Markets fall on dreary Morgan earnings

Stocks sank at the start & remained on a lower plain all day. Dow retreated 100, decliners over advancers 5-2 & NAZ dropped 28. The first 3 earnings reports from Dow companies have not been well received. Leading averages lower were banks, the Financial Index is looking to test the 200 support level.


S&P 500 FINANCIALS INDEX

Value 201.35

Change -4.19

% Change -2.0%

MLPs managed modest gains today. The Alerian MLP Index rose .91 to the 293s. The index appears to be stuck in a rut after its big pop at the start of 2010. The Dow Jones REIT Index was down 1.40, just can't stray far from the 181 Sep high. Junk bond funds were a little soft after a terrific start this year. Treasuries were in demand, the yield on the 10-year Treasury bond fell 6 basis points to 3.68%



Alerian MLP Index --- 3 months




Dow Jones REIT Index --- 3 months








Oil & gold continued lower going into a long weekend. Oil has been in a sideways range for some time. The lower end of the graph corresponds to about a 65 price, it may be heading back there for testing.

CLG10.NYM

..Crude Oil Feb 10

..77.97

.. 1.42 ......(1.8%)

GCF10.CMX

..Gold Jan 10

..1,129.80

.. 12.80 ......(1.1%)

OIL (ETF) --- 3 months





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In 2010, junk bond funds got off to their best start (following an outstanding 2009). One key index is up 2% YTD, small relative to stocks but a big gain for this market. Rising speculative-grade loan prices pushed down the average spread to maturity for the debt to 4.09 percentage points more than the three-month London interbank rate, near the lowest level in 18 months. A tightening spread over Libor means a company borrowing $1B pays $70M less in annual interest than it did when prices were at a record low in Dec 2008. The low interest rate environment is driving down interest costs for junk bonds, more are coming to market. This scenario can not last.

KKR Sees Value in Junk Loans as Investors Bet on Rising Libor



JPMorgan has been under pressure all day after their gloomy press release. Here's a picture of the stock over the last week. JPM was off 99¢ (2%) today.


JP Morgan --- 1 week







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The earnings season is just beginning & the first ones are suggesting they will tough to digest. There was a broad based decline today but volume was not strong. However this is also an options expiration day & we're going into a long weekend causing some fund managers to adjust portfolios making it difficult to understand price movements.


Dow Jones Industrials --- 3 months