Tuesday, June 30, 2009

Strong second quarter, sold off on last day

The 2nd quarter closed on a sour note. Some of the selling could be related to fund managers trying to make their results look better. But it was still a down day nevertheless, stock dropped on the opening & remained at low levels for the rest of the day. Dow slumped 82, decliners over advancers 3-2 & NAZ was off 9. Banks led the markets down.

S&P 500 FINANCIALS INDEX

Value
160.76
Change
-1.82
% Change
-1.1%


S5FINL:IND




The high yield sectors had a quiet day, inching up by the close, in a down market. But the qtr & first 6 months have been an exciting time. High yield sectors started from depressed levels last year, offering extraordinary yields at the same time Treasuries had soared offering minimal yields. In 2009 Treasuries were sold bringing their yields closer to traditional levels while yields in the high yield sector plunged from high double digits. The VIX chart shows the reasons. It began at astronomical levels, fears were high. Nerves calmed down, allowing buyers to return the to high yield sectors. The VIX is back to levels last seen prior to Lehman's collapse.


Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD




Barclays Capital Hi Yld Bond - YTD




10-Year Treasury Yield Index - YTD




VIX ---- YTD




Oil fell today but is still up 55% YTD, not good for future inflation.

CLQ09.NYM..Crude Oil Aug 09..70.12..Down 1.37
......(2.0%)



Going forward may bring a much different scenario. The recession appears to have bottomed, with the help of money thrown at it by the stimulus package. But the next 6 months will be influenced by the recovery & that is being debated. A huge problem is unemployment which probably has not hit bottom. Jun numbers will be posted on Thurs & are expected to show the rate jumping again, this time to 9.6%. Housing is mired in a 3 year depression with no signs of recovery. Recovery for autos will be off very depressed levels as 2 major companies try to emerge from bankruptcy. And California is running out of time, their clock keeps ticking. The reversal of buying enthusiasm from Treasuries to high yield securities in 2009 was dramatic & can not be expected to continue. I feel a greater sense of reality about a slow recovery may dominate trading for the balance of the year.

Dow Jones Industrials --- YTD

Stocks lower on weak consumer confidence data

Dow is down 106, decliners over advancers 5-2 & NAZ fell 11. The financial index joined in today's decline. It had a good run in Q2, but most of the gains came in the first 5 weeks. It started Q2 at 119 & shot up to 150 by early Apr. Since then it has been in a sideways band above 150.

S&P 500 FINANCIALS INDEX

Value
160.36
Change
-2.22
% Change
-1.4%


The Alerian MLP index pulled back 1+ taking it below 221. MLPs have had an outstanding qtr & 6 months, but their excitement may be dimming. REITs are flat while junk bond funds are down today.

Alerian MLP Index --- 2 weeks




The yield on the 30 year Treasury dropped 3 basis points to 3.52% as the rate of decline for housing prices declined at 18% in Apr. The chart shows the plunge in yields during Q4 2008 & the sharp rise in H1 for 2009. Since bond prices are the mirror image of yields, bonds soared in Q4 from the flight to safety & then plunged this year when investors switched to high yield bonds. The plunge in bond prices made this the worst H1 for Treasuries in 3 decades.

10-Year Treasury Yield Index - 1 year




Oil is off today, but up sharply from 45 at the start of 2009. The bulls seem to be in charge of this market, whatever the reasons.

CLQ09.NYM...Crude Oil Aug 09...69.37 ...Down 2.12
.......(3.0%)


The index of consumer attitudes, from the Conference Board, dropped to 49.3 in Jun from 54.8 in May (but double the depressed levels back in Feb). Those saying jobs are "hard to get" increased to 44.8% from 43.9% in May, while those saying jobs are "plentiful" slid to 4.5% from May's 5.8%. These figures suggest that economic conditions, while not as weak as earlier, are still weak.

Consumer Confidence in U.S. Unexpectedly Drops, Reflecting Weak Job Market


Q2 has been a great time for the markets (aside from Treasuries). However, the best days were early on, followed by a sluggish market. The latest reading on consumer confidences indicates more sluggish (at best) times are ahead.

Dow Jones Industrials --- 3 months

Monday, June 29, 2009

Stocks higher on light volume

Dow climbed 91, advancers over decliners 3-2 & NAZ was up only 5. Dow remained near plus 80 for most of the day & had only had two losers, Alcoa (AA) & General Electric (GE). Volume continues light, partially with some (the more successful) away for a long holiday. Banks were eager to join in the rally.

