Markets drift aimlessly

While everybody awaits the GM bankruptcy announcement on Mon, there's not much to do today. Dow is down 23, advancers ahead of decliners 3-2 & NAZ is fell 6. Banks are drifting lower.


S&P 500 FINANCIALS INDEX

Value 160.03

Change -1.84

% Change -1.0%

MLPs are benefiting from higher oil prices & growing acceptance by investors for high yield securities, up 2½ to 225 (another high in 2009). REITs are even today while junk bonds funds are up again. The pursuit of high of high yields is a dramatic turnaround from a few months ago when these securities were being thrown out the window. Junk bond funds are generally at their highest levels since the beginning of the plunge in early Oct.

Alerian MLP Index --- YTD




Oil continues to rocket ahead.

CLN09.NYM

...Crude Oil Jul 09

...66.11

... 1.03 .......(1.6%)

Consumer confidence improved in May reaching its highest level since Sep. Improved optimism may come from expectations about good coming from the stimulus package. The Reuters/Michigan Surveys of Consumers reported a final May reading on consumer sentiments of 68.7, above an early May figure of 67.9 & higher than the Apr reading of 65.1. However, consumers remain nervous about their finances with continuing high unemployment rates.

•Confidence Among U.S. Consumers Increases to Highest Level Since September

The link below gives thoughts from bond guys who are questioning the administration's strategy of quadrupling the budget deficit to almost $2T which they say is responsible for higher yields on Treasuries. The Treasury sold a huge supply of notes/bonds this week with good but not great acceptance. The run up in the high yield sector is narrowing their yield spread over Treasury rates. While the spread for junk bond yields remains high, it's down to "only" 1000 basis points.

•Bond Vigilantes Confront Obama Credibility as Bernanke Housing Aid Falters

10-Year Treasury Yield Index -- YTD

GM stockholders have not seen a sub $1 stock price since the depression:

GM shares fall below $1 for first time in 76 yrs


General Motors --- 1 week




Markets waffle, but bulls seem to be in command. After the run up on Mon, May 4 to 8,426, Dow is about 30 points lower as I write. The problem is that pressure from the rise in yields on Treasuries is not compatible with a rise in stock prices. Something has to give. Maybe GM's bankruptcy on Mon will help clear the disconnect.