Higher stocks betting on low interest rates

Dow held onto its gains from the AM. Dow was up 136 to another 2009 high, advancers over decliners 4-1 & NAZ gained 30 (also to another 2009 high). Banks had a subdued rally, the Financial Index hovered around 200 all day & needs another 13 to reach a new 2009 high.


S&P 500 FINANCIALS INDEX

Value 199.48

Change 3.43

% Change 1.2%

The high yielders maintained their AM gains. The Alerian MLP Index (which already is experiencing its best year in its 14 year history) rose 2¼ to the 263s & the Dow Jones REIT Index shot up 4. Junk bond funds gained. Surprisingly Treasuries had a tremendous day. The yield on the 10-year Treasury bond dropped a very big 10 basis points to 3.33%.

Constellation Energy Partners (CEP), an MLP which after suspending the distribution has spent the year paying down debt, announced a new lender is giving a larger loan ($305M) on favorable terms. CEP was up 14¢ to 3.56.

CEP
Constellation Energy Partners Announces New Credit Facility


Alerian MLP Iindex --- 2 months




Dow Jones REIT Index --- 2 months





Oil lost a few pennies in the PM, but it still had an excellent day. Gold added to its AM gains. Now everybody is guessing how long it will take to reach 1200. Its chart below shows how it has exploded 25% in just 3 months.

CLZ09.NYM

..Crude Oil Dec 09

..78.79

.. 2.44 ......(3.2%)

GCX09.CMX

..Gold Nov 09

..1,140.30

.. 24.20 ......(2.2%)

GLD (ETF) --- 3 months





Ben Bernanke, head of the Federal Reserve, said: "economic 'headwinds' of reduced bank lending and a weak labor market will probably restrain the pace of the U.S. economic recovery, warranting continued low borrowing costs. " He gave no indication that interest rates will rise anytime soon. Instead interest rates will stay very low for an “extended period” as the Federal Reserve seeks to maintain a recovery from the deepest recession since the 1930s.

Bernanke Says ‘Headwinds’ to Restrain Pace of Growth

FED Interest Rate - 1 year





The dollar fell to a 15 month low which is helping commodities & stocks. A continuation of low interest rates for the foreseeable future is also a big plus for stocks. GM's recovery is encouraging. But the unemployment problem shows no sign of improving & will be a drag on any economic recovery. Its importance will grow as the next round of elections approaches. Over 10% are unemployed & another 7% are underemployed (working at low paid jobs just to scrape by). There is talk about a much different kind of recovery than the US has ever seen, jobless growth.


Dow Jones REIT Index --- 2 months