Prospects of even more bad news on the banking front dragged the S&P 500 FINANCIALS INDEX down sharply:
| Value 111.52 | Change -11.60 | % Change -9.4% |
Another banking stock, Citigroup (C), I call it a just a call, has had a wild ride this month. Those who risked playing with fire & bought it near the lows were rewarded nicely. Those who got in a little late found out what can happen when playing with fire. The new Mets ballpark, Citi Field, is opening. It's difficult to believe this has any connection with the Dow stock, Citigroup.
Citigroup ---- 1 month
MLPs, REITs & junk bond funds all participated in today's sell-off. The only winner was the VIX, up 5+.
As promised, the Federal Reserve has been buying Treasury bonds. These purchases help push yields down, but so far there have been no dramatic changes in the yield. The yield on the 10 year Treasury closed at 2.71%, not far from the yields during the last week. However, money managers in this market seem to be responding favorably. They have been selling Treasuries to lock up their gains & using that money to buy mortgages for the higher yields combined with the lack of confidence on further price increases for Treasuries. If true, the FED move is "working" to some degree, the beleaguered building industry would like to see more mortgage money made available.
•Bernanke Buying Treasuries Drives Pimco, TCW to Mortgages, Corporate Bonds
Oil sold off badly on fears of lower demand for oil. Generally this is viewed as a plus for the markets but today it's a solid negative, a sign that the worldwide recession is getting worse.
| CLK09.NYM | ..Crude Oil May 09 | ..48.53 | .. 3.85......(7.4%) |
Chrysler looks like it will work out an arrangement with Fiat to stay alive. In this world, time is measured in mins, everything is subject to more change. If this goes thru, there will be an enormous amount of pressure on GM to figure out how to stay alive. Bondholders & unions, among others, will have to give up a lot to save what little remains.
GM bondholders are getting ready to swap bonds for stock, largely because they have little to lose, to help preserve GM. Again, the long term is viewed as an hour or 2.
•Obama Says GM, Chrysler Have One Final Chance to Restructure or Lose Aid
Over the weekend, talk by administration officials that the banking crisis is not over, might even get worse, hurt markets. But the gloomy outlook for the 2 autos is center stage & nobody is sure how it will play out. All sides are releasing statements with current news & spin for political effect. One thing is clear, the administration is acting very tough & seems ready & willing to let the 2 auto companies fail for what is called a structured bankruptcy. Asian markets, which open in a few hours, will probably continue the negative theme from Wall Street.
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