S&P 500 FINANCIALS INDEX
| Value 199.07 | Change 5.93 | % Change 3.1% |
The Alerian MLP Index shot up 6½ to the 292s, solidly in the black YTD. Its 270 floor held in Feb & again in May, impressive. The REIT index rose 4½ to the 196s. Junk bond funds gained about 2% despite gloomy news discussed below. Fears have eased as the VIX, volatility index, dropped 5 to 30. Treasuries had a very sharp sell-off. The yield on the 10-year Treasury bond exploded 13 basis points to 3.35%, still low relative to yields in the last year.
Alerian MLP Index --- 2 weeks
Dow Jones REIT Index -- 2 weeks
VIX --- 2 weeks
10-Year Treasury Yld Index - 1 year
Oil is having another good day as it reestablishes the 70-75 trading range. Gold is essentially even, ready to take off on the next round of financial fears.
| CLN10.NYM | ...Crude Oil Jul 10 | ...73.39 | ... 1.79 .......(2.5%) |
| GCM10.CMX | ...Gold Jun 10... | 1,211.80 | ... 1.60 .......(0.1%) |
Photo: Bloomberg
The number of claims for unemployment benefits dropped last week but remains higher than expected, indicating only modest improvements in the job market. Applications for unemployment benefits fell 14K to 460K last week (higher than forecasts of 455K). This decline came after claims had risen by a revised 28K in the previous week (largest gain in 3 months). The latest level is slightly higher than it was at the start of the year, workers are still facing tough times even though the overall economy is growing again. The 4-week average for new jobless claims edged up to 457K last week. The number receiving benefits fell 49K to 4.64M for the prior week. That figure does not include unemployed workers who have exhausted their regular 26 weeks of benefits. An additional 5.3M workers are receiving extended benefits. 29 states & territories saw an increase in applications for unemployment benefits while 24 saw a decline. Unemployment numbers keep plodding along
Jobless Claims in U.S. Fell Last Week to 460,000
Jobless claims - 1 year
The percentage of corporate bonds considered in distress surged this week to the highest since 2009, responsible for the sharp sell-off in junk bond funds early in the week. Investors dumped debt of the neediest borrowers on concern Europe’s fiscal crisis will make it harder for them to refinance. Over 17% of junk bonds yield at least 1000 basis points (10 percentage points) over Treasuries, up from 9.2% last month, the biggest since the distress ratio rose 11 percentage points in Nov 2008. US distressed bonds have lost 10% in May, see my Instablog article at SeekingAlpha.com posted an hour ago), amid speculation Greece & other nations in Europe with rising budget deficits won’t be able to meet their debt payments. Junk bond sales plunged this month to the lowest level since Mar 2009. Junk bonds are just stocks with high yields.
http://seekingalpha.com/author/avi-morris/instablog
•Bond Distress Rises to Highest Since 2009 as Sales Vanish: Credit Markets
Tiffany (TIF) more than doubled net income in Q1 as revenue grew in the US & soared 50% in Asia. TIF also forecast higher full-year profits. However spending is being compared with sharp declines last year. Chairman & CEO Michael J. Kowalski said "it is prudent to maintain a modicum of caution in our outlook due to global economic uncertainties." TIF earned 50¢ per share, in Q1 ended Apr 30 compared with 20¢ last year. Revenue rose 22% to $633.6M. Revenue in the Americas increased 22% to $315.3M which compares with a 31% drop in the year-ago period. Adjusted for currency fluctuations, revenue rose 20% & revenue at stores open at least a year rose 15%, led by flagship store on New York's Fifth Avenue which rose 26%. Investors liked the news, TIF rose 2.70 to 46.29.
Tiffany's 1Q profit more than doublesAP
Tiffany --- 2 years
China standing behind Europe & is a potential backer if European finances got ugly, was a boost the markets needed. But economic data remains dreary. Jobless claims can't break below the 450K level, high unemployment will drag on. BP (BP) keeps putting junk in the well to plug the leak. Even with today's gains, Dow is only slightly above 10K & the S&P 500 at 1093 is below the 1100 level which technicians consider important. One clear message from today's markets, high yielders are hot again.
Dow Jones Industrials -- 2 weeks
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