JPMorgan news doesn't help stocks

Dow keeps flirting with the 8000 line, just can't make up its mind whether it will be a ceiling or a floor. Dow is down 38, advancers over decliners are about equal & NAZ up is 7. JPMorgan reported their version of good earnings but banking in general was not helped, the index fell.

S&P 500 FINANCIALS INDEX

Value 144.15

Change- 2.21

% Change -1.5%

MLPs are a little lower & the Dow Jones REIT Index held up well on the major bankruptcy news (see below), falling only 4. Junk bonds are inching up.


General Growth Properties (GGP), the 2nd largest mall owner, filed for Chapter 11. The stock can be bought for 1.05. Even in bankruptcy, properties have value. Their stock, after sinking in the middle of 2008, totally collapsed in the Sep-Oct sell off. Since then it's been trading on hopes they could avoid bankruptcy. Simon Property (SPG), the largest shopping center-mall owner was down only 27¢ in the 43s on the news. When selecting REIT investments care is needed, now more than ever.

• General Growth Properties files for bankruptcy protectionat MarketWatch(Thu 10:27am)

JPMorgan (JPM), a Dow stock, reported better than expect earnings for Q1. Traders were happy to hear that the bank wasn't dead. After dropping on the gut reaction following release of the news in pretrading, the stock has risen & is currently about even. The news wasn't all good. EPS still dropped 40% from last year's Q1. Earnings came from strong trading activity & banking to average consumers. But JPM anticipates losses will keep rising on credit cards, home equity loans, mortgages & commercial real estate loans. Loan defaults increased. The credit costs amounted to $10B ($6B from loan losses & $4 billion to build up reserves). Problems related to bad loans linger.

•JPMorgan Net Beats Estimates on Record $8 Billion Investment-Bank Revenue


New jobless claims fell to 610K last week from 663K in the prior week, the 2nd straight weekly decline. The four week average of claims, a lagging indicator, fell 8½K to 651K. The number continuing to receive unemployment insurance benefits rose above 6M for the first time. The ugliest news comes from lagging indicators, so we may have seen the bottom. But the large number collecting benefits shows how deep the recession has become.

Initial Jobless Claims in U.S. Unexpectedly Fall; Benefit Rolls Top Record


Dow keeps trying & trying but can't crack thru the 8K ceiling, now it's just below. Interesting that the Alerian MLP Index has a similar relationship with its 200 ceiling. In its defense, at least major MLPs have been working their way higher to interim highs.


Dow Jones Industrials --- 1 month