S&P 500 FINANCIALS INDEX
| Value 193.14 | Change -1.25 | % Change -0.6% |
The Alerian MLP Index jumped 6¼ to the 285s, but down 3 from its highs & down 1 YTD. The REIT index fell a fraction in the 191s. Junk bond funds were up, maybe 2%. The VIX came off its earlier lows, reducing its loss to essentially even in the 34s. Fear is creeping back in with PM selling. The yield on the 10-year Treasury bond rose 6 basis points, more profit taking by successful bond traders.
Alerian MLP Index --- YTD
Dow Jones REIT Index -- YTD
Oil & gold had good days. Oil remains in its sideways trading zone, but gold may want to take out record highs. As long as economic confusion reigns in Europe, gold should be very strong.
| Oil | ...70.95 | __2.20 | __3.20 |
| Gold | ...1,210.80 | __12.80 | __1.07 |
Italy’s planning €25B ($30B) of budget cuts in the next 2 years because they are “absolutely necessary” to defend the €. The measures are part of a European effort to convince investors the region can tame budget deficits & shore up the €. The package should reduce Italy’s budget deficit an additional 1.6% of GDP to bring the shortfall within the EU limit of 3% of GDP in 2012 from 5.3% last year. This is a new concept for Euro zone members, fiscal restraint. The budget cuts include a 3-year wage freeze for civil servants, a 10% budget cut for ministries, €4½B in reduced transfers to regional govs, a partial amnesty on illegal construction & a crackdown on tax evasion. Unions were divided over the measures, with the CGIL, the nation’s largest, saying it would call for a general strike in Jun to protest cuts. The CISL & UIL unions have not called for protests so far.
•Italy Adopts $30 Billion of Budget Cuts in European Push to Tame Deficits
In the rush to fix struggling savings banks in Spain, Caja de Ahorros del Mediterraneo’s proposal to merge with 3 smaller savings banks, creating a lender with €135B ($167B) in assets. The combination would allow them keep separate branches & workforces. Huh? The idea of a merger is to cut costs (i.e. jobs). Spain is pushing for mergers between “cajas,” lenders run as foundations that helped fund the country’s property boom & account for about half of its loans. By melding ailing lenders with stronger partners, the central bank aims to purge bad loans & lay the groundwork for recovery as the gov tackles budget deficit. But their approach is not aimed at solving economic problems, just giving that appearance!
•Spain's Rush to Fix Ailing Savings Banks Risks Leaving the Job Half Done
BP stock has been hammered hard after causing the greatest oil spill in history which they are still trying to plug. Analysts are split roughly 50-50 between buy & hold for BP. Aren't you glad you didn't listen to them? One stepped up front today & said he is recommending the stock. The stock has fallen so far that its yield is pushing 8%, a nice return when risk free instruments yield so little. He figures they have enough cash & ongoing cash flow to survive the economic storm they are going thru. He is recommending watching the stock & pretty much "buy on the dips." The yield is nice, but should be limited to the very aggressive who are willing to endure the upcoming firestorm. The stock was up 15¢ to 42.41 (down from the 60s in Jan).
BP --- YTD
Euro zone problems described above are only a few that must be dealt with. Most countries are not willing to make necessary sacrifices. That's why the € fell below $1.22. Dow is back to shooting for 10K again. The latest news on the oil spill is that BP is trying again to plug one hole. We all hope they are finally successful.
Dow Jones Industrials -- YTD
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