In the last 2 months, the financial index has doubled from a severely depressed level of 81:
S&P 500 FINANCIALS INDEX
| Value 167.24 | Change 4.90 | % Change 3.0% |
In Apr, employers cut 539K jobs, the fewest in six months. These figures were helped by increased federal hiring of temporary workers for the 2010 Census. The Apr number wasn't as deep as the 620K job cuts forecasted by economists. Since the recession began in Dec 2007, the economy has lost 5.7M jobs. The deepest job cuts, 741K, came in Jan, the most since 1949. The unemployment rate climbed to 8.9%, the highest in 25 years, versus 8.5% in Mar.
Public payrolls rose 72K last month after falling 6K in the prior month, aided by the Census Bureau which will hire more than 1.4M over the next year. The big problem with the numbers is that factory payrolls fell 149K after decreasing 167K Mar.
•U.S. Loses 539,000 Jobs, Fewer Than Forecast, in Sign Economy Stabilizing
There are a bunch of post stress test stories. Wells Fargo (WFC) & Morgan Stanley (MS) will have large stock sales to boost capital. Bank of America (BAC) faces the greatest challenge, needing to raise $34B. BAC will raise capital through asset sales, earnings in the upcoming quarters and raising capital from private investors. The problem is that selling stock & asset sales used to be considered signs of weakness & growing capital with earnings looks to be of little help in the short run. There's also Fannie Mae, forgotten about with the emphasis on commercial bank problems. They need more gov money as they face a grave future.
- Banks' 'stress test' lift cloud of uncertainty- AP
- Wells Fargo prices stock offering at $7.5 billion- AP
- Morgan Stanley offers $3.5 billion in stock- AP
- Fannie Mae seeks $19B in US aid after 1Q loss- AP
- BofA CEO Lewis lays out plans for bank's future- AP
| BAC | 13.6801 |  0.1701 | 1.26% | 263,664,760 | |||
| MS | 25.98 |  1.16 | 4.27% | 64,175,370 | |||
| WFC | 24.8525 | 0.0925 | 0.37% | 183,595,309 |
Strong demand for the high yield sector continues while the VIX, volatility index, dropped 1 to the 32s, another 2009 low.
Alerian MLP Index ---- 2 weeks
Dow Jones REIT Index --- 2 weeks
Barclay's Hi Yield Bond ETF - 2 weeks
Oils are participating in the rally.
| CLM09.NYM | ...Crude Oil Jun 09 | ...57.39 | ... 0.68 .......(1.2%) |
The Federal Reserve gets high marks for leaking enough about stress tests results ahead of time to ease fears before the official report was given last night. But the economy still faces a grim short term future.
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