S&P 500 FINANCIALS INDEX


Value
162.58
Change
2.23
% Change
1.4%



MLPs held their AM gains, up 1+ to the 222s. REITs were even & junk bond funds continued mixed. The yield on the 10 year Treasury ticked down another basis point to 3.49%. The VIX was down ½ to the 25s, far away from the highs in the 80s early this year. But 20 used to be considered elevated in the old days (more than a year ago).

Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD




Oil remained strong in the PM pushing to get back to its 72 high.


CLQ09.NYM..Crude Oil Aug 09..71.48 ..Up 2.32
......(3.4%)




The S&P 500 is having it's best qtr in 11 years, up 16% coming off the very low levels 3 months ago. Dow "only" has a 12% gain. For both much of the gains came in Apr.

Dow Jones Industrials --- 3 months




S&P 500 --- 3 months

Markets higher on MLP takeover

Dow rose 84, advancers ahead of decliners almost 2-1 & NAZ gained 11. Banks are putting in a good showing:

S&P 500 FINANCIALS INDEX

Value
161.77
Change
1.42
% Change
0.9%

A relatively slow news day (except for Madoff investors) combined with a buyout vaulted MLPS onto center stage. Enterprise Products (EPD) will acquire Teppco Partners (TPP) in an all-units deal worth $3.3B to form the nation's largest publicly traded energy partnership. The partnership will own nearly 48K miles of crude & natural gas pipelines; 200M barrels of storage capacity for natural gas liquids, crude and refined products & 27B cubic feet of natural gas storage capacity. It will also control one of the largest liquid natural gas terminals in the US in the Houston Ship Channel. TPP had rejected a bid of $2.8B earlier this year, the new offer represents a 9.3% premium over TPP's close on Fri. TPP rose $1.40 or 4.8% while EPD slipped .30.

Enterprise Products to Buy U.S. Pipeline Operator Teppco for $3.3 Billion


The Alerian MLP Index gained 1.85 to the 223s as it tries to work its way back to the low 230s reached earlier in Jun. The Dow Jones REIT Index continues in its sideways trading range near 226 (up change today). Junk bond funds are mixed after having a nice year coming off greatly depressed values at the start of 2009. The 10 year Treasury bond yield is flat near 3½%. The VIX, volatility or fear index, has fallen near its lowest level since the financial meltdown last Sep. This decline is the mirror image of what happened with high yield securities (such as MLPs).


Alerian MLP Index --- 2 weeks




VIX ---- 1 year




Oil is having another good day, making a run on its recent highs in the 72s.

CLQ09.NYM...Crude Oil Aug 09...71.10 ...Up 1.94
.......(2.8%)


Today is Bernie Madoff's day in court where he will learned he will be spending the rest of his life in prison. His wife had most of her assets taken away to help recoup money for investors.

Madoff Cursed by Victims Who Scavenge for Food, Sell Recyclables


Fri night, the House passed legislation aimed at wiping out coal companies & spending more on alternative energy. There are a lot of problems, the biggest being it could amount to a huge tax on fuel bills for ordinary people. The Senate takes up the legislation where its future is unclear. Like the numerous other big bills, if passed its implications for the economy & its recovery are large.


Dow is trying to fight its way back to 8.8K, its high for the year. That level takes it into the black for 2009 (while the S&P 500 has been in the black for much of the last 2 months).

Dow Jones Industrials --- 2 weeks

Sunday, June 28, 2009

Midyear review

This has been a stellar year for high yield securities & especially MLPs. The MLP Index began at 176 (with yields well into double digits) & has risen to the 221s for a rise of 26%. Their index including reinvested income rose more, from 428 to 560 or up 31%. High yield securities have been in demand. But there are clouds around. Constellation Energy (CEP) slashed the distribution in Q1 & Fri took it down to zero. Its units are back into the 2s. Two other MLPs cut distributions to help meet loan financial requirements on their loan agreements.

REIT index has not done well. It began the year at 151 fell to 101 at the end of Q1. Apr was a good month, but since then it has been trading sideways ending at 127 on Fri. They have had to endure one major bankruptcy & div cuts by even the strongest (like Simon Property, SPG). I see "for rent" signs & that is a national problem which will get worse.

Junk bonds have done very well from very depressed levels at the start of the year. Many offered yields of 20+%. Since then, 30-50% gains with reinvested divs are common. Yields have fallen to low double digits. Meanwhile, Treasuries sold off after one of their biggest yearly rallies in 2008. The yield on the 10 year Treasury shot up to 3½% from the low 2% area at the start of 2009 as bonds were sold (& reinvested in higher risk securities).

