Thursday, March 17, 2011

Markets rebound on improving US economy

Stocks took off at the start of trading & remained near the highs all day. Dow gained 161, advancers almost 3-1 ahead of decliners & NAZ was up a more moderate 19. Bank stocks pretty much led the rally, but the Financial Index remains 15 below its recent highs & far below the record highs above 500 reached in 2007.

S&P 500 FINANCIALS INDEX

Value	216.49
Change	2.93 (1.4%)

The Alerian MLP Index jumped 4+ to the 367s, a big day for it, while the REIT index gained 2 to just under 228. Junk bond rose 1%. But Treasuries fell, pushing the 10-year bond yield up from the lowest level this year, on bets Group of Seven finance chiefs are preparing to hold a conference call on Japan’s earthquake which will reduce demand for a refuge. Oil prices shot up 3½%, climbing back above $100 after a crackdown on protesters in Bahrain & the US pressed for UN action against Libya's Gadhafi. Gold rose for a 2nd day to above $1400 as unrest in northern Africa & the Middle East spurred demand for a safe haven investment.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.07%
U.S. 2-year		0.58%
U.S. 10-year		3.24%

CLJ11.NYM

....Crude Oil Apr 11

...101.42

.....3.44

(3.5%)

GCH11.CMX

...Gold Mar 11

.......1,404.00

...

8.00

(0.6%)

The index of US leading indicators rose in Feb, the 8th consecutive gain. The Conference Board’s gauge of the outlook for the next 3-6 months increased 0.8% after rising 0.1% in Jan. Better employment prospects have increased consumer confidence alongside strengthening business investment & exports, indicating the economy will continue to grow even as housing remains depressed. 8 of the 10 indicators in the leading index contributed to the gain, led by a widening interest-rate spread. The spread, difference between the overnight federal funds rate & the yield on the 10-year Treasury note, boosted the index 0.4%.

Index of Leading Economic Indicators in the U.S. Rises 0.8%

Photo: Yahoo

FedEx (FDX) said slow-but-steady economic growth should produce strong earnings for the current qtr, even though fuel prices & Mideast turmoil remain big uncertainties. It was upbeat about fiscal Q4 & year ending in May, saying revenue should continue to improve & its freight unit should return to profitability after 6 money-losing qtrs. But Q3 earnings fell 3% as rising fuel prices & harsh winter weather offset a double-digit rise in revenue. FDX earned 73¢ in fiscal Q3 (ended in Feb) which compares with 76¢ a year earlier. Winter storms reduced net income by about 12¢. Snow & storms hurt operations for 27 days, nearly a third of the qtr. Fuel prices went up 30% from a year earlier & maintenance costs rose 19% as the company flew more aircraft. Revenue rose 11% to $9.66B, mostly due to better prices & heavier packages. For fiscal Q4, FDX is predicting EPS of $1.66-1.83, better than analysts' expectations of $1.66. For fiscal 2011, FDX forecasts EPS of $4.49-4.66. Excluding costs related to the integration of its freight unit & legal costs, it expects adjusted EPS of $4.83-5.00 verses $4.89 forecasted by analysts. The stock liked the news, rising 2.61 to almost 88.

FedEx gives positive 4Q outlook, shares jumpAP

FedEx Corporation (FDX)

Gas prices remain high at $3.55, not too far from the record $4.11 reached in 2008.

	Regular	Mid	Premium	Diesel	85	**E85 MPG/BTU adjusted price
Current Avg.	$3.553	$3.689	$3.820	$3.930	$2.995	$3.942
Yesterday Avg.	$3.556	$3.695	$3.826	$3.930	$3.000	$3.949
Week Ago Avg.	$3.524	$3.654	$3.784	$3.900	$2.959	$3.894
Month Ago Avg.	$3.126	$3.257	$3.384	$3.526	$2.698	$3.550
Year Ago Avg.	$2.787	$2.960	$3.067	$2.924	$2.361	$3.107

Source: AAA

Others were also calling this a relief rally. This had been an ugly week & bargain hunters saw opportunities in beaten up stocks. It's difficult to understand what's going on in Japan & how much success they are having in putting out the fires at the nuclear reactors. Waiting is not fun, tough to say what will happen in trading tomorrow. But MLPs had an excellent day. SeekingAlpha just published my article on how to receive dividends from MLPs:

http://seekingalpha.com/article/258816-owning-mlps-can-pay-dividends-a-look-at-tax-implications