S&P 500 FINANCIALS INDEX
| Value | 181.42 | |
| Change | -4.22 (-2.3%) |
After an excellent Q2, this is payback time for MLPs. The problem with being the darling of many money managers is they are fickle, as shown today. The Alerian MLP Index dropped 7½ to 301 & that 300 level is proving to be tough to break thru & hold. The REIT index fell 2 to the 185s. Junk bond funds fell maybe 1%. The VIX, volatility index, rose ½ to the 35s as investors are getting more nervous. But Treasuries are in demand. The yield on the 10-year Treasury note fell another 4 basis points to 2.91%. At the lows for that yield in early 2009, it was just above 2%.
Alerian MLP Index --- 2 weeks
Dow Jones REIT Index --- 2 weeks
VIX --- 2 weeks
10-Year Treasury Yld Index - 2 weeks
Oil pulled back sharply like the stock markets. But this time gold was also dragged down. However it's above the key 1200 support level which bulls hope will hold.
| CLQ10.NYM | Crude Oil Aug 10 | 72.11 | ... 3.52 .......(4.7%) |
| GCN10.CMX | ...Gold Jul 10 | ...1,216.90 | ... 28.60 .......(2.3%) |
Initial claims for unemployment benefits rose last week for the 2nd time in 3 weeks. Meanwhile, more than 1M have lost benefits & more could be cut off now that Congress has failed to extend federal jobless aid. The Labor Dept reported new claims for benefits jumped 13K to 472K. The 4-week average rose to 467K, its highest level since Mar. Remember that $800B stimulus package which was supposed to cure economic problems because of all the jobs it added? Claims have remained stuck above 450K since the beginning of the year. The economy received more bad news when 2 reports showed the housing industry is struggling now that tax credits for homebuyers have expired. Still, the biggest problem for the recovery remains the number who are unemployed along with the growing number who stand to lose gov support while they search for work. More than 1.3M laid-off workers won't get their unemployment benefits reinstated before lawmakers go on a weeklong vacation. The numbers could reach 3.3M by the end of this month if an extension is not passed. The charts below show how dreary these numbers are.
Jobless Claims in U.S. Increased Last Week to 472,000
Weekly jobless claims - 1 year
4 week moving avg - 1 year
General Motors said US sales rose 11% in Jun, below estimates. Buick sales gained 53%, while Chevrolet rose 32%, Cadillac added 39% & GMC rose 45%. Sales of other GM brands, including discontinued Pontiac & Saturn, dropped 98%. Since Jun last year was bad, increase sales of only 11% is rated poor. Industry deliveries in Jun were expected to reach an annualized rate of 11.2M, down from 11.6M in May. Annual auto deliveries averaged almost 17M from 2000 - 2007 & fell to 10.4M last year (lowest in 27 years). June sale from the competition should be reported in the PM.
Q3 is starting off on the wrong foot. The economic news was dismal & the jobs report will be released tomorrow before trading. For what it's worth the € is strong gaining over 2¢ to $1.24¾, an interim high. But the most important statistics today are the sinking yields on Treasuries. For example, the yield on the 2-year Treasury note is a mere 61 basis points. When that is the driving force behind investment decisions, stocks are in very troubled waters.
Dow Jones Industrials --- 2 weeks
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