Thursday, August 12, 2010

Recovery doubts plague markets

Stocks were under water all day, but losses were limited after yesterday's sell-off. Dow fell 58, decliners over advancers 4-3 & NAZ was off 16 on light volume. Banks stocks also had a down day.


Value189.70One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change-1.19 (-0.6%)

The MLP index dropped another 1+ to the 316s & down 19 this week. The REIT index fell 2½ to 200+ but junk bond funds edged higher. The VIX was flattish in the 25s. Treasuries sold off after their recent rally. The yield on the 10 year Treasury rose 5 basis points to 2.73½%, still extremely low. The € was also flat at $1.28+.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

Oil is down 10 in a couple of weeks on the gloomier outlook for global economic growth. But gold had a great day. With risk averse coming into vogue again, this was its day to attract buyers.

CLU10.NYM..Crude Oil Sep 10..75.87 ..Down 2.15

GCQ10.CMX..Gold Aug 10..1,214.80 ..Up 17.30

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Initial jobless claims rose 2K to 484K last week, the highest level since mid Feb according to the Labor Dept & substantially higher than the 465K estimated! The number of people receiving unemployment benefits dropped, while those getting supplemental benefits surged by 1.34M reflecting the extension of eligibility. Dreary numbers drone on because employers are not hiring in a meaningful way.

U.S. Jobless Claims Unexpectedly Climb to Five-Month High

Jobless claims - 1 year

One-Year Chart for Claims (INJCJC:IND)

# receiving benefits - 1 year

One-Year Chart for Unemployment SA (INJCSP:IND)

Johnson & Johnson (JNJ), a Dow stock & Dividend Aristocrat, may sell $1.1B at record low rates for a nonfinancial AAA rated company. J&J, joining IBM (IBM) & McDonald’s (MCD), 2 more Dow stocks, selling corp debt in the last month at some of the lowest interest rates on record. Corp borrowing costs have fallen to the lowest level amid rising investor concern that the economic recovery is faltering. Investors are driven to minimal rates on quality debt considered virtually risk free. JNJ was up pennies.

J&J May Get Record Low Rate on $1.1B Debt Sale

Johnson & Johnson --- 2 weeks

Cisco (CSCO), Dow stock, fell hard after a disappointing earnings report last night. John Chambers, CEO, told CNBC his customers have expressed hesitancy about the economy & the recovery, which he expects to continue at a slow rate. The tech giant is considered a bellwether for the tech industry & the markets, the fortunes of CSCO are strongly tied to purchases by large corps, phone companies & govs around the world. However, Chambers said he was optimistic about the recovery & CSCO prospects going forward as the company added 3K employees in the last 6 months & expects to add more employees. The stock fell 2.37 (10%) to 21.36.

Cisco CEO Says Sales Hurt by Worries About Recovery

Cisco --- 2 weeks

Markets are back on defense. There is more concern that the recovery is sputtering. The possible tax hikes coming, if congress doesn't extend the present cuts, is getting more attention as they will take effect in a few months. Added costs associated with the new healthcare bill is causing companies to defer hiring plans & high unemployment rates are at the center of the weak markets. Dow is looking to test 10K & that could come soon. Sorry I missed the AM posting, but I've returned for the close.

Dow Jones Industrials --- 2 weeks

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