Announces Planned Dividend Reduction