President Obama's speech does not inspire markets

The graph below (from Bloomberg) tells it all. Dow sold off at the opening & then traded flat for the rest off the day despite a speech by Obama about a new initiative to reduce high unemployment. Dow ended down 104, decliners over advancers 5-2 & NAZ was off 16. Banks continue their sluggish performance, the Financial Index is at the low end of its 190-210 trading range in the last 4 months.






S&P 500 FINANCIALS INDEX

Value 191.45

Change -1.72

% Change -0.9%

The Alerian MLP Index was up .46 to 269.59 essentially at its yearly high while the REIT index fell 1, both not greatly affected by the stronger dollar. Junk bond funds were mixed to lower. Treasuries were higher even with another auction. The yield on the 10-year Treasury bond was down 6 basis points to 3.39%, but above its lowest yield of the day. The Treasury auctioned off another $40B in 3 year notes at a rate of 1.23%. The reception was good, but not the best of the year. The coverage was almost triple supply & indirect bidders (including foreign central banks) bought over 60%. The note's yield closed at 1.17%, giving buyers an instant profit.

Alerian MLP Index --- 2 months




Dow Jones REIT Index --- 2 months





Broad based selling in commodities continues. Oil is below 73 while gold is off more than 80 in just 3 days. The 2 month chart for GLD shows how much it has been retraced in those 3 days. Lower prices could be bringing more attractive buying points.

CLF10.NYM

..Crude Oil Jan 10

..72.74

.. 1.19 ......(1.6%)

GCZ09.CMX

..Gold Dec 09

..1,125.30

.. 38.10 ......(3.3%)

GLD (ETF) --- 2 months





In his lunchtime speech, the president said he believes we can "spend our way out of this recession" until more Americans are back at work. He proposed a package of new spending for highway, bridge & other infrastructure projects, deeper tax breaks for small businesses & tax incentives to encourage people to make their homes more energy efficient. The goal is gov could set the stage for more job creation by private businesses, a major part of his package is new incentives for small businesses. The graph above shows Dow hardly moved from down 100 in the PM.

Obama Focuses on Small Businesses to Spur Job Growth

Announced corp layoffs - 1 year





The president talked about using TARP funds to "help create jobs." What is turning out to be excess TARP funds will be a slush fund for gov to spend. Congress is pretty much the same group that was in office in early Sep 2008 when there was hardly a peep from anybody at the political conventions about a major financial meltdown approaching by month's end. I don't know! The bulls can be heartened that the markets took a lot of ugly news fairly well, at least so far.

Dow Jones Industrials --- 2 months