Tuesday, June 7, 2011

Markets recover on oversold rally

Stocks started strong with the Dow up 64, advancers ahead of decliners 3-1 & NAZ was up 11. Bank stocks are leading the rebound, but not convincingly. The Financial Index has dropped about 16 in the last month.

S&P 500 FINANCIALS INDEX

Value	202.30
Change	1.77 (0.9%)

MLPs are not participating in today's rally. The index is down a smidgen to 357 & may have to test the 350 low again. The REIT index rose 3½ to the 242s & junk bond funds were a little higher. Treasuries were weak, with the yield on the 10 year Treasury rising above 3% ahead of 3 auctions this week. Oil fell to a 2-week low in on speculation that OPEC may raise output quotas in Vienna tomorrow & increase output targets to help replace missing supplies from Libya. OPEC is expected to raise output quotas by 1.5M barrels a day. Gold is little changed, remaining at the highest levels since it peaked at 1577 in early May.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month	0.036%
U.S. 2-year	0.429%
U.S. 10-year	3.037%

CLN11.NYM

....Crude Oil Jul 11

...98.74

...

0.32

(0.3%)

GCM11.CMX

...Gold Jun 11.....

1,545.30

...

1.20

(0.1%)

European countries must decide how to plug Greece's potential funding gaps next year before the IMF releases its next batch of loans. EU leaders have "hard nuts to crack" at an EU summit in late Jun, agreeing on additional rescue support if needed, before the IMF would release its part of a €12B ($18B) Jul installment (part of last year's €110B bailout package). The initial rescue loan agreement had predicted Greece would be able to borrow in the markets for part of its funding needs next year, but high interest rates mean that is highly unlikely. As a result, it's expected that Greece will need extra help beyond the current package of rescue loans. Last week, debt monitors from the EU & IMF said Greece should receive the €12B installment in early Jul as long as additional austerity & privatization measures are deemed sufficient. A final decision is to be taken by the IMF board & the eurogroup in meetings later this month. This is just one of many enormous problems weighing on the stock markets.

IMF says EU faces tough decisions on Greece AP

Job openings in the US decreased in Apr, the first time in 3 months, showing companies started to lose confidence in the expansion’s durability. The number of positions waiting to be filled fell by 151K to 2.97M, the fewest since Jan according to the Labor Dept. The number of people hired & the number of workers fired also decreased. Job openings decreased 4.8% from a revised 3.12M in Mar. The loss in vacancies was led by a 91K decrease in professional & business services, followed by a 65K drop in education & health services. However the construction industry had a 28K increase in openings in Apr. Employers took on 3.97M workers in Apr, or 95K less than the previous month. Separations, which include retirements & those who left their jobs voluntarily, decreased to 3.74M from 3.8M in the prior month. The number of firings fell to 1.53M from 1.61M. In the 12 months ended in Apr, the economy created a net 1.2M jobs, representing about 47.7M hires, compared with about 46.4M separations. Compared with the 13.8M who were unemployed in Apr, today’s figures indicate there were 4.6 people vying for every opening, up from about 1.8 when the recession began in December 2007. These numbers are another grim reminder that the economy is only sputtering.

Job Openings Fall First Time in Three Months

There is not a lot happening in the markets. I highlighted 2 of the biggest clouds weighing on the markets, Greek debt problems & high unemployment. There are plenty of other problems such as raising the debt ceiling which seems to be going nowhere. MLPs keep muddling along as investors are demanding higher yields in recent weeks (although still low relative to historical standards. I had an article published at SeekingAlpha on Dividend Aristocrats with good growth records which is getting a favorable response:

http://seekingalpha.com/article/273575-6-dividend-aristocrats-with-excellent-growth-records