Markets back off from early gains

Stocks charged forward this AM on a weaker dollar but strength in the dollar later in the day limited the advance.  Dow was up 31, advancers over decliners 3-2 & NAZ was up 11.  Bank stocks slipped on uncertainties about the weaker dollar & the continuing foreclosure mess which will bring more gov regulation.  While the stock markets have been strong for a year, the Financial Index has gone nowhere.  Not good because bank stocks are supposed to be market leaders.


S&P 500 FINANCIALS INDEX

Value	195.81
Change	-0.80 (-0.4%)

The MLP Index rose ½ to 350, after early gains took it over 252 (a new record) while the Dow Jones REIT Index gained a fraction to the 224s.  Junk bond funds were mixed to higher. 

Alerian MLP Index   ---   YTD



Dow Jones REIT Index   ---   YTD



10-Year Treasury Yield Index   ---   YTD




While off their best levels of the day, commodities, such as oil & gold, had a very good day & gold's YTD chart looks very pretty.

CLZ10.NYM

...Crude Oil Dec 10

...82.42

.... 0.73

(0.9%)

GCV10.CMX

...Gold Oct 10

......1,341.10..

16.70  (1.3%)

$$ Gold Super Cycle $$ 

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GLD   (ETF)   ---   YTD

Photo:  Bloomberg


$10B of 5-year Treasury Inflation Protected Securities (TIPS) were sold at a negative yield for the first time on bets the Federal Reserve will be successful in halting deflation.  The securities drew a yield of negative 0.55%.  Conventional Treasuries rallied amid speculation about the amount of debt the Fed may purchase to spur the economy in a strategy called quantitative easing.  Holders of TIPS receive an adjustment to the principal value of their securities equal to the change in the consumer price index, in addition to a fixed rate of interest that is smaller than the interest paid to a holder of conventional debt. The difference between is known as the breakeven rate.  The fixed payment on 5-year TIPS, known as the real yield, has been pushed below zero because the increase in the consumer price index is greater than the yield on regular 5-year US notes, which has fallen along with other Treasury yields.  The yield on the 10 year Treasury bond fell only 1 basis point to to 2.55%, above its earlier level.  The low yields on Treasuries are bringing strange occurrences which are not good for the stock markets.


Treasury Draws Negative Yield for First Time During TIPS Sale

BONDS

U.S. 3-month		0.11%
U.S. 2-year		0.36%
U.S. 10-year		2.55%

RadioShack (RSH) reported Q3 net income rose 23% boosted by sales of smartphones & their accessories, but the company's eroding gross margin received greater attention.  EPS was 37¢ in the qtr, up from 30¢ last year ago & ahead of forecasted 35¢.  Revenue rose a slight 2% to $1.05B.  Revenue in stores open at least one year rose 6.2%.  But it reported gross margin declined in Q3 because Smartphones such as the iPhone, which RadioShack recently began carrying, have lower margins than other products.  The stock fell 2.06 or 9% & has been trading sideways for the last year.

RadioShack 3rd-quarter net income rises 23 percentAP


Radio Shack   ---   2 years





Stocks had a fairly good day on sluggish kind of volume.  Dow had been up more than 110 at its high but had to settle for a mediocre gain, still below its yearly high.  Demand is strong for the high yielders as for the low yields Treasuries.  The negative yield on the Treasury TIPS indicates many investors are not believers in the stock market rally.

Dow Jones Industrials   ---   YTD

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