The FINANCIALS INDEX had an exceptional day, closing above the Apr 13 interim high of 150.18. The previous time it was this high was in early Jan 09. Typical big name banks were up 10-20%. However, Citi remains a $3 stock.
S&P 500 FINANCIALS INDEX
| Value 157.44 | Change 14.48 | % Change 10.1% |
Helped by a strong oil market, the Alerian MLP Index rose 2.92 to 215½ (highest since early Nov). Dow Jones REIT Index was up 11 to its best level since Jan. Junk bond funds were generally strong. Their yields have fallen to around 15% or around 1200 basis points above the yield (3.16%) on the 10 year Treasury. The concept of safe haven investing is withering, at least for the time being as the VIX, volatility index, closed down .77 to 34.53 (low for 2009).
Oil gained, traders were encouraged by strong stock markets & signs that big fuel customers, China & India, showed growth in their manufacturing sectors in April, reversing months of declines.
| CLM09.NYM | ..Crude Oil Jun 09 | ..54.37 | .. 1.17......(2.2%) |
Citigroup (C) is trying to wriggle out of having the gov convert preferred stock into common which could take their stock ownership over 50% (Citi doesn't want to work for Barney Frank). Citi is hoping to attract capital from private investors to meet stress test standards. This drama plays on.
Citigroup May Seek Capital That Averts US Control
JPMorgan (JPM) may be tapped to buy more distressed banks. They already bought Washington Mutual & the remains of Bear Stearns. Jamie Dimon, CEO, said, "There are still too many banks in the United States." Wells Fargo (WFC) is being told that it will have to raise more capital.
JPMorgan CEO sees more bank consolidation ahead- Reuters
Chrysler's fate is plodding along. Lenders are arguing about what assets can be sold. The gov loans are viewed as a lost cause, the only question is how much money can be retrieved. Chrysler was hoping to emerge from bankruptcy in 1-2 months so the new company could resume as a going concern. Bickering will not help matters. Chrysler is forecasting losing almost $5B this year plus another $1+B in the next 2 years. Their suppliers are also sweating out Chrysler's (or whatever the new company is called) future.
The closely watched S&P 500 started the year at 903.25. Today it closed at 907. That is called a "new yearly high." Dow needs another 350 points to return to its starting point for 2009. Averages are reaching new highs because risky investments are no longer considered unwanted.
S&P 500 ---- YTD
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