Tuesday, October 12, 2010

Markets lower ahead of earnings announcements

Stocks opened weaker but have recovered some of the early losses. Dow is down 34 to 10,974, decliners ahead of advancers almost 2-1 but NAZ added 2. Bank stocks inched up taking the Financial Index higher.

S&P 500 FINANCIALS INDEX

Value	197.75
Change	0.33 (0.2%)

The Alerian MLP Index is catching its breath after gaining almost every day since the start of Sep. Today it fell 1 to the 348s, no big deal. The REIT index was flat in the 216s while junk bond funds were mixed at or very near their highest levels in 2 years. Treasuries keep climbing on expectations that the Federal Reserve will purchase more bonds. Unfortunately small business owners say money is available, their biggest problem is a lack of sales growth. The yield on the 10-year Treasury bond fell 1 basis point to 2.37%, nearing its record lows of about 2.1% at the start of last year.

Treasury yields

U.S. 3-month		0.11%
U.S. 2-year		0.35%
U.S. 10-year		2.37%

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

10-Year Treasury Yld Index --- 2 weeks

Oil fell because of the stronger dollar, but at 80+ it remains in the upper end of its trading range for the last 2 years. Gold is resting after climbing to new record heights.

CLX10.NYM

....Crude Oil Nov 10

....81.53

....

0.68 (0.8%)

GCV10.CMX

....Gold Oct 10

.......1,349.00

.....

4.30

(0.3%)

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Photo: Yahoo

Temporary pauses in foreclosures have expanded among major lenders with greater concerns about sloppy paperwork to support evictions of delinquent borrowers. Worries increase that a blanket ban on foreclosures could further hobble the economy, even making it "catastrophic." Dramatic nationwide action could unjustly impose losses on investors in the housing market. Investors who buy mortgage-backed securities free up money that can be used by lenders to make new loans. The market for mortgages nearly dried up during the height of the 2007-2009 financial crisis but the instruments have rallied since Mar 2009 as investors bet depressed prices more than account for losses that will come as homes backing bad loans are liquidated. Bank of America (BAC), the nation's largest mortgage servicer & a Dow stock, said on Fri it would temporarily halt foreclosures nationwide as it reviews its foreclosure processes. JPMorgan (JPM), another Dow stock, & Ally Financial (GMAC Mortgage) have announced partial moratoriums, but some other leading mortgage servicers have said they have no plans for a systematic halt.

Foreclosure halt could hit investors- Reuters

Pfizer (PFE), a Dow stock, will acquire King Pharmaceuticals (KG), a diversified specialty pharmaceutical discovery & clinical development company, for $3.6B in cash ($14.25 per share, representing a premium of 40% to King's previous closing price). The transaction was approved by both boards & is expected to be accretive to PFE adjusted diluted earnings per share by approximately 2¢ annually in 2011 & 2012, then 3-4¢ annually from 2013-2015. KG jumped 4 to 14.15 while PFE lost a couple of pennies.

Pfizer to Acquire King Pharmaceuticals, Inc.PR Newswire

King Pharmaceuticals --- 2 weeks

Pfizer --- 2 weeks

Little is happening in the markets but there is a lot of nervousness. Intel (INTC), a Dow stock, reports earnings after the close. The stock is flat. The foreclosure mess is growing, not a good sign for the markets.

Dow Jones Industrials --- 2 weeks