Monday, July 12, 2010

Markets vacillate while waiting for the first Q2 earnings

Stocks hugged break-even all day. Dow finished up 18, decliners ahead of advancers almost 2-1 & NAZ gained all of 1+ as traders were awaiting earnings reports. Banks also went sideways.


Value195.55One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change0.44 +0.2%

The Alerian MLP Index rose 1 to the 319s, setting a new high since Aug 2007! The index is up 34 or 12% YTD helped by all the new ETNs & mutual funds investing in MLPs. The REIT index rose a fraction in the 194s. Junk bond funds continued mixed to higher while the VIX slipped a fraction into the 24s & down sharply from just last week. The yield on the 10-year Treasury bond slid 1 basis point to 3.04%, still very low. The € lost recent strength, it's just under $1.26.

Alerian MLP Index -- 3 months

Dow Jones REIT Index -- 3 months

VIX --- 3 months

10-Year Treasury Yld Index --- 3 months

Oil & gold pulled back a little in lackluster stock trading.

CLQ10.NYM..Crude Oil Aug 10..74.92 ..Down 1.17

GCN10.CMX..Gold Jul 10..1,204.80 ..Down 4.80

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Consumer Reports said iPhone 4 has reception problems caused by its antenna design. After the phone went on sale in Jun, buyers complained that holding the phone a certain way could cause calls to drop. Apple (AAPL) said that any phone will lose signal strength when gripped in certain ways & the new iPhone seems to show a larger drop because it has been using a faulty formula to decide how many signal bars to show. But Consumer Reports tested several phones that use AT&T's network & only the iPhone 4 seemed to have the reception issue. As a result, the iPhone 4 will not be marked "recommended" on its updated smart phone ratings list because of this problem. The stock took this setback calmly, it only lost 2 to the 257s & has done very well during the recent difficult time for stocks.

Consumer Reports Says Apple IPhone 4 Has `Significant' Flaw

Apple --- 3 months

Playboy magazines

Photo: Bloomberg

FriendFinder Networks, owner of Penthouse adult magazine, intends to submit a bid for Playboy (PLA) after Hugh Hefner offered to buy all remaining shares of PLA for $123M. FriendFinder CEO, Marc Bell, said the company is “looking at alternatives.” Hefner plans to offer $5.50 apiece in cash for the Class A & Class B shares. The offer values PLA at about $185M. PLA said Hefner isn’t interested in a merger or sale out of concern for the company’s brand & Playboy magazine’s editorial direction. PLA was up 1.62 taking it above the 5.50 offering price on hopes of a better offer.

Penthouse Owner to Compete With Hefner for Playboy Control

Playboy --- YTD

Trading was very light (NYSE volume on the floor was under .9B shares). The outstanding performance for MLPs coincides with the rise of ETNs & mutual funds introduced for the sector (such as MLPL last week). A key advantage of these securities is they don't have tax hassle of MLPs but they also lack the tax privileges. However when a lot of new investors rush into a sector, I get nervous. MLPs are having a 2nd spectacular year but this time without any significant changes in the fundamentals.

Dow Jones Industrials -- 3 months

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