Chrysler bankruptcy, stocks wobble

The third largest US auto maker filed for Chapter 11. Chrysler announced it will temporarily halt most vehicle production while it completes a deal with Italian car maker Fiat to resume car production. The failure of Chrysler was expected, but when it happens it always a shock. Chrysler will still sell cars (they have plenty in inventory) & the gov would back its auto warranties. Its plants will be idled during the legal proceedings. A giant business will have its fate decided by a judge.

•Chrysler Files for Bankruptcy Protection to Shed Debt, Seal Fiat Alliance


Markets absorbed the news fairly well. Dow had been up 100 or so in the AM & fell, not badly, in the PM, staying near break even. Dow closed down 17, advancers ahead of decliners by 40% & NAZ rose 5. Banks have been in charge of the markets recently, they held up well today (the index started the month at 120).


S&P 500 FINANCIALS INDEX

Value 145.40

Change -1.18

% Change -0.8%

Exxon Mobil (XOM), Dow stock, largest company in the world & a Dividend Aristocrat, saw its profits fall more than 50% from lower oil prices in Q1. Exxon & Chevron (CVX), the other Dow oil stock, each fell by about 1½.

Exxon Has Biggest Profit Drop in 5 Years as Oil Falls


Oil was little changed near 51, but MLPs may have felt vibes from the XOM announcement. The Alerian MLP Index dropped 3½ to 210. But they had an outstanding month & are having a terrific year. REITs & junk bonds funds were mixed to up today & in similar fashion to the MLPs had a great month & are up sharply YTD.

MLPs got thru Apr & earnings season in good shape. BreitBurn Energy Partners (BBEP) had to drop its distribution payment to conserve money for debt repayment. But its stock even managed to rebound a point after that announcement. And that's the bad news for MLPs in Q2. Yesterday, Teppco (TEPPCO) received a takeover bid which it rejected, adding a little sex appeal to the industry. There were a few distribution increases (qtr over qtr). Kinder Morgan (KMP), the largest, maintained its 1.05 quarterly rate in Q2, which is according to their giudance & above last year's distribution.


Alerian MLP Index ---- YTD





In Apr, Dow had a strong beginning & a strong finish with sideways trading in the middle. Overall, it gained about 560 (7%). The risker stocks did the beast. Some REITs & junk bond funds saw gains of 50%+ while individual MLPs were up 15-20%.


Dow Jones Industrials --- 1 month