General Motors Corp. plans to file for Chapter 11 bankruptcy protection June 1 and seek a sale of most of its assets to a newly formed company, people familiar with the plan told Bloomberg News. The automaker, which celebrated its 100th anniversary last year, will get U.S. Treasury financing while seeking the asset sale.
The above is the front banner copied from Bloomberg.com. It looks like it is all over for GM & everybody involved is getting positioned to participate in the "new" GM. First things first, Dow Jones needs a replacement stock for the Dow Jones 30.
A committee of bondholders has agreed to a sweetened deal proposed by the gov to erase the automaker's unsecured debt in exchange for company stock. "Unidentified sources" have told about everybody that GM will file for bankruptcy on Mon.
Markets are taking the news well. Dow gained 103 (finishing near the highs of the day), advancers over decliners 2-1 & NAZ gained 20 (all in the PM). The S&P 500 was up 13, taking it into the black YTD. Banks are handling the news well, although they remain stuck in the 150+ sideways band.
S&P 500 FINANCIALS INDEX
| Value 161.67 | Change 5.57 | % Change 3.6% |
MLPs benefited from higher oil prices. The index was up 3 to the 222s, the highest since early Oct when the index crashed. REITs were up & the Barclay junk bond ETF is also at its highest level since early Oct, bringing the yield down to 14.2%.
Alerian MLP Index --- 1 year
Barclays Capital Hi Yld Bond ETF-1 year
Oil gained again to a multi month high. Oil stocks & MLPs went along for the ride.
| CLN09.NYM | ..Crude Oil Jul 09 | ..64.88 | .. 1.43 ......(2.25%) |
The Treasury sold $26B in 7 year notes at 3.3% yield. The yield was above the 3.263% traders forecast, a bad sign considering more bonds are coming to market. The bid/cover ratio fell to 2.26X from 2.28X at the last 7 year note sale. This ratio was the lowest since 2.11X on Feb. 26, 2009. Demand, especially from foreigners, is weaker for longer term notes. Indirect bidders, which includes foreign central banks, bought 33% of the notes sold, the same as at the prior auction. The 10 year Treasury bond rallied after the auction (1PM EDT) to 3.67%, reducing its yield 6 basis points. However, that yield remains at high levels. The graph below shows the increase in yield in just the last 2 weeks.
US Treasury 7-Year Notes Yield 3.3% at Auction May 28
10-Year Treasury Yield Index - 2 weeks
Markets are trying to charge forward, ignoring the GM bankruptcy & rising interest rates which are devastating for a housing industry trying to recover. Here's the S&P 500 over the last year:
S&P 500 ---- 1 year
No comments:
Post a Comment