Monday, July 12, 2010

Markets wobbly ahead of earnings season

Stocks are wandering lower ahead of earnings season which begins this evening. Dow is down 30, decliners over advancers almost 3-1 & NAZ slipped 8. The Financial Index was lower as bank stocks led the modest decline.


Value 193.94 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change -1.57 (-0.8%)

The Alerian MLP Index reached almost 320 (another 2010 high) before settling back to up ½ in the 318s. All the new funds investing in MLPs are behind some of the buying. MLPL, started last week, is a doubler ETN & is getting a lot of attention because its yield should also be doubled (relative to the Alerian MLP Index yield) to around 13%. The REIT index dropped 2½ to the 191s. Junk bond funds are mixed to higher. The VIX is down a fraction in the 24s. The yield on the 10-year Treausry bond fell 2 basis points to 3.04%. The € which has been hot as of late, slipped to under $1.26.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

VIX --- 2 weeks

10-Year Treasury Yld Index - 2 weeks

On this quiet day in the stock markets, commodities are also doing little.

CLQ10.NYM...Crude Oil Aug 10...75.91 ...Down 0.18

GCN10.CMX...Gold Jul 10...1,209.60... 0.00

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BP (BP) rose to its highest price in nearly a month, driven by reports of asset disposals to help pay for the oil spill & hopes for a new system to capture almost all the spewing oil. The cost of the spill is about $3.5B. It has collected or flared 749K barrels of oil from the well, which ruptured on Apr 20. BP is installing a new capping system to capture up to 80K barrels per day, up from about 25K bpd. Robots operating a mile under the ocean surface will take up to a week to put the system in place. In addition it is reported that BP was in talks with US oil & gas company Apache (APA) & other companies over potential asset sales which could involve $12B. BP is is up 2 to the 36s while APA dropped 3 to the 74s

BP Discusses Selling Assets to Apache to Pay for Spill

BP --- 1 year

Apache --- 1 year

Aon (AON), the world's largest insurance broker, will buy Hewitt (HEW) for almost $5B ($50 per share in cash & stock). AON fell 2.80 into the 35s while HEW jumped 11½ to almost 47 (a record price since going public). Hugh Hefner wants to take Playboy (PLA) private, buying the shares for $5.50. It's shares jumped 1.33 to 5.27.

Aon to Purchase Hewitt for $4.9 Billion in Cash, Stock
Playboy Says Hefner Proposes to Take Company Private

Aon --- 1 year

Hewitt --- 8 years

Playboy --- 5 years

The corp buyouts should be encouraging for stock buyers but not today. Nervousness about the earnings seasons is driving markets. Alcoa (AA), a Dow stock, will be the first to report after the close.

Dow Jones Industrials --- 2 weeks

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