Wednesday, September 8, 2010

Markets rose on easing concerns over European debt problems

Stocks started strong but those gains were pared in late day trading. Dow rose 46, advancers over decliners 2-1 & NAZ was up 20. Bank stocks were also higher but faded late in the day. The chart for the Financial Index shows it's still much closer to its lows than highs over the last year.


Value192.73One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change2.17 (1.1%)

After being higher, the MLP index was down a smidgen to close under 325. The REIT index had a minimal gain closing in the 211s, but junk bond funds were higher. The VIX was down a fraction in the 23s. The € had a good day, up ½ penny to above $1.27. Treasuries were weak, the yield on the 10 year Treasury bond rose more than 4 basis points to 2.66.

Treasury Securities

U.S. 3-month
U.S. 2-year
U.S. 10-year

Alerian MLP Index --- YTD

Dow Jones REIT Index --- YTD


10-Year Treasury Yld Index --- YTD

Oil gained for the first time in 3 days but is still in the middle of its 70-80 trading zone. Gold made an attempt for a new record, that will have to wait. Short term demand is strong & long term fundamentals are excellent.

CLV10.NYM..Crude Oil Oct 10..74.71 ..Up 0.62

GCU10.CMX..Gold Sep 10..1,256.50 ..Down 0.80

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The latest Beige Report from the Federal Reserve (FED) found slower growth spreading to more regions of the country. Of the 12 regions, economic activity was mixed or slowed in 5 (New York, Philadelphia, Richmond, Atlanta & Chicago). Activity elsewhere was described as modest or pointed to positive developments. Only two regions, Atlanta & Chicago, reported slower growth. The overall US economy was still growing in late summer, but there were "widespread signs of deceleration," according to the FED. The findings will be discussed when the FED meets on Sep 21.

Fed Survey: Slower Growth Spreads to More Regions- AP

Borrowing by consumers declined in the US for a 6th straight month in Jul. A $3.6B decrease followed a revised $1B drop in Jun that was less than initially estimated. Total borrowing is restrained as people pay down debt. Confidence to charge more or take out loans may be restored when the economy picks up & companies ramp up hiring. Consumer spending “appeared to increase on balance,” though shoppers were limiting purchases of non-essential items, the FED said earlier in its Beige Book survey.

Consumer Credit in U.S. Fell $3.6 Billion in July, Fed Says

US consumer borrowing - 1 year

One-Year Chart for Total (CICRTOT:IND)

Volume remained slow, NYSE volume was 0.9B shares. The main momentum for the markets this week has been to drift along. A slow recovery in the US economy will be getting a lot more attention in the next 2 months, prior to the fall elections. The Dems will come up with spending ideas, but they will have to be passed by Congress before any money is spent & won't help those running for reelection. Treasury yields have had a small bounce off their lows, but are still at very worrisome levels indicating investors don't feel good about putting new money into stocks even though some have very attractive yields. But gold is one investment that is strong with a following wind behind it to take it to new record levels.

I'll be off for awhile, but there should not be much happening in the markets as trading will be even sloooower.

Dow Jones Industrials --- YTD

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