Wednesday, June 29, 2011

Greek hopes push markets higher

Dow gained 72, advancers over decliners 5-2 & NAZ was up 11. Banks led the way today. The Financial Index is up 10 from its low 2 weeks ago. However bank earnings in Q2 maybe glum.

S&P 500 Financials Sector Index

Value	206.08
Change	4.23 (2.1%)

The MLP index had an excellent day, able to reach its highest level in a month, & the REIT index rose 2½ to over 240. Junk bond funds slid & Treasuries were lower with the yield on the 10 year Treasury rising over 3.1%. Oil was up on a favorable inventory report (lower investories). The swift rebound in oil means that motorists won't see as big of a discount at the gas pump as expected, after dropping to $3.54 yesterday. The chart below shows gold has been rising as investors are willing to accept more risk.

Alerian MLP Index

Value	370.91
Change	4.13 (1.1%)

Today's Market Update video below:

Treasury yields:

U.S. 3-month	0.015%
U.S. 2-year	0.465%
U.S. 10-year	3.109%

CLQ11.NYM

...Crude Oil Aug 11

...94.98

...

2.09

(2.3%)

S&P would cut the US debt rating to D, the lowest on its scale, in the event of a default after a failure to raise the debt limit. The US credit grade, following even a short-lived default after which the gov resumed making debt payments, would be determined by the company’s sovereign rating committee & would “be dependent on facts on the ground.” However, S&P said, “We believe the debt ceiling will be raised and the government won’t default, otherwise we wouldn’t have a AAA rating on the U.S. government.” S&P continued, “It’s evolving as we expected.”  The costs for insuring against default for one year have risen to 51 basis points as of yesterday, up from 24 basis points on May 16 (when the US reached its borrowing limit) The US would risk not winning back its top Aaa credit rating soon if the nation’s debt limit causes even a short-term default, Moody’s said earlier this month. S&P put the US gov on notice in Apr that it risks losing its top AAA rating unless there is a plan to reduce budget deficits & the national debt by 2013. There's little more than a month left to increase the debt ceiling & talks between the Reps & Dems are dead in the water.

S&P Would Cut U.S. Rating to Lowest on Default, Expects Debt-Limit Rise

HomeAway (AWAY), the vacation rental website, rose more than a half on its market debut. 8M shares were priced at $27, the top end of its previously announced range, raising $216M. The company offers fully furnished, privately owned homes, condos, villas & cabins that can be rented on a nightly, weekly or monthly basis. AWAY was founded in 2005 & has more than 560K paid vacation rental home listings in more than 145 countries but has been posting losses over the past few years.  AWAY will use the proceeds to redeem shares of preferred stock, issue dividends & for corporate purposes. The stock popped after it began trading & remained up $13, around $40 for the rest of the day (not too shabby for those who bought at the IPO price). Speculative juices are running high in the stock market.

HomeAway shares rise in market debutat Reuters

News Corp sold social media site Myspace for about $35M to online advertising company Specific Media. News Corp will retain a minority stake in the website that it purchased 6 years ago for $580. "There are many synergies between our companies as we are both focused on enhancing digital media experiences by fueling connections with relevance and interest," said Tim Vanderhook, CEO of Specific Media.  NWS was up 23¢.

News Corp. selling MySpace to Specific Media: WSJat MarketWatch

News Corporation (NWS)

Markets are feeling good. Dow is up 325 this week, bouncing off the 12K bottom area. But there are plenty of obstacles out there. The Greek debt crisis is getting the most attention & that is still iffy, at best, especially with a rebellious Greek population. There was one more reminder from S&P about the US needing to get its "debt" house in order. Meanwhile the economy is just sloshing around. Earnings season will start when Alcoa (AA), a Dow stock, releases earnings after the close on Jul 11. Markets this week are betting earnings will be great. We'll see if that optimism is justified.