Thursday, June 3, 2010

Markets a little higher ahead of jobs report

Stocks started the day with gains, slid into the red at lunchtime followed by a recovery to near break even. Dow rose 5, advancers over delciners 3-2 & NAZ gained a big 21. There was not a lot going on in the Dow, 17 up & 13 lower. Bank stocks were lower all day, but not by very much.

% Change

The Alerian MLP Index jumped 6 to 297+ while the Dow Jones REIT Index fell 1 to the 198s. MLPs received a nice mention in the link below. Junk bond funds rebounded after yesterday's selling, up 1% or so. The VIX has had a bumpy time of it in the last month (shown below), but it has settled down in the last week. However, 30 still qualifies as a high reading from nervousness. Today it dropped ½ to the 29s. Treasuries continued weak, taking the yield on the 10-year Treasury bond up 4½ basis points to 3.38% (another sign of easing fears, at least for the moment).

Bottom Up Stock Analysis For MLPs Yields Key Stocks For 2010 And 2011 From Swank Group: Specialty Refiner And Growth Oriented Pipeline Two Key PicksWall Street Transcript

Alerian MLP Index --- 1 month

Dow Jones REIT Index -- 1 month

VIX --- 1 month

Oil had a good day, but remains range-bound while gold slipped again. The weak € has not been helping either Treasuries or gold, unusual.

CLN10.NYM..Crude Oil Jul 10..74.42 ..Up 1.56

GCM10.CMX..Gold Jun 10..1,208.00 ..Down 12.60

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The group of 20 central banks (G-20) are delaying their withdrawal of emergency stimulus as Europe’s debt crisis shakes financial markets & threatens to hinder the global recovery. G-20 countries began talks to identify investor reaction to Europe’s indebtedness as a hurdle to higher interest rates. It's anticipated that the countries are less eager to tighten given uncertainties in the global economic recovery. The European $1T bailout financing will be discussed, the package hasn’t been enough to pacify investors concerned sovereign debt is the biggest threat to the recovery from last year’s global slump. Central banks are concerned the biggest threat to the recovery is banks ceasing to lend & financial markets freezing as happened in 2008, rather than weaker European demand. Stay tuned for announcements over the weekend.

G-20 Central Banks Delay Stimulus Exit as Europe Debt Woes Rattle Markets

The graph below shows the fall of the € in the last 3 months, pretty dramatic. The decline over the last 5 years is more disturbing. This loss is what the finance ministers are fighting. Today the € sank to $121½, not good.

Euro (€) -- 3 months


Euro (€) -- 5 years


As usual at this time of the month, markets are trying to guess what the unemployment report will show tomorrow. Estimates for the gain in jobs ranges from 200K- 700K+, quite a range. My guess is that 500K+, at a minimum, is already baked into the markets. Less would be disappointing. The G-20 meeting also has the power to shake markets one way or the other.

Dow Jones Industrials -- 1 month

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