Wednesday, April 6, 2011

Higher markets on hopes in gov budget talks

Dow rose 32, advancers ahead of decliners less than 3-2 & NAZ was up 8. Bank stocks also joined in the rally after lagging for much of the last month. The recent rise for the Financial Index brought it back to where it was at the start of Mar.

S&P 500 FINANCIALS INDEX<

Value	224.62
Change	2.53 (1.1%)

The MLP index was up a fraction to 382 (383+ is a new record) & the REIT was down pennies to 237. Junk bond funds were mixed & Treasuries fell. The yield on the 10 year Treasury bond rose 6 basis points to 3.55%, near a 2 month high There is growing nervousness about higher interest rates on Treasuries. Oil is pushing $109 & the chart for gold shows it setting new records (green line) for a 2nd day.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.05%
U.S. 2-year		0.83%
U.S. 10-year		3.55%

CLK11.NYM

...Crude Oil May 11

...108.70

...

0.36 (0.3%)

Gas prices have risen for 15 days straight days & are getting closer to the all-time high of $4.11, reached in 2008. In the past 3 weeks alone, prices have jumped 4%. YTD, gas prices are up a whopping 20% & it's not even summer driving season yet, when prices tend to peak. The increase is largely being fueled by higher oil prices which have risen as oil producing nations in North Africa & the MidEast wrestle with chaos which has sparked a 24% spike in oil prices over the last 12 months.

Gas prices rise along with oil- CNNMoney

Source: AAA

Dennis Lockhart, President of the Federal Reserve (FED) Bank of Atlanta said he doesn’t expect the central bank to tighten US monetary policy by the end of the year with inflation still low & the economic recovery fragile. “I wouldn’t rule it out entirely, but at this stage I personally am not leaning in the direction of thinking that is absolutely required,” Lockhart said at an Atlanta conference. FED policy makers at a meeting last month differed over whether to begin removing record stimulus in 2011, according to minutes of the Mar 15 meeting. “A few participants indicated that economic conditions might warrant a move toward less-accommodative monetary policy this year; a few others noted that exceptional policy accommodation could be appropriate beyond 2011,” according to the minutes. “The rest of this year in the scheme of things is a fairly long time,” Lockhart said. “You have to remain somewhat flexible, and the recent history of macro events has reinforced that view with Japan and with the Middle East developments.”

Lockhart Not ‘Leaning’ to Fed Policy Tightening By Year-End

Sprint Nextel (S) & Verizon Wireless (VZ) cut the price of the Galaxy Tab tablet computer for the 2nd time this year, signaling more competition for the iPad from Apple (AAPL). The Tab, made by Samsung, now costs just $199.99 with a 2-year wireless-service contract. In Jan, Sprint cut the price to $299.99, while VZ reduced the price to $499.99. The cheapest iPad 2, which has Wi-Fi only, is priced at $499. AT&T, #2 carrier, has held the price for the Tab at $549.99 after slashing it $100 earlier this year. It's hoped the lower initial price & carrier promotion will help boost demand for the devices. Wi-Fi tablets connect to the Web using so-called hotspots available in bars, hotels & users’ homes. The 95% market share of this market that AAPL was proud of will fall (but in a rapidly growing market).

Samsung Tablet Price Cut to $200 by Carriers in Rising Challenge to IPad

In the last 3 weeks, Dow has only had 4 minor setbacks. Overall, it's up an incredible 850! The Alerian MLP Index has a similar story, but with a more modest rise of 13. Problems around the world do not bother the bulls. Today there is a lot of apprehension about a shutdown of the federal gov by week's end. Those who like less gov wouldn't mind but it will cause a lot of grief beyond gov workers losing pay. Now there's talk of hope regarding budget cuts in DC. Not sure what that means let alone if it will much to reduce massive deficits. This has been a sideways week for the markets, but they've been inching up to new multi year highs. The rest of the week should see more of the same.

Dow Industrials (INDU)