Monday, June 6, 2011

Gloomy jobs data weighs on stocks

Dow fell 8, decliners ahead of advancers 5-2 & NAZ slipped 1. Bank stocks are having another bad day bringing the Financial Index to yet another 6 month low.

S&P 500 FINANCIALS INDEX

Value	2021.54
Change	-2.064 (-1.0%)

MLPs are losing fans. The index fell 3+ to the 359s. In the last month, it was only lower when it spiked down to 350 3 weeks ago. 350 is considered important by technical guys & the tracking fund (shown below) is sitting on its 200 day moving average. Not good. The REIT index fell 1+ to 240 while junk bond funds were a little higher. Treasuries fell, pushing 10-year yields above 3%, as the US prepared to sell $66B of notes & bonds this week. Oil dropped for a 2nd day, extending last week’s modest decline, on signs of a slowdown in demand as OPEC ministers arrived in Vienna to discuss production quotas. Uncertainties are raising gold prices, taking gold within $22 of its record highs reached a few weeks ago.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month	0.030%
U.S. 2-year	0.429%
U.S. 10-year	3.021%

CLN11.NYM

....Crude Oil Jul 11

...99.15

......

1.07

(1.1%)

GCM11.CMX

...Gold Jun 11..

...1,551.80

...

10.10

(0.7%)

Steve Jobs
Photo: Bloomberg

Steve Jobs, Apple CE), will return today in San Francisco to take the wraps off what investors hope will be the next source of growth for AAPL. He will unveil the iCloud, a Web-based service that lets consumers stream music they bought to any Apple device, pitting it against rivals Google (GOOG) & Amazon.com (AMZN). Expansion into cloud computing is seen as crucial if the company is to stay competitive with increasingly popular open-sourced software, such as Android from GOOG. AAPL has been busy wrapping up negotiations with major record labels to secure licenses for its iCloud service, which is also expected to include a revamped version of its little-known MobileMe storage service. The licenses will help Apple introduce scan-and-match technology that scans a user's hard drive and provides access to music found there from the company's own servers. AAPL fans, developers and analysts are hoping Jobs may have surprise up his sleeve since he typically takes the stage only for major events. The stock is up 1+ to the 344s ahead of any announcements after trading sideways in 2011.

Apple to Unveil ICloud to Deflect Google Android

Apple Inc. (AAPL)

Greek Prime Minister, George Papandreou, started a campaign to secure a new intl bailout by imposing years of austerity on a nation where economic mismanagement is common. Unease is growing within Papandreou's ranks about the consequences of waves of budget cuts demanded under successive deals with the European Union & IMF & this could turn into alarm after 80K Greeks crammed a central Athens square to vent their anger over the nation's dire state. Papandreou will present his plan to the political council of his party tomorrow & then send it to parliament. Intl lenders say the new bailout package, which would replace a €110B deal agreed only a year ago, depends on Greece keeping to its promises for further austerity & accelerated privatizations. While officials are playing down the chances of a default, creditors may be asked to buy new Greek bonds when old ones mature to help when refinancing debts. Confusion over how to help Greece continues.

Papandreou Faces Growing Backlash as Last EU Bailout Premier

State & local local govs are set to go on a record-breaking layoff binge when the new fiscal year starts next month. They are forecasted to shed 110K jobs in Q3, the first time the blood-letting has risen into the triple digits. In May, public employment shrunk by 29K jobs, mostly at the state & local level, while businesses created 83K jobs according to the Labor Dept. All told, the sector has lost 510K positions since its peak almost 3 years ago & cutting continues. States are planning to slash funds for education, social services & local govs, as well as downsize their payrolls even more, in the coming fiscal year. The bad news is that local govs are in even worse shape. Not only are they losing state aid, but they are finally feeling the fallout from the mortgage meltdown. Property tax assessments, a major funding source for municipalities, have only started to drop. Caught in a fiscal bind, local govs will have to reduce personnel expenses since it is the costliest part of their budgets & they've already slashed their programs & services. Gloomy unemployment figures reported on Fri, could be worse for the rest of the year.

State, local governments set to see record job cuts, layoffs CNNMoney

There is no dramatic new news, but the dreary data from the jobs report on Fri is keeping buyers away. Bank stock were hit harder. They have Greek debt issues to worry about along with plenty of domestic problems. MLPs, the darlings over the last 2 years, have lost their luster. They may need to offer higher yields to bring back buyers in a meaningful way. The AAPL conference will be unusually important to raise markets out of their lethargy.