Wednesday, February 2, 2011

Wobbly Dow after reaching 12,000

Stocks went nowhere today.  They ignored troubles in the rest of the world to reach 2½ year highs yesterday & needed a rest today.  Dow was up 1, decliners 5-4 ahead of advancers & NAZ was off 1.  Bank stocks also pulled back, taking the Financial Index lower.   


Value223.50One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   -2.01   (-0.9%)

The MLP index was up a fraction to the 374s, good enough for another new record.  The REIT index slipped a fraction in the 231s.  Junk bond funds were flat while Treasuries sold off despite turmoil in the Mideast & the Federal Reserve program for buying Treasuries.  The yield on the 10 year bond rose 5 basis points to 3.49%.  Longer term, the graph shows the yield has been essentially flat over the last 2 months, after rising one percentage point from near record lows in prior months.

Treasury yields:

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

Alerian MLP Index   ---   2 months

Dow Jones REIT Index   ---   2 months

10-Year Treasury Yield Index   ---   2 months

Oil did little, remaining near its recent highs.  But gold continues weak despite chaos in Egypt.  This is one of the rare times that safe haven qualities for gold are not bringing out buyers. 

CLH11.NYM...Crude Oil Mar 11...91.04 ...Up 0.27  (0.3%)

GCG11.CMX...Gold Feb 11...1,334.20 ...Down 5.40  (0.4%)

***Gold Super Cycle***  

The Treasury said it would keep its long-term borrowing at steady levels & warned that the federal debt limit of $14.29T could be reached as soon as Apr 5. Congress must to act to increase that figure.  The Treasury plans to sell $72B in long-term debt next week, consisting of $32B in 3-year notes on Feb 8, $24B in 10-year notes on Feb 9 & $16B in 30-year bonds on Feb 10. The Treasury expects the debt ceiling to be reached between Apr 5 & May 31 (compared to the range of Mar 31 to May 16 predicted early last month) & plans to keep its note & bond sales at “stable” levels in coming months.

U.S. to Sell $72 Billion in Debt as Limit Nears

Kimberley-Clark (KMB), a Dividend Aristocrat, will invest $250M by 2014 to build a plant & 2 distribution centers in Brazil.  The plant will produce tissue products & paper towels.  KMB reported earnings last week & raised the div to $2.80, providing a 4.3% yield.  The stock was down 54¢ after doing very little in the last year. 

Kimberly-Clark to Invest in Brazil, Build Plant, Valor Saysat Bloomberg

Kimberley-Clark   ---   1 year

Dow has had a steady rise over the last 2 months.  The only hiccup was last Fri from which it recovered very quickly.  But now that it has topped the 12K ceiling, it lacks strength.  Bulls are happy, this is the kind of chart they like to see, small & steady gains.  But it's also very overbought & that can't last. The ceiling for the Treasury could become a huge problems with only a few weeks left before borrowings are maxed out.  The 2 parties seem far apart, a deal may not be concluded until the last minute (literally).

Dow Jones Industrials   ---   2 months

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