Markets mixed on mixed economic data

Stocks are looking for direction ahead of the Federal Reserve meeting & their announcement on interest rates. Dow is off 14, decliners are slightly ahead of advancers & NAZ is up 3. Banks are drifting lower, the Financial Index is getting close to the low end of its trading range at 190.

S&P 500 FINANCIALS INDEX

Value 192.70

Change -1.57

% Change -0.8%

MLPs just keep climbing, the Alerian MLP Index rose ½ still in the 278s. The Dow Jones REIT Index fell 1, but in the 178s it needs just 3 more points to reach a new 2009 high. The chart for Barclays Capital High Yield Bond ETF shows how much it has advanced in just the last 2 weeks. This understates the experience individual junk bond funds have enjoyed. Even this index is back to its level at the start of Oct 2008. Treasuries are weak again. The yield on the 10-year Treasury bond rose 5 more basis points to 3.60%, a 4 month high.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




Barclays Cap Hi Yld Bond - 2 weeks





Oil finally broke its 9 day losing streak while gold is trying to establish a base around 1120.

CLF10.NYM

...Crude Oil Jan 10

...70.85

... 1.34 .......(1.9%)

GCZ09.CMX

...Gold Dec 09

...1,122.80

... 0.50 .......(0.0%)

GLD (ETF) --- 2 weeks




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Industrial production rose a better-than-expected 0.8% in Nov. The gain showed that consumers are spending more, causing manufacturers to produce more goods. The economic rebound could raise inflationary pressures. Stronger activity at mines led the increase in industrial production, rising 2.1%. The manufacturing sector (with the largest share of industrial output) reversed a one-month decline & rose 1.1%. The portion of industrial capacity in use rose to 71.3% in Nov, from 70.6% in Oct.

•U.S. Industrial Output Rises Most in Three Months as Recovery Gains Speed


Factory use (%) - 1 year

Wholesale prices jumped 1.8% in Nov, more than double the 0.8% forecasted. Core inflation, excluding energy & food, rose 0.5%, the biggest increase in more than a year. Over the past 12 months, wholesale prices rose 2.4%, the biggest increase over an annual period in 14 months. Wholesale prices had been negative when compared with year-ago levels for 11 straight months. The Nov increase followed a 0.3% rise in Oct & was the largest one-month change since Aug, a gain also driven by energy. The unexpectedly large jump in prices is not likely to alter the outcome of the Fed's deliberations although it might influence future actions.

•Producer Prices in U.S. Rose More Than Forecast in November on Fuel Costs



MLPs have had an unbelievable recovery. Kinder Morgan (KMR) & Enbridge Energy (EEQ), both stock equivalents of the comparable units, have already rebounded to record levels. Their yields are almost 8%, not bad after their gains. In addition, a chart for Constellation Energy (CEP) is shown as a reminder, not all have done well. They have dropped the distribution allowing them to pay down their loan & refinance with a bigger loan. Those looking for risky investments might be attracted to CEP on hopes there is more recovery ahead.


Enbridge Energy - 3 years




Kinder Morgan - 3 years




Constellation Energy - 3 years





Inflation numbers were troubling, but figures for one month may not mean much in the long run. This should be a day with little direction while markets await news from the FED.

Dow Jones Industrials --- 2 weeks