Tuesday, June 8, 2010

Markets hesitate but gold reaches a record at 1254

Stocks started higher, then selling came on & markets are mixed to lower. Dow is up 21, decliners over advancers 5-2 & NAZ was off 15. Banks slipped taking the Financial Index to 9 month lows.


% Change

Selling is hitting MLPS. The Alerian MLP Index fell 3 to the 286s & heading to the 275 area, lower end of its recent trading range. The REIT index fell 3 to the 183s (3 month low). Junk bond funds were mixed, little changed. The VIX, volatility index, was fractionally higher in the 36s (high territory). The yield on the 10 year Treasury bond fell 2 basis points to 3.16%. This figure looks to be heading for fresh yearly lows, worrisome for stock markets.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

Oil is flat but the excitement is with gold after reaching a record at 1254! Since then it settled back but wants to go higher.

CLN10.NYM...Crude Oil Jul 10...71.65 ...Up 0.21

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Photo: Bloomberg

Federal Reserve Chairman Ben Bernanke said he is hopeful the economy will gain traction & not fall back into a "double dip" recession. "My best guess is we will have a continued recovery, but it won't feel terrific," he said. That's because economic growth won't be robust enough to quickly drive down the unemployment rate at 9.7%. The economy grew at a 3% pace in Q1. That's good growth during normal times, but coming out of such a deep recession the economy must grow much more strongly to make a dent in the jobless rate. Asked when the FED will start raising interest rates, Bernanke quipped "in the future." However, he did say the FED won't be able to wait until the jobs market is fully healed before it pushed rates up.

Bernanke Says Unemployment Rate in U.S. Likely to Stay High `for a While'

David Cameron, the British PM, needs to accelerate budget-deficit cuts to protect the nation’s top credit rating, according to Fitch Ratings. The UK is lagging behind other European countries in publishing deficit-reduction plans while investor concerns over gov debt loads increase. Fitch continued, “The scale of the United Kingdom’s fiscal challenge is formidable and warrants a strong medium-term consolidation strategy -- including a faster pace of deficit reduction than set out in the April 2010 budget.” Fitch added that the increase in debt in the UK had been faster than in any other AAA-rated country. Some say a credit rating downgrade is “coming," Another European country to keep an eye on. Currencies were little changed. The £ is under $1.44 while the € is a fraction above $1.19.

Fitch Says Cameron Faces ‘Formidable’ U.K. Debt Task

Photo: Bloomberg

McDonald's (MCD), Dow stock & Dividend Aristocrat, extended its winning streak in May as customers bought more of the fast-food chain's cheap eats. However, MCD also said it will take a hit to its full-year profit because of the weak €, which accounts for about 25% of operating income. Sales in locations open at least a year rose 4.8% worldwide last month. The measure rose 3.4% in the US, extending a streak recorded since Feb. The figure climbed 5.7% in Europe & 3.8% in other regions.

McDonald’s May Sales Rise 4.8% on New Frappes, Snack Wraps

McDonald's --- 2 years

Stocks are meandering not knowing where to go. But Dow is down over 10% from its highs & more importantly is learning to live under 10K. It needs a news item to get out of being stuck in the mud which is bringing on more selling.

Dow Jones Industrials --- 2 weeks

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