Markets inch higher after a weak jobless report

Stocks started lower on jobless data & a widening trade gap, but they are struggling to get back to break even.  Dow was up 6, advancers over decliners 3-2 & NAZ was up 2.  Bank stocks are leaders & they were down taking the Financial Index significantly below 200 (which has not meant a lot this year). 

S&P 500 FINANCIALS INDEX

Value	197.20
Change	-2.70   (-1.4%)

The Alerian MLP Index is up another fraction in the 351s to yet another record.  In Sep & Oct, the index has only had 4 down days, collectively a loss of only 3.42 (1%).  The REIT index was also up a fraction as investors crave higher yielding instruments.  Junk bond funds rose to generally their highest levels in more than 2 years. The 10-year Treasury yield was flattish near the highest in more than a week. PIMCO., which runs the world’s biggest bond fund, said it sold US debt, betting a 2nd round of buys by the Federal Reserve (called quantitative easing) would have limited effects.

Treasury yields:

U.S. 3-month		0.13%
U.S. 2-year		0.37%
U.S. 10-year		2.43%

Alerian MLP Index   ---   2 weeks



Dow Jones REIT Index   ---   2 weeks



10-Year Treasury Yld Index   ---   2 weeks




Oil as little changed while gold kept on its surging ways.  Gold climbed to a record for a 2nd day as a weaker dollar spurred demand for an alternative investment.  The € is almost $1.41, up more than 20¢ from its lows in May!

CLX10.NYM

...Crude Oil Nov 10

......83.15

.... 0.14

(0.2%)

GCV10.CMX...

Gold Oct 10

..........1,377.30

.... 7.80

(0.6%)

Gold Super Cycle Link! Click Here

Photo:  Bloomberg


New jobless claims rose last week, hardening the view the central bank will pump more money into the economy.  Initial claims for unemployment benefits rose to a higher-than-expected 462K according to the Labor Dept (compared with  expectations of 445K).  The number of unemployed continuing to collect insurance benefits fell 112K to 4.4M, the lowest level in almost 2 years.  The US growth outlook has darkened significantly & the Federal Reserve is expected to embark on a fresh round of asset purchases to prop up the economy while the data continues at dreary levels.  Weekly jobless claims haven't been able to break thru 450K in a meaningful way, necessary to reduce the nagging high unemployment rates.

Initial Jobless Claims in U.S. Rose 13,000 Last Week to 462,000


Jobless claims - 1 year




# receiving extended benefits - 1 year

Photo:  Bloomberg

The US trade deficit widened sharply in Aug, reflecting a surge in imports of consumer products as businesses restocked their shelves in hopes of a pickup in consumer demand.  The deficit with China climbed to an all-time high which will increase pressure for a tougher line on trade issues including China's tightly controlled currency.  The Commerce Dept said the deficit in Aug increased 8.8% to $46.3B. Exports edged up a slight 0.2% but this increase was swamped by a 2.1% jump in imports.  The trade deficit is running at an annual rate of $502.5B YTD, up 34% from the $374.9B deficit for all of 2009 (which had been the smallest imbalance since 2003). In Q2, the surge in imports swamped the rise in exports. Trade was the biggest drag on the economy during the spring, subtracting 3.5 percentage points from growth. As a result GDP grew at just 1.7% in Q2, down from growth of 3.7% in Q1.  While trade is expected to be less of a drag on GDP in Q3, the bigger-than-expected Aug deficit indicates that GDP growth for Q3 will remain at an anemic pace below 2% (not enough to reduce the high unemployment rate).


U.S. Trade Gap Climbs More Than Forecast on Higher Imports


Trade gap -1 year





Imports - 1 year





Weaker economic data hasn't bothered the markets very much, although gold & MLPs continue to surge ahead.  MLPs have been red hot in the last 6 weeks, rising almost every day.  Fans are happy but this can't last & sometimes these runs ends violently.  Meanwhile the Dow needs only about another 100 to hit a new high for 2010.


Dow Jones Industrials   ---   2 weeks

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