During this time S&P500 is up 1½% while Dow is down 4%. The time for big gains in high yield securities may be over for awhile. Realities of a slow recovery from the deepest recession since the Depression are getting more attention. Housing & autos business remains very soggy. Unemployment looks like it will take months before it peaks, then recovery will be slow. California is "going under" (whatever), another whopper size problem which will have to be dealt with. Next week will be a 4 day week for trading. It will give more time to better assess a recovery.

Aleriain MLP Index --- 6 months




Dow Jones REIT Index --- 6 months




1o-Year Tresury Yield Index - 6 months





Dow Jones Industrials --- 6 months

Friday, June 26, 2009

2nd straight weekly decline for the Dow

Dow fell 34, advancers ahead of decliners almost 2-1 & NAZ was up 8. Bank stocks were helped by late day buying. The financial index is in the middle of its trading range (160) over the last month.

S&P 500 FINANCIALS INDEX


Value
160.32
Change
0.94
% Change
0.6%



Value for S5FINL:IND





MLPs have been fighting their way back after recent selling. The index has recovered 10 points from the lows of 2 days ago, today up 2 to 221s. Meanwhile REITs have not varied much from their central line around 126 & junk bonds have been flattish. The yield on the 10-year Treasury fell 4 more basis points to 3.51%.

Alerian MLP INDEX --- 2 weeks




Dow Jones REIT Index --- 2 weeks




Barclays Capital Hi Yld Bond ETF - 2 weeks




Oil was weak going into the weekend, these changes are not meaningful.

CLQ09.NYM..Crude Oil Aug 09..69.24..Down 0.99
......(1.41%)




Bloomberg TV had a story about the winners this year in the S&P 500. Dividend payers would seem to be the logical ones, but that has not been the case. Their study showed the companies with yields of 5+% were down this year while the 138 not paying divs were up sharply. A dozen of those no div stocks with excellent cash flow were doing even better. There has been a high tolerance for risk this year.


They had another story on General Motors emerging from bankruptcy, that's getting bogged down. The United Steel Workers are involved & complaining they're not getting a fair deal. In addition, unsecured bond holders have complaints. The Supreme Court will probably be needed to resolve those issues & that may not happen quickly.


S&P 500 dipped into the red for 2009 earlier this week when markets were lower. With gains in the last 2 days, it's back in the black (up 15 YTD at the close). Two weeks ago Dow closed at 8800, finally taking it into the black YTD. But Dow couldn't hold that value, down over 300 YTD. The high savings rate reported this AM is troubling. While the concept of savings is good for consumers to get their balance sheets in better shape, this economy needs more spending to pull out of the recession. Just another indication the recovery may be slow & painful.

Next week will be a holiday shortened week. Volume is typically light during these times with only modest price swings. Have a good weekend!

Dow Jones Industrials --- YTD

Lower stocks on higher savings rate

Profit taking after yesterday's big rally pulled stocks down. Dow fell 52, decliners ahead of advancers by 20% & NAZ was off only 2. The financial index has been going nowhere, modestly above 150, for 2 months.

S&P 500 FINANCIALS INDEX

Value
158.46
Change
-0.92
% Change
-0.6%



Below is a summary of the press release from Constellation Energy (CEP), down 68¢ to 2.69 after suspending their distribution. CEP slashed the distribution in Q1, now it's gone.

Constellation Energy Ptnrs completes borrowing base redetermination and suspends distribution (CEP) down 74¢ t6 2.63: Co announces that its lenders have completed a semi-annual review of the company's borrowing base pursuant to the terms of its credit agreements. Based on this review, the aggregate borrowing base under the credit agreements has been set at $225 million. The aggregate borrowing base had previously been set at $265 million.


The bad news from CEP did not bleed thru to other MLPs. The Alerian MLP index is up a fraction in a down market, trying to reach 220. REITs are down slightly & junk bonds funds are up a fraction.

Alerian MLP Index --- 1 month




Treasuries have been in demand after the yield on the 10 year touched 4% a couple of weeks ago. Today it's down 2 basis points to 3.53%.

10-year Treasury Yield Index - 1 month




Oil continues in its sideways trading range, below the 72 high reached earlier in Jun.

