Tuesday, July 27, 2010

Markets are wobbly after weak consumer confidence data

Stocks are digesting yesterday's gains. Dow is down 20, advancers barely ahead of decliners & NAZ fell 11 on another inconclusive day of trading. Banks gained, but the Financial Index remains just under 200.


Value 199.50 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change 0.52 (0.3%)

The MLP Index is down 3+ to just above 330. It's entitled to rest after the spectacular run in the last 2 months. In addition, ex-distribution reductions will affect it in the next week. The REIT index dropped 1¼ to the 206s. Junk bond funds were flat to up a fraction & the VIX was fractionally higher to the the 23s (still near a 3 month low). The yield on the 10-year Treasury bond rose 4 basis points to 3.03%. The € is a little soft, still close to $1.30.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

VIX --- 2 weeks

20-Year Treasury Yld Index --- 2 weeks

Oil is in the higher end of its 75-80 range while gold continues weak. Lower prices for gold give better entry points for those who believe in its long run potential.

CLU10.NYM...Crude Oil Sep 10...78.44 ...Down 0.54

GCN10.CMX...Gold Jul 10...1,172.20 ...Down 10.80

Gold Super Cycle!! Click Here

The Conference Board said that its Consumer Confidence Index slipped to 50.4 in Jul, down from the revised 54.3 in Jun (& below expectations of 51.0). This decline follows last month's nearly 10-point drop, from 62.7, marking the biggest drop since Feb when the measure also fell 10 points. The index had been recovering smartly since hitting an all-time low of 25.3 in February 2009. But Americans are skittish about spending. One component which measures how people feel about the economy now, declined to 26.1, from 26.8. The other barometer, which measures respondent's outlook over the next 6 months, declined to 66.6, from 72.7 last month. Those claiming that jobs are "hard to get" increased to 45.8 from 43.5, while those saying jobs are "plentiful" remained unchanged at 4.3%. The report raised concerns about the overall economy and the important back-to-school season.

Consumer Confidence in U.S. Fell in July to a Five-Month Low

Consumer confidence - 1 year

One-Year Chart for Confidence (CONCCONF:IND)

Present conditions - 1 year

One-Year Chart for Situation (CONCPSIT:IND)

Expectations - 1 year

One-Year Chart for Expectations (CONCEXP:IND)

BP's (BP) much-criticized CEO Tony Hayward will be replaced by Robert Dudley on Oct 1. Meanwhile the company reported a record quarterly loss & set aside $32.2B to cover costs of the oil spill in the Gulf. BP Chairman Carl-Henric Svanberg said the Apr 20 explosion of the Macondo well on the Deepwater Horizon platform run by BP in the Gulf of Mexico has been a "watershed incident" for the company. "BP remains a strong business with fine assets, excellent people and a vital role to play in meeting the world's energy needs," he said. "But it will be a different company going forward, requiring fresh leadership supported by robust governance and a very engaged board." Besides permanently plugging the oil leak & cleaning up the spill & the company's image, Dudley will oversee the sale of $30B in assets over the next 18 months. The stock fell 1 on the earnings news but has had a good recovery off its lows a month ago.

BP Asset Sales Win 58% Premium, Show Potential for More Deals

BP --- YTD

More earnings are coming. So far, they're getting a mixed to favorable reaction. Dow is at an important level, matching its highs in Jun. If it's serious about heading north, it must take out that high convincingly. The retreat by the MLP index is worth noting after its 60 point run in 2 months.

Dow Jones Industrials --- 2 weeks

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