S&P 500 FINANCIALS INDEX
| Value 197.42 | Change -4.33 | % Change -2.1% |
MLPs had a very difficult month (along with the rest of the market). The index fell ½ today in the 292s but is substantially below its starting point of 311. The REIT index fell 2 in the 199s. Junk bond funds were roughly 1% lower after enduring one of their worst months in history. The VIX chart below tells the story for May. It gained almost 1½ today to the 31s, still in a high region. Treasuries had a stellar month. The yield on the 10-year Treasury bond fell 4 basis points today to 3.3% & has fallen an eye popping 36 basis points in May.
Alerian MLP Index -- 1 month
Dow Jones REIT Index --- 1 month
VIX --- 1 month
10-Year Treasury Yld Index - 1month
Oil fell back on worries about sluggish economic growth slowing demand for oil. Gold was flat, awaiting developments.
| CLN10.NYM | ..Crude Oil Jul 10 | ..74.18 | .. 0.37 ......(0.5%) |
| GCM10.CMX | ..Gold Jun 10 | ..1,211.50 | .. 0.40 ......(0.0%) |
Spain lost its AAA rating at Fitch amid a European fiscal crisis that prompted the European Union to come up with a $1T bailout package for the weakest. The rating was cut one step to AA+ & assigned a “stable” outlook. Spain held the top rating at Fitch since 2003. Standard & Poor’s lowered Spain’s ratings to AA one month ago. The $1T bailout package may make it easier for agencies to cut ratings when deserved, since there will be less pressure making them look like "bad guys." Spain is struggling to cut the euro region’s 3rd-largest budget deficit. The economy, still reeling from the collapse of a debt-fueled construction boom, is expected to contract for a 2nd full year. The Spanish gov has angered supporters by cutting public wages & freezing pensions. But these moves have failed to convince investors it can put its finances back in order with borrowing costs surging.
•Spain Loses AAA Rating at Fitch on Concern Debt Burden Will Hamper Growth
The House passed a scaled-back economic-stimulus package of tax breaks & safety net spending that would raise taxes on fund managers & multinational corporations. Dems claim the bill will help bring down the 9.9% unemployment rate (where have I herd that before?), but it comes too late for hundreds of thousands who will see jobless benefits expire starting next week. The bill extends benefits thru Nov, but the Senate left for a week-long break without taking action. Democrats hope to restore payments when they return the week of Jun 7. However the unemployed also face a permanent loss of health-care subsidies, which were stripped out of the bill. The bill passed 215 - 204, largely along party lines.
The downgrade on the Spanish debt hurt, but hardly a surprise. The € fell back below $1.23. The president is watching workers clean up the mess on the Gulf coast. Swell but the mess drags on. US markets will be closed on Mon, but Asian & European markets will be open, trading on happenings over the weekend. Dow dropped over 850 in May with unusually high volatility. This could be a signal for a long, hot summer.
Dow Jones Industrials --- 1 month
0.33