Friday, June 3, 2011

Markets decline for 5 straight weeks

Stocks began the day lower & continued dropping. Dow fell 97 (closing nearer the low than the high), decliners over advancers 2-1 & NAZ was 40 lower. Bank stocks, as market leaders, fell to a new 2011 low for the Financial Index.

S&P 500 FINANCIALS INDEX

Value	204.60
Change	-1.39 (-0.7%)

The MLP index was off a fraction in the 362s, barely down YTD, but the REIT index added a fraction to 242 (8 below the 2011 high). Junk bond funds were lower & Treasuries gained, taking the yield on the benchmark 10 year Treasury to under the magic 3.0%. Oil rose on weak economic data, good enough to remain over $100 a barrel. God climbed, as shown by the green line in the chart below, to a one month high.

ALERIAN MLP INDEX

Value	362.75
Change	-0.31 (-0.1%)

Treasury yields:

U.S. 3-month	0.030%
U.S. 2-year	0.429%
U.S. 10-year	2.997%

CLN11.NYM

...Crude Oil Jul 11

...100.63

...

0.23 (0.2%)

Greece is ready to receive the next installment of its bailout, & will likely get further rescue loans to prevent it from defaulting on its massive debts according to, European officials. Debt inspectors from the European Union & IMF said Greece should receive the next €12B of its existing €110B bailout as long as additional austerity & privatization measures are deemed sufficient. Greece also had to accept unprecedented outside interference in the way it runs its gov. Jean-Claude Juncker, chair of the group of 17 eurozone finance ministers, said he expected Greece to get additional help, on top of the existing rescue loans, as long as it fulfills its promises. "I expect the eurogroup to agree on additional financing to be provided to Greece, under of course strict conditionality," Juncker said following a meeting with Greek Prime Minister George Papandreou. Juncker also said that private creditors, such as banks & investment funds, will be asked to share some of the burden of giving Greece more time to get its economy back in track This means solving today's problems today & tomorrow will take care of itself.

Greece to Get Next Aid Payment as EU Plans New Bailout

Walgreens, a Dividend Aristocrat, had May sales of $6.08B, up 7.0% from the prior year. Total front-end sales increased 5.5%, while comparable store front-end sales increased 3.6%. Customer traffic in comparable stores increased 1.6% & basket size increased 2.0%. Prescriptions filled at comparable stores increased 7.1%. May pharmacy sales increased 7.8% & accounted for 64.4% of total sales. Sales in comparable stores (those open at least a year) increased 5.6%.

Sales for Q3 of fiscal 2011 were $18.38B, up 6.8% from $17.2B last year. Comparable store sales for Q3 increased 4.1%, while front-end comparable store sales increased 3.9%. Prescriptions filled at comparable stores increased 4.5% in Q3 & comparable pharmacy sales increased 4.2%. There are a lot of numbers, but, generally, up is good although the stock fell 6¢ (in a down market).

Walgreens May Sales Increase 7.0 PercentBusiness Wire

Walgreen Co. (WAG)

As predicted, gas prices at the pump are inching up again.

	Regular	Mid	Premium	Diesel	85	**E85 MPG/BTU adjusted price
Current Avg.	$3.789	$3.933	$4.061	$4.005	$3.244	$4.269
Yesterday Avg.	$3.784	$3.923	$4.049	$4.007	$3.242	$4.267
Week Ago Avg.	$3.809	$3.952	$4.078	$4.025	$3.247	$4.273
Month Ago Avg.	$3.982	$4.122	$4.252	$4.166	$3.347	$4.405
Year Ago Avg.	$2.716	$2.884	$2.988	$2.994	$2.195	$2.888

Source: AAA

Dow dropped almost 300 this week & is down 660 since the start of May. For the technical guys, the Dow is getting near the 200 day moving average, a floor of support which the bulls expect to hold. There is no way around the jobs report today, it was disappointing & we may not have seen the full impact if some traders started their weekends early. It looks like Greece will muddle by & not be allowed to default. But this is not a long term solution. Portugal & Ireland are also on the ropes. Most importantly, the US economy is not responding well after the billions thrown at it between the QE bond buying programs & extra money approved by congress 2 years ago. The chart above for the Financial Index shows a dismal run for stocks that were supposed to be extending their rebounds. Not so! These markets are in deep trouble.