Friday, June 17, 2011

Dow higher on hopes of another Greek bailout

Stocks started with gains & after stuttering at midday, late day buying pushed Dow to close near its highs giving it its first (modest) gain in 7 weeks. It barely closed above 12K. Dow rose 42, advancers ahead of decliners 3-2 but NAZ fell 7. Bank stocks were higher, but the Financial Index continues to have a cheerless chart.

S&P 500 Financials Sector Index

Value	200.82
Change	1.83 (0.9%)

The MLP index had another bad day while the REIT index was up 2+ to the 236s. Junk bond funds were a little higher, following selling this month, & Treasuries were little changed. The yield on the 10 year Treasury is near its lowest levels this year. Crude oil fell to near its lows for the year while gold has been strong (see the chart below), less than $40 below its record highs reached 2 months ago.

Alerian MLP Index

Value	353.49
Change	-2.36 (-0.7%)

Below are how major markets fared today & big movers this week.

Treasury yields:

U.S. 3-month	0.025%
U.S. 2-year	0.379%
U.S. 10-year	2.942%

CLN11.NYM

...Crude Oil Jul 11...

93.16

...

1.80

(1.9%)

Angela Merkel, the German Chancellor, retreated from German demands that bondholders be forced to shoulder a “substantial” share of a Greek rescue. Instead she is willing to work with the ECB to avoid disrupting markets. “We would like to have a participation of private creditors on a voluntary basis,” Merkel said. This “should be worked out jointly with the ECB and there shouldn’t be any dispute with the ECB on this.” Attention now shifts to Greece after the Prime Minister overhauled his Cabinet to try & secure passage of austerity measures needed for a bailout. European finance ministers meet on Greece in Luxembourg on Jun 19-20, followed by a Brussels summit of European Union leaders on Jun 23-24 to decide what to do about refinancing Greek debts. The drama plays on.

Merkel Agrees to Voluntary Bondholder Role

High unemployment remains a high priority problem in the US. Workers on companies' payrolls shrank in more than half the states in May, even though the jobless rates in many places continued to improve, according to the Labor Dept. The number working for businesses outside of farming decreased in 27 states & Washington, DC & increased in 22 states. The jobless rates in 43 states & DC dropped from May 2010, & rose in only 4 states. In May, the unemployment rates in 24 states fell from the previous month, while those in 13 states & DC rose. Nevada continued to register the highest unemployment rate, at 12.1%, followed by California at 11.7%.

Payrolls shrink, jobless rates drop in many states- Reuters

The average price for gas at the pump inched down to under $3.68. While crude oil prices are retreating, this measure will probably be soft.

Source: AAA

Pandora (P) was up 14¢ but LinkIn (LNKD) fell $2.74, 2 very hot IPOs. When IPOs do well, speculative juices are running high, not now. Dow manged to record a gain this week, but it was a struggle & hardly convincing. MLPs are going nowhere & next week, they will likely test the May low for the index. Europe will find some way to bailout out Greece debt holders, but Scotch tape will be used (not a serious, long term fix). Now that Anthony Weiner has resigned, congress can get back to real business, making budget cuts, so the debt ceiling can be raised. By my reckoning, there are only about 40 days left. Stock markets remain on defense & if the MLP index support does not hold at 350, this could be a negative sign for the overall markets.