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.