Stocks waffle on swine flu & auto worries

Dow tumbled more than 100 on the opening but has recovered, back to near break even. General Motors (GM) & Chrysler worries give the markets plenty to be nervous about, but Swine Flu is proving to be an even bigger headache. Dow was up 4, advancers are 30% ahead of decliners & NAZ was up 4. Banks were off a little as initial leaks about the stress tests are worrisome:

S&P 500 FINANCIALS INDEX

Value 141.14

Change -1.30

% Change -1.0%

MLPs pulled back pennies & the other hig yield sectors only have small changes mirroring the small changes for the major averages.


Governments have toughened precautions & the World Health Organization (WHO) raised its alert level from 3 to 4, just 2 steps short of declaring a full pandemic. They said it was too late to contain the virus & suspected that U.S. patients may have transmitted the virus to others in the United States. Investors around the world are running for cover, abandoning riskier assets such as stocks in favor of safe haven assets like the dollar & the especially the Japanese ¥.

.•Swine-Flu Alert Is Raised as Virus Can't Be Contained, Crosses Continents

The Consumer Confidence Index shot up more than 12 points in Apr to 39.2, from a revised 26.9 in Mar. This is the highest level since 44.7 in Nov & is far above economists' expectations of 29.5. Encouraging economic news in retail sales & housing helped fuel the recent stock market rally, allowing consumers to feel better. The huge jump in Apr follows a small increase in Mar, preceded by a free-fall in Feb. However, the index remains well below year-ago levels of 62.8.

•Consumer Confidence in U.S. Jumps Most Since 2005 Following Stock Recovery

Bank of America (BAC) & Citigroup (C), 2 Dow stocks, have been told by regulators that "stress test" results show they may need to raise additional capital (according to the The Wall Street Journal). Each bank has already received $45B in gov loans. The stress tests are proving to be very stressful. The chart below shows that the appetite for risk has fallen drastically in the last 2 weeks.

• WSJ: Regulators urge BofA, Citi to boost capital- AP

Citigroup (C) --- 1 month

Yesterday one of those bright guys in DC (where they don't have a clue what pay cuts or unemployment mean) came up with the bright idea to rent a 747 to take pictures of NYC. Can you spell, "Duh?" This is what happens when money is no object, at least for them. In Q2, the gov will borrow $360B, a staggering sum for a FULL year. Then, in Jul, (it's only 31 days), the gov will borrow over $½T. that number is:

$500,000,000,000.

Improving consumer confidence & a bottoming out of the economy are welcome news. But out of control gov spending is extremely troubling. In addition, buyers have to worry about Swine Flu. 8000 for the Dow is proving to be a barrier that does not want to give way.