Markets explode into the new year

Stocks began 2010 by surging out of the gate. Dow is up 160, advancers 4-1 ahead of decliners & NAZ gained 40. Even banks are having a good day. While the Financial Index is higher, its gain can be thought of as good but not great.

S&P 500 FINANCIALS INDEX

Value 196.76

Change 2.98

% Change 1.5%

MLPs started the year like they were shot out of a canon. The Alerian MLP Index rose over 5, shooting for 291. Its 3 year chart is shown below to review how much it has recovered against its 342 all time high. The REIT index had a more tepid gain (up only 1) reflecting doubts about real estate. Junk bond funds are having another excellent day bringing many yields down to 10%. Even Treasuries are rallying, the yield on the 10-year Treasury bond fell 4 basis points to 3.82% (but remaining in high territory).

10-Year

3.375

11/15/2019

96-12 / 3.82

Alerian MLP Index --- 3 years




Dow Jones REIT Index --- 1 year





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Oil cracked the important 80 ceiling on the cold weather snap (remember global warming?) in the northeast. Commodities were strong, gold is trying to establish 1100 as a floor from which to rebound.

CLG10.NYM

...Crude Oil Feb 10

...81.46

... 2.10 .......(2.7%)

GCF10.CMX

...Gold Jan 10

...1,120.20

... 25.00 .......(2.3%)

The Institute for Supply Management said its manufacturing index was 55.9 in Dec vs 53.6 in Nov (a reading above 50 indicates growth) for the 5th straight month of expansion & the highest reading in 4 years. But a separate report on construction spending sounded a more cautionary note as construction activity fell in Nov for a 7th straight month, the 0.6% was bigger than the 0.4% decline predicted. Other measures of manufacturing around the world also showed growth. China's manufacturing sector expanded in Dec at its fastest rate in 20 months. In Europe, a similar survey in the 16 countries that use the Euro rose to a 21-month high & a manufacturing index for Britain rose to a 25-month high.

Manufacturing in U.S. Expanded More Than Forecast


Factory Index - 1 year

Photo: Bloomberg


Berkshire Hathaway (BRK.A) had its worst performance in a decade (pretty much flat) when compared to the big gains by the Dow. Generally "value stocks" performed only so-so at a time when risk was embraced & rewarded. BRK felt that effect.

•Warren Buffett Delivers Worst Stock Performance Against S&P 500 in Decade

Berkshire Hathaway --- 1 year




The new year started with bulls taking charge. The January Effect (fresh money coming into markets in a new year) is taking hold. Last year, risk averse was the main theme but now risk is being rewarded. Risky investments are getting a lot of attention as demonstrated by the strength in high yield sectors.


Dow Jones Industrials --- 1 year




Nasdaq --- 1 year