Tuesday, January 5, 2010

Markets sluggish on mixed data

Dow slipped 11, advancers over decliners 3-2 & NAZ was essentially even. Banks had one of their best days in a long time but the Financial Index remains in the middle of its 5 month trading range.


% Change

The Alerian MLP Index rose another 3 to the 295s. In the last 2 months it has risen 16% without one setback. Meanwhile, the REIT has had tough sledding (appropriate imagery for this time of year). It's flattish today & only at its Sep high level. Junk bond funds keep blasting ahead to new highs propelled by investors embracing risk for high yields. Today Treasuries were higher, the yield on the 10-year Treasury bond dropped 8 basis points to 3.76% (still at an ominous level for many new mortgages).

Alerian MLP Index --- 1 year

Dow Jones REIT Index --- 1 year

Nothing like very cold weather in North America, Europe & Asia to attract buyers to oil. The chart below shows the trend for oil over the last 6 months. While bumpy, that's how commodities work, it has an upward bias. Gold keeps sloshing around trying to establish a base.

CLG10.NYM..Crude Oil Feb 10..81.98 ..Up 0.47

GCF10.CMX..Gold Jan 10..1,115.00 ..Down 2.70

OIL (ETF) --- 6 months

Find out what's inside Trend TV Click Here

photo: Bloomberg

The top car manufacturers saw sharp declines in sales last year, but said they had positive momentum going into Jan 2010. Sales of smaller, cheaper vehicles, however, helped drive gains for some manufacturers. Hyundai had an 8% yearly gain, with its low-cost Kia brand reporting 2009 sales gains of nearly 10% including a 44% gain in Dec. In addition, Japanese automaker Subaru, reported a 15% sales gain for 2009.

For the year, GM sales were off 33% from 2008, with Dec sales falling 9%. GM sales were down for the year because partially because it's phasing out Saturn, Pontiac, Saab & Hummer. GM saw its US market share stabilize at 20% (down from over 50% in the past).

Ford Motor (F) full-year sales declined 15%, but posted its first full-year gain in US market share since 1995. It also reported a 33% increase in Dec sales thanks to strong demand for midsize cars like the Ford Fusion, whose sales rose 83% & the Ford Escape Crossover with a sales increase of 75%.

Chrysler sold only 931K vehicles for the year, its worst performance since 1962 as sales dropped 36% in 2009 (but down only 4% in Dec). And last month's sales rose 36% over Nov, showing signs of some progress at showrooms.

Honda's sales were off 22% for the year but up 20% for Dec, while Nissan was up 18% for the month but down 19% in 2009. Toyota (TM) sales were up 32% in Dec but down 20% for the year.

Total US auto sales will be reported shortly. They are expected to drop to levels not seen for 3 decades. The last time sales were so low was in 1982, when 10½M cars were sold during another bad recession.

Meanwhile, China surpassed the US as the largest auto market, with sales expected to top 12M in 2009. Japan's auto sales declined to the lowest level in 38 years, falling to 2.9M vehicles. But Germany, another major auto producer, said that car exports were up in the qtr & year as the effects of the economic downturn eased.

That was one ugly year for autos with China emerging as not only the largest but one of the fastest growing markets for cars.

Auto Industry Stabilizes as Ford, Toyota Report December U.S. Sales Gains

Annual US sales of light vehicles - 1 year

Because of the large gains in the stock markets last year, it's easy to forget bonds. They also had an outstanding year with high yield bonds performing the best (many up 50+%). High yield bonds are merely stocks with high yields. They have their work cut out for them if they want to make price advances this year. Their yields are approaching the lowest they've been in the best of times. In addition, many junk bond funds invest in high yield bonds in foreign (especially emerging) countries which carry an added risk. As long as they carry on with the winning ways, investors are happy. But I wonder how long this can last with so much uncertainty about the recovery.

Dow Jones Industrials --- 1 year

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