Thursday, March 31, 2011

Markets hesitate on last day of Q1

Dow lost 30, advancers ahead of decliners 3-2 & NAZ added 4. Bank stocks slid again although the Financial Index gained 5 in Q1. A stong qtr went out with a whisper.

S&P 500 FINANCIALS INDEX

Value	220.71
Change	-0.99 (-0.4%)

The Alerian MLP Index ended just 4 short of setting a new record high. The REIT index rose 1½ to the 236s & junk bond funds hardly budged. Treasuries also were flattish. The yield on the 10 year Treasury bond has remained close to 3.4% for 4 months. Oil soared to the highest since 2008 on the conflict in Libya. Gold touched 1430 but settled back in the PM, ending with another quarterly gain.

ALERIAN MLP INDEX

Value	379.90
Change	1.72 (0.5%)

Treasury yields:

U.S. 3-month		0.09%
U.S. 2-year		0.78%
U.S. 10-year		3.45%

CLK11.NYM

...Crude Oil May 11

..106.64 ...

...

2.37 (2.8%)

GCJ11.CMX

.....Gold Apr 11

.......1,435.00

...

11.20

(0.8%)

The former finance arm of General Motors (GM) is preparing an IPO as it seeks to repay billions in gov aid received during the financial crisis. Ally Financial (formerly GMAC) said the IPO could raise up to $100M, but the actual offering will likely be larger. Ally will not receive any proceeds from the IPO. The Treasury owns 74% of the stock & will likely be selling some of it shares. Ally makes loans to GM & Chrysler customers & finances dealer inventories. In total, it received $17.2B in gov support & has returned $4.9B thru div payments & trust preferred securities sold earlier this month. Ally said it financed 10% of new cars purchased last year & posted a profit of $1.1B, compared to a loss of $10.3B in 2009. Revenue rose to $7.9B from $6.5B. Markets are clearly more wiling to tolerate risk.

Ally, former GM finance arm, files for IPO- AP

Apple (AAPL) remains the darling of many investors. It gained in Q1, but has had a choppy time of it in the last 2 months. I'm waiting to hear if they are having supply issues from Japan as are other major electronics companies.

Apple Inc. (AAPL)

This has been the best qtr for stocks in 13 years. Dow gained 743, hardly chump change after gaining 5K off its lows. MLPs had a similar story. The MLP index added 15 & it started from record levels. REITs & junk bond funds were up around 5%. However while all this was happening, gold also managed a gain, even if it was only modest one. It started from record levels & has an impressive long term track record that few stocks can match. The US recovery seems to be progressing well although the QE2 program of the FED only has 3 months to run, after which rates are expected to rise. The housing depression continues which is limiting any progress in the unemployment picture. As long as all stories are good (or at least good enough), markets will rise. Maybe even gold.