Monday, June 7, 2010

After starting higher, markets sink

Asian stocks sold off badly, but US market were able to begin with a modest advance which did not last. Dow is off 43, decliners over advancers 4-3 & NAZ is off a big 21 (2%). Banks also began higher, but gave up those gains.


% Change

Like stocks, MLPs were higher but selling is getting the upper hand reducing the gain on the index to a modest fraction in the 292s. The REIT index is up 1 to the 188s. Junk bond funds are generally a little higher. The VIX, volatility index, is about even at 35½. The yield on the 10-year Treasury bond is up a tad to just under 3.20%, still very low.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

There is little going on in the commodities. But oil is holding above the important support at 70 while gold is not far from setting new records at 1250.

CLN10.NYM...Crude Oil Jul 10...71.80 ...Up 0.29

GCM10.CMX...Gold Jun 10...1,215.40 ...Down 0.80

Gold Super Cycle!!!
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A lack of comment on the 17% drop in the € versus the $ at last week’s G-20 meeting signals they approve of the currency’s direction. G-20 leaders promised to “safeguard recovery” in a statement released after their talks on Sat. They replaced an endorsement of budget stimulus with a pledge to pursue “credible, growth-friendly measures to deliver fiscal sustainability.” Jean-Claude Trichet, European Central Bank President, said at the meeting that fiscal tightening in “old industrialized economies” would aid the expansion by shoring up investor confidence. He said the € is keeping its value in a “remarkable fashion.” I'm not sure what he means but the € slipped at fraction, under $1.19½. Hungary is a looming big problem, but nobody is sure what is going on.

G-20 Silence on Euro Drop Signals Approval, Morgan Stanley Says

BP (BP) said it was capturing most of the oil gushing from its leaking Gulf of Mexico well, & that an additional capture system would be ready next week. Its containment cap had captured 10K barrels on Jun 5, compared with an estimated daily flow of 12-19K barrels. An additional system to capture more of the leaking oil via equipment previously developed for the failed "top kill" attempt to shut the well, could allow BP to siphon the vast majority of the leaking oil, BP said. It's believed they turned the corner on plugging the leak. It is also thought that capturing most of the oil in the coming weeks would make it easier for BP avoid cutting its Q1 div. The stock is up 34¢ to 39.50 & yields 9% for the very brave.

BP Spending Picks Up on Spill as Capture Rate Rises

BP --- YTD

Apple (AAPL) will unveil its latest iPhone today, as it aims to stay a step ahead of rivals in an increasingly competitive smartphone market. The bar is set high & it will be a challenge to wow investors after the stock has already gained more than 20% YTD & the company overtook Microsoft (MSFT, a Dow stock) to become the world's most valuable tech company. The new iPhone is expected to be faster, sport a front-facing camera for videoconferencing, boast longer battery life & a better screen. Although the iPhone is gaining share globally, it faces a lot of new competitors. Nervous investors are selling AAPL, down 2 to the 253s.

Apple’s Jobs Seen Revamping the IPhone to Stay Ahead

Apple --- YTD

Not very much was accomplished at the G-20 meeting, as expected. There are technical indicators that a small cap drop may signal bears are in charge & another that the "painful retreat" may be over. Take your pick! Markets are soft while volatility is high, not good.

Dow Jones Industrials --- 2 weeks

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