Friday, May 6, 2011

Stock advances are trimmed on Greek debt worries

Dow rose 54 (but 120 off its AM highs), advancers still had an advantage at 2-1 over decliners & NAZ was up 12. Bank stocks had similar volatility, losing much of the AM advances.

S&P 500 FINANCIALS INDEX

Value	216.69
Change	0.72 (0.3%)

This was a rebound day for MLPs, but some of the enthusiasm was lost in the PM. At its high, the index reached almost 373. The REIT index pulled back 2 to the 242s. Junk bond funds were higher. Treasuries ended a little higher (buying on Greek debt worries) after falling in the AM trading. The yield on the 10 year Treasury bond was down a smidgen to under 3.16%, a 5 month low. Oil had its worst week (closing below the important $100 level) since it plunged in Dec 2008 from its record highs. Silver fell, capping the biggest weekly plunge on mounting sales by investors following increases in margin requirements at the Comex. Gold rebounded, halting a 3-day slide. The green line in the chart shows today's tading.

ALERIAN MLP INDEX

Value	371.00
Change	7.10 (1.9%)

Treasury yields:

U.S. 3-month		0.01%
U.S. 2-year		0.55%
U.S. 10-year		3.16%

CLM11.NYM

...Crude Oil Jun 11...

97.50

...

2.30 (2.3%)

Live 24 hours silver chart [ Kitco Inc. ]

Consumers used their credit cards more in Mar, marking only the 2nd increase in more than 2 years since the height of the financial crisis. The Federal Reserve said consumers increased their borrowing $6B in Mar. Consumers borrowed more to finance car loans for the 8th straight month & a category of borrowing that includes credit card use, rose for only the 2nd time since Aug 2008 The 3% overall increase pushed consumer borrowing to an annual level of $2.43T, just a 1.3% higher level than a nearly 4-year low of $2.39T hit in Sep. More frequent credit card purchases could be a sign that consumers are feeling more confident about the economy. However, when Apr data is released, it may show more credit card purchases were used to buy gas at the pump.

Consumer Credit in U.S. Increased $6 Billion on Auto Loans, Card Purchases

Greece denied a report that said it's considering abandoning the € after rumor caused the currency to tumble late on Fri. "The report on an imminent Greek exit from the eurozone, as well as being untrue, has been written with incomprehensible levity despite the fact that this has been repeatedly denied by the Greek gov, & the govs of other EU member stated," the Finance Ministry said. The report added that the eurozone's finance ministers were holding a secret crisis meeting Fri night to discuss the issue. "Such reports are a provocation, undermine efforts by Greece and the euro and serve speculative games," the ministry said. The € dropped late Fri to $1.447 from $1.4530 late Thurs after trading at $1.49+ on Wed, its highest level in 18 months. Eurozone officials are denying any meeting with the usual double talk statements. Last May, the Greek debt crisis led to significant selling of by stocks in an otherwise upward rally during 2010.

Euro Tumbles Most in a Year After Report Greece May Drop Common Currency

Price for gas at the pump remained at $3.98½ yesterday.

Source: AAA

Stocks trimmed gains & the € extended losses after a strong rise by stocks in the AM. This has been one tough week for stocks & especially commodities. Dow fell 170, similar to declines in early Mar & Apr. The MLP index started the week at 390 & finished at 371, one of its worst week ever! It suffered like all other securities but thoughts about changing the tax status of distributions brought on most of the selling. Memories of the selling in stocks last May are vivid. There are other problems to worry about in the US. Raising the debt ceiling has to be dealt with shortly & then working on a budget for FY2012, QE2 is winding down in a few weeks & high priced gas will suck enegy out of the economic recovery. May might not be a happy month for investors.