Wednesday, March 9, 2011

Markets slip on higher oil prices

Dow fell 6, decliners ahead of advancers 5-4 & NAZ dropped 14. Bank stocks led the limited amount of selling

S&P 500 FINANCIALS INDEX

Value	224.80
Change	-0.77 (-0.3%)

The Alerian MLP Index fell 3 to the 373s, down over 8 this month, & the REIT index was off a fraction in the 234s after yesterday's big rise. Junk bond funds were generally higher on continued strong demand for new issues (see below). Treasuries were little changed with the yield on the 10 year Treasury bond slipping 1½ basis points to 3.53%.

Treasury yields:

U.S. 3-month		0.09%
U.S. 2-year		0.69%
U.S. 10-year		3.53%

JPMorgan Chase Capital XVI (AMJ)

Oil extended gains after the Energy Dept said fuel stockpiles declined more than forecast. Oil above $100 was considered bad for the economy, now $105 is accepted. Hmmm! Gold was higher, just below its highs in the 1440s earlier this week.

CLJ11.NYM

...Crude Oil Apr 11

...105.18

...

0.16

(0.2%)

Gold

1431.40

+4.20

+0.29%

Gold Super Cycle Link! Click Here

Inventories for wholesalers in the US rose 1.1% in Jan, more than forecast, as distributors tried to keep pace with rising sales. This followed a revised 1.3% gain in Dec that was bigger than initially estimated according to the Commerce Dept. Sales jumped 3.4% in Jan, led by cars, computers & commodities. The amount of goods in inventory compared with purchases matched a record low in Jan, pointing to further gains in manufacturing which has been the mainstay of the expansion. The rise in wholesale inventories signals that imports in Jan probably also increased. At the current sales pace, wholesalers had enough goods on hand to last 1.13 months in Jan, matching the record low that was reached in Apr 2010. This is viewed as a sign of strength in the economy.,

U.S. Wholesale Inventories Rose 1.1% in January, Sales Climbed

American Airlines (AMR), the 3rd- largest US carrier, plans to sell $1B of debt secured by routes, takeoff & landing slots & rights to use space in airport terminals, The 5-year notes comes as junk bond borrowing costs are 8 basis points above their record lows & after jet-fuel prices have jumped 25% since the start of the year. AMR is taking advantage of a “hot high-yield market.” The extra yield demanded to own junk bonds instead of Treasuries narrowed 5 basis points to 464 basis points yesterday, according to the Bank of America Merrill Lynch U.S. High Yield Index. Absolute yields fell to 7.366% (barely above the record low of 7.285% reached on Feb 22). Best Buy (BBY), the world’s largest consumer-electronics retailer, & BP (BP) led bond sales of $12.7B yesterday, bringing the week’s total to a whopping $17.4, considerably above the $11.3B in the first 2 days of last week. High demand for junk bonds bringing record low yields is an imbalance that can not last.

American Airlines Plans Debt in ‘Hot’ Market: New Issue Alert

Stock markets eased back after more confusion about fighting in Libya. The country’s largest crude-processing plant was shut amid fighting between gov & rebels. While the facility hasn’t been damaged, employees have fled. Oil tanks at a nearby terminal were damaged by bombings today. This is ugly news, but investors are taking it in stride. MLPs have been weak this month. But after their phenomenal run in the last 2 years, they are entitled to profit taking. Speaking of a phenomenal run, Dow is beginning its 3rd year of a spectacular run (gaining more than 5500 points). The bulls are not ready to give up even with gloomy news from rising oil prices.