S&P 500 FINANCIALS INDEX
| Value | 222.49 | |
| Change | 3.66 (1.7%) |
The Alerian MLP Index rose almost 2 to top 370, another record high, while the REIT index was up 1+ to the 223s. Junk bond funds gained up to 1%. The Treasury had a successful auction of 10 year bonds today, the bid to cover ratio was over 3X (more than 3 times as many bids per bond sold). The yield on the 10 year Treasury bond settled back from AM trading to a modest rise of 1 basis point, taking it above 3.35%.
Treasury yields:
| U.S. 3-month | 0.15% | |
| U.S. 2-year | 0.59% | |
| U.S. 10-year | 3.35% |
Alerian MLP Index --- 1 year
Dow Jones REIT Index --- 1 year
10-Year Treasury Yield Index --- 1 year
Oil prices surged after a presidential panel investigating the Gulf oil spill said the oil industry & the gov need to do more to reduce the chances of another large-scale disaster (i.e. limit future drilling). Gold was barely higher & little changed (under 1400) in the last 2 months.
| CLG11.NYM | ...Crude Oil Feb 11 | ...91.80 | ... 0.69 | (0.8%) |
| GCF11.CMX | ....Gold Jan 11 | ......1,385.30 | ... 1.30 | (0.1%) |
**Gold Super Cycle**
The US economy ended last year on an encouraging note, with all parts of the country showing improvements. Factories produced more, shoppers spent more & companies hired more, pointing to a stronger economy in 2011 according to the Federal Reserve's (FED) survey of economic conditions just released. But, risks loom. Declining home prices & millions of foreclosures are depressing housing markets around the country. Companies are also paying more for materials including oil, food products, steel, textiles & chemicals, the survey noted. However competitive pressures prevented them from passing those increased costs on to customers in higher prices. Even though employers are slowly hiring more, workers are not winning bigger paychecks because of high unemployment. The FED will monitor inflation as it reviews its $600B Treasury bond-buying program. Chairman Bernanke said he is optimistic that the economy will strengthen this year even though it could take up to 5 years for unemployment to drop to a historically normal level of around 6%. These are the fundamentals in the markets that are taking them higher.
Fed: Economy Expanded on Manufacturing, Holiday Spending
The federal budget deficit narrowed slightly in Dec compared to the prior year, but the deficit for the entire year is still on pace to exceed $1T (the 3rd consecutive year of $1+T deficits). That's T as in trillion. The deficit was still an enormous $80B last month, down 12.4% from the previous Dec. In Q1 of the current budget year, the deficit totaled $371B, an improvement of 3.1% from the same period a year ago. Swell!! The tax-cut package signed last month should result in a much larger deficit while it helps boost economic growth. The estimated cost of the package is $858B, which will be added to deficits over the next 2 budget years.
Federal budget deficit narrows to $80B in December- AP
Markets finally went above the initial surge highs at the opening on Jan 3. All news is being treated as good news, a strong sign markets want to go higher. The nagging thought I have is when everybody agrees the bull run will continue, an unforeseen bump can upset the apple cart. That's what happened at the start of May last year, leading to the only nasty spill the markets have taken in 2 years. JPMorgan (JPM) & IBM (IBM), 2 Dow stocks, will report earnings this week.
Dow Jones Industrials --- 1 year
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