Thursday, May 13, 2010

Markets meander lower

Stocks were fairly flat to a little lower, but selling kicked in the PM (much of it in the last hour). Dow fell 113, decliners over advancers 2-1 & NAZ dropped 30. Major banks could be facing criminal charges & a disappointing report on jobless claims brought on the selling. Banks sold off with the Financial Index closing at its lows.


% Change

After touching 305 at the start of trading the Alerian MLP index fell, ending with a loss of almost 3 to just over 300. That 300 line has been an important barrier (floor) for most of this year. The REIT index fell 3¼ to the 212s & junk bond funds were generally soft. The yield on the 10-year Treasury bond was essentially even at 3.56%. But the VIX, volatility index, rose 1.16 to the 26s (mostly in PM trading) as market fears increased.

Alerian MLP Index --- 1 month

Dow Jones REIT Index -- 1 month

VIX --- 1 week

Oil & gold drifted lower, following the stock markets down.


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The Senate is working on the bill for increased bank regulation. It just adopted a plan to reduce credit rating conflicts. Among the many other measures proposed is whether to include auto companies, because car loans are so important in the economy which has brought in the Pentagon. They are representing many service members who buy cars with these loans. The Senate could have a final vote on the financial regulation bill by next week & it's a good bet that banks will not be happy with it!

Ratings Board for Asset-Backed Securities Is Approved in U.S. Senate Vote

Federal prosecutors in NY are conducting a criminal investigation into whether major Wall Street financial firms misled investors. Uh, oh!! Allegedly some of the firms being investigated include: JPMorgan Chase (JPM), Citigroup (C), Deutsche Bank (DB), UBS (UBS), Morgan Stanley (MS), &, of course, Goldman Sachs (GS). These banks sold off today, down 1-2%.

Citi, others under scrutiny as probe widens
at MarketWatch

SteelPath launched SteelPath MLP Funds, the first mutual fund family to provide access to the Master Limited Partnership asset class. Without the burden of K-1s, or state & UBTI tax filings to the shareholder, SteelPath offers a mutual fund platform for investors who want to invest in MLPs in their personal or retirement accounts. Because they are new, there is no track record & the fund has the usual assortment of risk factors. Their website is new, it's still be work on.

The spill in the Gulf continues as BP is desperately looking for a way to plug the leaks. The € closed below $1.25½. The reality of the difficulties associated with making $1T package work is sinking in. Make no mistake, the US is a key participant in the package. At a minimum, the US supplies a good 25% of the IMF's budget & the IMF is funding much of the bailout package. This may have been the biggest factor in PM selling which suggests a weak opening tomorrow.

Dow Jones Industrials -- 1 month

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