CLQ09.NYM...Crude Oil Aug 09...69.20 ...1.03
.......(1.5%)



Households pushed their savings rate in May to the highest level in 15 years, a big boost in incomes from the gov stimulus program led to limited increased spending. A higher savings rate is healthy in the long term, but in the short term the economy needs spending. Consumer spending rose 0.3% in May, in line with expectations. However incomes jumped 1.4%, the biggest gain in a year & outpacing 0.3% increase that was expected. The savings rate (which was near zero in early 2008) surged to 6.9%, the highest level since December 1993. This data suggests the recuperation period for consumers could be a long one.

Consumer Spending in U.S. Rises, Incomes Jump on Obama's Stimulus Efforts


California is the next bailout situation & they are getting desperate. At least bailing out CA will cost less than the banks or autos,

California’s Budget Impasse Intensifies as Cash Crisis Looms


Stocks are still fighting it out in the trenches after a couple of months with spectacular gains. Dow hasn't strayed far from 8½K.

Dow Jones Industrials --- 1 month

Thursday, June 25, 2009

Successful Treasury note auction leads stocks higher

Markets roared ahead based on mixed news. Ben Bernanke got grilled by a hostile Congress over the Bank of America-Merill Lynch deal last year, the Federal Reserve is starting to wind down aggressive programs designed to help financials get thru the financial crisis in 2008 & jobless claims went up last week. With that news as a background Dow shot up 172, advancers almost 4-1 ahead of decliners & NAZ rose 37. As usual on up days, banks led the way up.

S&P 500 FINANCIALS INDEX

Value
159.38
Change
2.65
% Change
1.7%


The Alerian MLP Index found plenty of buyers, up a very big 5 to 219s. MLPs while not directly associated with the price oil, may have been helped by oil's rise back over 70. However the REIT Index, another principal high yield security index, was up a more modest 1.85 & junk bond funds were flattish.

Alerian MLP Index --- 2 weeks




Buyers bid up oil on hopes for stronger global demand.

CLQ09.NYM..Crude Oil Aug 09..70.31 ..Up 1.64
......(2.4%)


Treasuries rose on expectations that the FED will keep interest rates unchanged in 2009. Prices benefited when the FED bought $3.2B of long-maturity debt. At today's auction, the seven-year Treasury notes drew a yield of 3.329%, lower than forecast (i.e. a benefit to the Treasury selling the notes) & with more than double the number of bids at the last auction in May. The yield on the 10-year note tumbled 14 basis points to 3.55%, one of its biggest declines this year.

The notes sold today were forecast to yield 3.36%. The auction was the largest offering of seven-year securities since sales began in 1981. The bid-to-cover ratio was 2.82X, at the May auction it was only 2.26X. Indirect bidders, including foreign central banks, purchased 67.2% of the notes vs 33% at the May sale & an average of 33.2% at the last four sales. The sales of Treasuries this week were considered successful, important with more many offerings ahead. Foreign buyers (can your spell China?) have become critical for successful auctions.

Treasuries Extend Gains After U.S. Sells $27 Billion of Seven-Year Notes


Less attention was paid to the announcement that the FED will be winding down aggressive programs designed to helps financials get thru last year's meltdown. One program intended to support money market mutual funds will lapse by Oct 31 & the FED is reducing the amount it will lend to banks under two others. Easy money (i.e. cheap money programs) will be reduced, forcing banks to work harder to make profits.


At Congressional hearings, Bernanke was hit with very tough questioning over his conduct during the financial crisis last year. This is the same group which didn't have a clue about a financial meltdown when both parties held conventions 2 weeks prior to the collapse of Lehman. Now they are great at second guessing, after passing record spending bills without taking the time to read them! Dow closed near its highs. Today, the bulls were in charge but Dow is still down 100 this week.


Dow Jones Industrials --- YTD

Stocks up after higher unemployment numbers

Dow rose 52, advancers 2-1 over decliners, NAZ gained 19 but banks are slipping:

S&P 500 FINANCIALS INDEX

Value
156.08
Change
-0.65
% Change
-0.4%


MLPs are trying to get a head of steam up once again. The index is up 3 to the 216s. But REITs & junk bond funds were soft. Oil is up a fraction, in the 69s, & Treasuries are little changed.


Alerian MLP Index --- 1 month




Enbridge Energy (EEP & EEQ) pipelines bring most of the shale oil from Canada to the US (upper Midwest). Canada is the largest foreign source of oil for the US. A "green group" wants to stop their pipeline expansion because this is what they call "dirty" oil. The shares are up over 50¢.

