Monster rally fades

Asian stocks followed thru after the Wall Street rally last night with strong gains, but European markets were mixed with second thoughts on the Treasury plan to deal with bad loans. Dow pulled back 82, decliners over advancers 3-1 & NAZ fell 24. The Dow has rebounded more than 1K from its low a couple of weeks ago. But even with this rally, it's only back to levels seen in mid Feb:


Dow Jones Industrials --- YTD





Banks lost some of yesterday's glamor. S&P 500 FINANCIALS INDEX is down, but not badly:

Value 126.43

Change -2.78

% Change -2.2%

The Alerian MLP Index remains up for the year. But today MLPs, REITs & junk bond funds are giving up some of yesterday's gains.


Alerian MLP Index --- YTD





Oil fell, taking it under 53 (the highest price this year). Below is a chart for key commodities courtesy of Bloomberg. If not clear on the color bars below, blue is oil, orange is gold, yellow is corn (what else?) & pink is wheat. Gold is the clear winner, fighting its way back to break even.


Key Commodities - 1 Year

Oil

Oil

Gold

Gold Spot

Corn

Corn Spot

Wheat

Wheat Spot

Bernanke & Geithner are testifying before Congress which will give everybody a lot to talk about. Bernanke has said he was against the AIG bonus money & tried to stop payment of the money. More important, he is asking for new powers to seize banks in danger of failing as the FDIC does. The implication is that such banks could even be the whopper size ones. Naturally, inept Congress is focusing on AIG bonuses (something they undertstand) while paying less attention to the bigger issues (i.e. what they don't understand) involving $B. As an aside on the bonus money, perhaps one third went overseas, money that can not be retrieved.

•Geithner, Bernanke Call for New Wind-Down Powers After AIG's U.S. Bailout


The Treasury is spelling out more details about how to invest in these "troubled" mortgages. It looks like a variation of junk bonds, very high yields but with gov backing. At this early stage, nobody knows how successful the effort will be.

•Geithner Tempts Investors With Reduced-Rate Loans, Returns as High as 25%


Congress is center stage today. There will be plenty of fault finding about AIG bonus money, without any mention of Conrgess allowing to this happen after approving bailout packages.