Thursday, December 30, 2010

Markets slosh around on mixed economic data

Dow dropped 15,  advancers barely ahead of decliners & NAZ fell 3.  Bank stocks were also a little lower.  Economic data reported got very little attention today.


Value214.32One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change  -0.76  (-0.4%)

The Alerian MLP Index fell back in the PM, but still had a decent gain of 2½ to the 363s (only 2 below the record reached last month).  On this slow day, the REIT index was down a fraction in the 224s & junk bond funds were slightly lower.  The yield on the 10 year Treasury bond rose 3 basis points to 3.37%, remaining one percentage point above its low at the start of Q4.

Treasury Yields:

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

Alerian MLP Index   ---   YTD

Dow Jones REIT Index   ---   YTD

10-Year Treasury Yield Index   ---   YTD

Energy prices dropped after the gov said oil & natural gas supplies fell less than expected last week.  Gold fell for the first time this week on investor sales following this year’s rally

CLG11.NYM...Crude Oil Feb 11...89.60 ....Down 1.52  (1.7%)

GCF11.CMX...Gold Jan 11.......1,405.00 ...Down 8.10  (0.6%)

*** Gold Super Cycle ***  

Corp bond sales worldwide topped $3T for a 2nd straight year, led by the highest-ever issuance of junk-rated debt, as borrowers locked in the lowest yields on record.  Companies sold $287B of debt in the US, smashing the previous record of $163B in 2009. Signs the global economic recovery is gaining strength & encouraged investors to lend money to borrowers at lower interest rates, allowing Johnson & Johnson (JNJ), a Dividend Aristocrat, with a AAA credit rating to sell bonds with record-low coupons.  Yields on investment-grade corp bonds worldwide fell to an average of 3.36% in Oct, the lowest level from data that began in 1996. Yields dropped from last year’s high of 7.41% in Mar 2009, translating into savings for the average borrower of $4M annually for every $100M of bonds sold.  Interesting that investors are willing to lend record amounts of money at lower & lower interest rates.  Risk is accepted & tolerated.   

GE Leads $3 Trillion in Company Bond Sales as Yields Fall

In Dec US businesses expanded at the fastest pace in 2 decades, adding to evidence the world’s largest economy is accelerating heading into 2011.The Institute for Supply Management-Chicago said its business barometer rose to 68.6 this month, exceeding the most optimistic forecast of 63.7, to the highest level since Jul 1988. Figures greater than 50 signal expansion. Gains in business investment on new equipment & growing exports to emerging economies is keeping factories churning in the coming year, contributing to the recovery. Reports showing consumer spending is also picking up mean retailers will need to restock shelves, giving manufacturing a further lift.

Business Activity in U.S. Grows at Fastest Pace in Two Decades

Next week will be the annual CES show in Las Vegas to show off electronic products for the new year.  In computers, tablets are the hot new product.  Acer (a computer company in Taiwan) expects 20M tablets (computers) will be sold out of a computer market which exceeds 300M.  The iPad version II will be out in 2 months & Apple (AAPL) is already pumping the publicity machine.  But this time around there will be a ton of competition.  Andriod from Google (GOOG), going against iPhone, is also being increasingly popular.  AAPL is riding high, although off 1½ today from its record high (reached yesterday).  A new year will bring new charts for these companies:

Apple   ---   YTD

Google   ---   YTD

NYSE floor volume was 0.5B, like previous days.  The jobless figures did not bring out buyers, with such low volume it's difficult to make sense out of any moves in the markets,.  The MLP index slipped a point in the PM, it's entitled all considered.  Markets will be open tomorrow for those who need to make last minute adjustments to their portfolios.  Dow is up more than 1100 in 2010, not too shabby following its spectacular run in 2009.

Dow Jones Industrials   ---   YTD

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