EEP
UPDATE - Green group asks U.S. to bar Canada oil sands
at Reuters (Wed 4:28pm)


The economy shrank at a 5.5% pace in Q1 but appears to be doing better in Q2 despite more layoffs (Kimberly Clack, KMB, announced laying off 1600 today). The revised reading on GDP showed the economy didn't fall as deeply as the 5.7% annualized decline reported last month. The main forces behind the modest upgrade in Q1 GDP were businesses didn't cut stockpiles of goods as much & imports dropped more sharply than previously estimated. For Q2, economists predict GDP is sinking at a pace of 1-3%.

Another gov report found new jobless claims jumped unexpectedly last week & continuing claims for unemployment benefits rose more than expected. Initial claims for jobless benefits rose last week by 15K to 627K, expectations were for a drop to 600K. The number of people continuing to receive unemployment insurance rose 29K to 6.74M. The four-week average of claims was largely unchanged, at 616K. Jobs remain scarce even with the economy showing some signs of recovery, more gloomy numbers on the unemployment front.

Initial U.S. Jobless Claims Rise in Signal Labor Market Slow to Stabilize


Stocks took the unemployment numbers pretty well. But markets keep struggling, trying to move up. The chart shows that following 3 good months, stocks need time to rest.

Dow Jones Industrials --- 1 month

Wednesday, June 24, 2009

Dow retreats following Federal Reserve meeting

After being up 100 prior to the Federal Reserve's announcement, the Dow gave that back plus some. Dow fell 23 (4th straight down day), but advancers over decliners a strong 5-2 & NAZ rose 27. Only 11 Dow stocks were up. Banks had another good day while remaining in their sideways trading band (150s).


S&P 500 FINANCIALS INDEX


Value
156.73
Change
1.72
% Change
1.1%



MLPs gave back a little of the early advance in the PM as did REITs. The Alerian MLP Index & Dow Jones REIT Index each gained 2+ & junk bond funds were higher. Oil dropped into the 68s (down from 72s just last week).


Alerian MLP Index --- 2 weeks





The Federal Reserve held monetary policy steady, saying the economic recession was easing & it signaled worries are fading about a possible downward spiral in prices. The FED decided to hold interest rates near zero, reached in Dec, & repeated it would likely stay unusually low for some time. The Fed's policy-setting panel said it would hold to a previous pledge to buy $1.45T in mortgage-related debt by year-end & $300B in long term U.S. gov debt by autumn.

The FED said, "Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing, & conditions in financial markets have generally improved in recent months." Their strategy is to hold a steady course.

Fed Leaves Its Bond-Purchase Program Unchanged, Says Recession Is Easing
Treasuries Fall as Fed Policy Makers Leave Debt-Buying Program Unchanged


This was all but expected but markets did not take the news well, Treasuries sold off in the PM. The chart below shows the yield today for the 10 year Treasury bond, jumping over 10 basis points at the end of the day. The yield on the 2 year Treasury note shot up 5 basis points to 1.20%.


10-Year Treasury Yield Index - 1 day





Markets were disturbed that the FED talked about inflation being subdued for some time. They were hoping for aggressive action, especially to buy additional Treasuries & mortgages debt. In addition there was disappointment that no mention of an exit strategy (how the FED would unwind its present positions) was made. While the bulk of the retreat for the Dow was largely due to losses at Boeing (BA) & United Tech (UTX), increased uncertainty from the FED will not be a plus going forward.

Dow Jones Industrials --- 2 weeks

Higher markets ahead of Federal Reserve meeting

After falling for 3 straight days, Dow gained 103, advancers ahead of decliners better than 5-1 & NAZ rose 41. Banks are having a nice rebound after recent selling.

S&P 500 FINANCIALS INDEX

Value
158.39
Change
3.38
% Change
2.2%


Oversold MLPs found buyers, the index is up 4. Yield buyers have returned, REITs & junk bond funds are also higher but oil is down pennies. MLPs have enjoyed a nice climb lately while REITs have had to endure a very bumpy time of it. I've attached a discussion forecasting uglier times ahead for retailers & by extension their leaseholder REITs. It reminds us that the rising out of this recession could take time & can be painful.


Alerian MLP Index --- 2 months





Dow Jones REIT Index --- 2 months






This PM, The Federal Reserve will issue their statement. There's little they can do with interest rates but they have other tools to influence economic activity. The FED has been buying Treasuries & mortgages, now that program is on hold. The markets are trying to guess their next moves if the economy has bottomed. The obvious changes could include cutting back stimulus programs they have undertaken.

