Monday, January 3, 2011

Rising markets continue in a new decade

Dow started off a new year & new decade with a triple digit gain to the highest levels since Sep 2008   Dow rose 119, advancers over decliners almost 4-1 & NAZ gained 47.  Banks are leading/joining in the rally taking the Financial Index to levels last seen in early May 2009.


Value 219.34 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   4.57  (2.1%)

MLPs are flying like the markets, up 3+ to the 366s (good enough for a new record). However, high prices reduce the index yield to below 6¼%.  The REIT index was also up 3+ but in the 227s it is merely near its 2010 highs.  Junk bond funds were not benefiting from rising stock markets, mixed to slightly higher.  Treasuries sold off, to raise funds used to buy stocks (with greater risk).  The yield on the 10 year Treasury bond rose 7 basis points to 3.37%.

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

Oil climbed above $92 to its highest since Oc 2008, spurred on by expectations economic recovery will boost energy demand & as market bulls set their sights on $100 a barrel.  Gold is even while stock & other commodities are in a rally mode.

BRENT CRUDE 95.93 +1.18 +1.25%
Gold 1421.00 -0.40 -0.03%

Gold Super Cycle Link! Click Here

Construction spending rose for a 3rd straight month in Nov, helped by another increase in housing & a record level for spending on federal building projects. The Commerce Dept says construction spending increased 0.4% following gains of 0.7% in Oct & 1.2% in Sep.  However even with the 3 straight monthly gains, building activity remains 33.2% below the all-time high hit in Mar 2006, when spending was being driven by a record boom in housing.  Lower construction spending is a key factor in continuing high unemployment rates.

Construction Spending in U.S. Climbed in November for Third Straight Month

Clorox (CLX), a Dividend Aristocrat, expects fiscal Q2 adjusted EPSs of 57-63¢, below expectations of 74¢. Clorox said Q2 sales will fall 3-4% from the year-ago period. "Slowing category consumption experienced in the company's fiscal first quarter continued to impact shipments into the second quarter," the company said. Including the impact of a goodwill impairment, CLX expects to report a Q2 loss from continuing operations of $1.15-1.25 a share giving GAAP earnings of a penny 11¢ a share. The stock fell over $2 & has not participated in the 2010 rally.

Clorox Cuts Top End of Annual Sales Forecast; Shares Drop in Early Trading

Clorox   ---   1 year

Rising stock markets brought out buyers for Apple (AAPL).  The stock shot up 7 to the 229s, yet another record.  Thurs, the Annual CES shows opens in Las Vegas where electronics companies will show off their products for the new year.  Some will be aimed at popular AAPL products like iPhone & IPad.  Consumers benefit from lower prices & more features but AAPL is vulnerable to this competition bringing lower growth rates & reduced profit margins.  AAPL market cap (2nd largest in the world) tops $300B. 

Apple's market cap tops $300 billionat Fortune

Apple   ---   1 year

The new decade is began on the right foot for most investors.  Risk embracing is back in order.  However junk bonds (stocks with only moderate yields these days) are not joining in the rally after slipping in Q4.  Everybody agrees that this will be a great year for stocks which raises flags for me.  Auto sales for Dec should be out by tomorrow & Fri will be the big jobs report which should show some encouragement but the unemployment rate will remain high, above 9½%.

Dow Jones Industrials   ---   2 weeks

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