Monday, December 20, 2010

Markets slip on European debt worries

Stocks are meandering again (as they have for a week).  The Dow fell 41, decliners over advancers 5-4 & NAZ was off 2.  Bank stocks inched up.


Value 209.27 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   0.54  (0.3%)

The Alerian MLP Index fell another fraction into the 349s & down more than 10 from its interim high last week.  But the REIT index rallied, up almost 2 to the 216s (still sideways for much of the year).  Junk bond funds eased back 1% & are trading 5-10% off recent yearly highs.  Treasuries rose for a 3rd day in the longest winning streak this month as the Federal Reserve prepared to purchase up to $17B, the biggest amount in a single day. The yield on the 10 year Treasury bond fell 6 basis points to 3.27%.

Treasury yields:

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

Alerian MLP Index   ---   2 weeks

Dow Jones REIT Index   ---   2 weeks

10-Year Treasury Yield Index   ---   2 weeks

Crude oil futures extended declines while gold found a few buyers. 

CLF11.NYM...Crude Oil Jan......87.36 ...Down 0.66  (0.8%)

GCZ10.CMX...Gold Dec 10...1,380.80 ...Up 2.20  (0.2%)

Gold Super Cycle Link! Click Here

Boeing Increases 777 Output Plans for Second Time

Photo:   Bloomberg

Boeing (BA), a Dow stock, will again increase production rate for its 777 aircraft from strong customer demand.  The output will be boosted to 25 in Q1 of 2013. In Mar it announced plans to increase production to 21 planes per qtr (from 15) starting in the middle of next year.  United Airlines (UAL) first placed the 777 into service in 1995 & there have been 907 deliveries.  Boeing said it has a backlog of more than 250 777s & that suppliers are prepared for its production increases.  The stock fell 1.83 after trading sideways for most of 2010.

Boeing Increases 777 Output Plans for Second Time

Boeing   ---   2 years

Sara Lee (SLE) said talks to sell itself to JBS SA, Brazilian meat processor, have have stalled over price.  SLE, the maker of Sara Lee cakes, Jimmy Dean foods & Ball Park hotdogs, recently rejected a takeover offer from JBS because the price too low.  SLE is considering other options & hasn’t given JBS a specific price at which it would sell after talks with JBS, the world’s largest meat-processing company, have been ongoing for several months.  SLE, with sales more than $10B, has decided to sell other divisions, such as the North American bakery unit, to concentrate on its faster-growing coffee & meats businesses.  The stock was up 29¢ following a nice run in recent months. 

Sara Lee Talks With JBS on Sale Said to Hit Price Snag

Sara Lee   ---   3 months

Stocks are drifting lower on greater European debt concerns.  Buying Treasuries by the Federal Reserve is reducing their yields, but this might be only temporary.  There is not a lot going on in the financial markets.  Besides Europe, the US & South Korea are holding joint naval exercises which have the potential to excite North Korea (always unpredictable).  Weakness in MLPs at this stage is nothing more than ordinary profit taking after 2 outstanding years.  I just posted a review on MLPs & a forecast for next year at SeekingAlpha.

Dow Jones Industrials   ---   2 weeks

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