Stress tests overhang weighs on markets

Dow started strong out of the gate, up 80. It settled back to up 25, advancers over decliners by 30% while NAZ dropped 11. Banks are strong in the face of uncertainties over the stress tests results which will be released tomorrow evening. The market is betting that the gov will largely have kind words about the banks, not wanting to add fuel to the fire of confusion.

S&P 500 FINANCIALS INDEX

Value 160.83

Change 5.31

% Change 3.4%

The Alerian MLP Index is down pennies & the new AMJ ETF is tracking this change. REITs & junk bond funds are little changed. The VIX, volatility or fear index, is in the 33s, lows not seen since the Lehman collapse in Sep:


VIX ---- 1 year





Oil is having another good day on hopes for a strong recovery, especially in China, & a more favorable outlook for other global economies.

CLM09.NYM

...Crude Oil Jun 09

...55.58

... 1.74 .......(3.2%)

Regulators are reported to be telling Bank of America (BAC) it needs $34B based on results of gov "stress tests." The stock, however, climbed 88¢, go figgah! BAC has received more than $45B in gov aid already, & is under heavy scrutiny for its acquisition of Merrill Lynch.

•Bank of America Said to Need $34 Billion in New Capital After Stress Tests


The gov said in Feb that putting the biggest U.S. banks through "stress tests" was vital to getting the financial system back on solid ground. But now regulators seem so intent on avoiding statements to undermine confidence in the banks, that they risk eroding trust in these very stress tests. None of the 19 banks will be allowed to fold, ruling out any official statements to scare investors. Results probably won't provide specific analysis & discipline banks need to lend money necessary for an economic rebound.

• Public scrutiny blunted bank stress tests- AP

Private-sector job losses slowed more than expected in Apr, to the lowest since Nov 08. ADP Employer Services said private employers cut 491K jobs in Apr compared to a revised 708K in March. Economists had expected job cuts of 650K. The is the latest in a series of data suggesting the severe U.S. recession may be bottoming out. Friday the more comprehensive non-farm payrolls report by the gov will be released. Chances are good that report will show less bad numbers. Friday's payroll numbers are expected to show 620K jobs were lost in Apr, increasing the unemployment rate to 8.9% from the current 8.5%.

•Payrolls Reduced 491,000 by U.S. Companies, Fewer Than Estimated, ADP Says


The judge is trying to move along Chrysler's reorganization under bankruptcy. He ruled that Chrysler can take steps toward selling assets to Fiat Group. There is hope the reorganization can be accomplished fairly quickly.

• Judge OKs Chrysler's steps toward sale to Fiat- AP

Dow keeps trading water:

Dow Jones Industrials --- 2 weeks