Treasuries are little changed, awaiting results from the auction at lunch time & the FED's announcement. The 10 year bond yield rose 2 basis points to 3.66%.

10-Year Treasury Yld Index - 2 months






Economic data continues muddled, what should be expected coming out of the deepest recession since the Depression. New home sales slipped 0.6% in Apr, as they have to compete with foreclosures. The FED's statement should be unusually interesting for market watchers.

New-Home Sales in U.S. Unexpectedly Fall as Foreclosures Give Resales Edge

Dow Jones Industrials --- 2 months

Tuesday, June 23, 2009

Treasury 2 year note auction does not stir stocks

Markets were little moved by the auction for 2 year notes. Dow & NAZ pretty much broke even (literally, Dow down 16 & NAZ off 1) while advancers nudged ahead of decliners. Banks recovered some of yesterday's losses but remain at the bottom of their trading range for the last 2 months.

S&P 500 FINANCIALS INDEX

Value
155.01
Change
2.61
% Change
1.7%


The Alerian MLP Index fell another 2 to the 211s. Below is a chart for Enbridge Energy (EEQ, the stock version of the units) which has had a major drop (along with the index) in the last few weeks, falling 71¢ today. Their stock recovered 17 from its recent low at the end of 2008, but has given up 6 in the last few weeks. REITs & junk bond funds were little changed & Treasuries had gains (bringing lower yields) after the 2 year auction.

Enbridge Energy (EEQ) -- 3 months




The $40B auction in two-year US notes drew excellent demand with increased speculation that the Federal Reserve will keep interest rates steady in 2009. The auction drew the most bids for a two-year sale since Sep 2007 as the class of investors (including foreign central banks) took the biggest share.

The 10-year note yield fell 5 basis points to 3.64% & the two-year's yield declined 4 basis points to 1.10%. The two-year notes drew a yield of 1.151%, significantly lower than the 1.202% average estimate. The bid-to-cover ratio was 3.19X vs 2.94X at the May 26 sale (then the highest in almost 2 years). It averaged 2.48X for the past 10 sales. Indirect bidders (including foreign central banks) purchased 68.7%, vs 54.4% at the May sale (then the most in almost 3 years). Tomorrow's auction of $37B in five-year notes tomorrow & $27B in seven-year notes on Thurs may not go as well because investors will be committing for a longer period of time..

Treasuries Rise as Two-Year Notes Draw Strong Demand at Sale

Oil rebounded nicely, but that did not help MLPs.

CLQ09.NYM..Crude Oil Aug 09..69.17 ..Up 1.67
......(2.5%)


Today was one of those nothing days in the markets. The president had a news conference, but that did not influence trading. Tomorrow the FED will issue their release in the PM which will generate a lot of comments.

Dow Jones Industrials --- YTD


Stocks hesitate before 2 year Treasury auction

Stocks started higher but drifted lower. Dow is down 37, decliners over advancers almost 3-2 & NAZ fell 8. Banks rebounded (but sliding in the last hour). The chart below shows they have been trading sideways for the last 2 months:

S&P 500 FINANCIALS INDEX

Value
152.79
Change
0.79
% Change
0.3%






The Alerian MLP Index is down 2 to the 211s. Almost ½ the gains in Q2 were lost in the last 2 weeks. REITs & junk bond funds are also lower. Not much happening today, as oil is down pennies in the 67s.

Alerian MLPIndex --- 1 month






The 2 year Treasury note was little changed ahead of the very big $40B auction at lunchtime. After 3 days of rising markets for Treasuries, the 2 year note yields 1.15% (annualized) or a big 251 basis points below the 10-year bond's 3.66% yield. The 2 year note will have only minimal inflation fears built into its yield. The Treasury will sell $104B in notes this week, for another record. More supply could bring lower prices & higher yields.

Two-Year Treasuries Decline Before $40 Billion Auction of Notes


The US Energy Dept will provide loans to Ford (F), Nissan Motors & Tesla Motors money for retooling their plants to develop fuel-efficient vehicles.

News on housing continues dismal. Housing resales were up 2% but prices fell 7%, the usual assortment of mixed message from housing statistics. The bigger picture is housing is mired in a terrible depression, working off all this inventory could take a few years. The Federal Reserve is meeting on interest rates & will give an assessment of the future. With their key rate essentially at zero, their comments take will take on greater importance. Markets should remain in a holding pattern until their announcement tomorrow. Meanwhile stocks are skidding.


Dow Jones Industrials --- 3 months