Wednesday, July 7, 2010

Strong retail sales in June lifts markets

Stocks shot out of the gate & are continuing their upward climb. Dow is up 124, advancers ahead of decliners almost 4-1 & NAZ gained 25. Banks are leading the advance as the Financial Index climbed above its former low of 185 (a good technical sign).


Value 186.90 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change 3.78 (2.1%)

Higher yielders are having another good day. The MLP index shot up 3 to 311 & the REIT index rose 3 to 183. Junk bond funds were mixed to higher. A rising stock market took the VIX, volatility index, down 2 to the 27s. Treasuries were weak. The yield on the 10-year Treasury bond went up 2 basis points to 2.95%, still very low.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

VIX --- 2 weeks

10-Year Treasury Yld Index - 2 weeks

Oil is benefiting from the strong stock markets. Gold is lost, bulls need to push it back over 1200.

CLQ10.NYM...Crude Oil Aug 10...73.44 ...Up 1.46

GCN10.CMX...Gold Jul 10...1,192.50 ...Down 2.30

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The Intl Council of Shopping Centers said in advance of its June report tomorrow that retailers’ sales are growing at an average monthly rate of 4% in the first 5 months of 2010, the fastest pace in 4 years. Retailers may have bucked last month’s drop in consumer confidence that threatens to temper the rebound. In the current FY, the monthly number swung as high as 9% in Mar, then receded to a 0.8% gain in April (partly because of an earlier Easter). June sales probably came in at the high end of a projected 3-4% range. Sales growth has been driven by a 4.2% increase at wholesale clubs & an 8% jump at luxury chains this year.

Retailers' Sales Rise Most in 4 Years, Overcoming Job Concerns

A massive IPO of $22B for the Agricultural Bank of China's (ABC) will be the world's biggest. It also underlines the cash squeeze Chinese banks are facing after a massive lending binge. Original forecasts had put potential proceeds from the offering at an even bigger $30B. China's banks are now strapped for cash having lent a record 9.6T yuan ($1.4T) in 2009 to support Beijing's economic stimulus. Regulators have ordered all banks to shore up their balance sheets. ABC is selling 25.4B shares in Hong Kong & 22.24B shares in Shanghai. If underwriters buy about $2.89B more shares in an overallotment option, the dual listing could raise $22B, the most funds ever for an IPO. The benchmark Shanghai Composite Index is at a 15-month low, underscoring worries that the offering might overwhelm investor demand.

The € is little changed at $1.26¼. Its elevated value is from less noise about problems with European debts. But that doesn't mean they have gone away. Strong US retail sales are what bulls like to hear.

Dow Jones Industrials --- 2 weeks

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