Thursday, June 2, 2011

Markets sag ahead of unemployment report

Dow continued the trend of lower prices at overseas markets. It struggled to get into the black, but sellers carried the day. Dow fell 41, decliners just ahead of advancers & NAZ was up 4. Banks stocks bounced off their oversold lows, allowing the Financial Index to post a gain. But this should only be considered technical.

S&P 500 FINANCIALS INDEX

Value	205.92
Change	0.26 (0.1%)

The Alerian MLP Index has been on a plateau for almost a month after underperforming the Dow all year. It's down a fraction YTD at the same time Dow is still up 700 (thanks to the rise in Q1). The REIT fell 1½ to the 341s & is down 9 from its recent yearly high. Junk bond funds were mixed at the lofty levels (with low yields). Treasuries backed off, hurt after yields on the 10 year Treasury fell below 3% yesterday & a possible bailout for Greece. Oil rose as the dollar weakened after Moody’s said it may place the US gov rating under review for possible downgrade. Gold fell the most in 4 weeks as the € climbed, eroding demand for the precious metal as a haven asset.

ALERIAN MLP INDEX

Value	363.06
Change	-0.39 (-0.1%)

Treasury yields:

U.S. 3-month	0.036%
U.S. 2-year	0.457%
U.S. 10-year	3.026%

CLN11.NYM

...Crude Oil Jul 11

...100.57

...

0.28

(03%)

U.S. Govt May Be Cut by Moody’s If No Progress on Debt Limit

Photo: Bloomberg

Moody's warned the US gov that it could lose its sterling credit rating if Congress & the administration don't reach an agreement to raise the nation's borrowing limit, saying if the parties fail to make progress soon, it would put the US rating under review for a possible downgrade. That's because there's a "very small but rising risk" that the gov will default on its debts. Moody's warned the gov could also face a downgrade if it fails to come up with a plan to control the country's rising debt. The gov hit its $14.3T borrowing limit on May 16. The warnings will have ugly consequences if the pols in DC don't make progress soon on raising the debt ceiling.

Moody’s Says U.S. May Be Cut If No Debt Limit Progres

Goldman Sachs was subpoenaed by the Manhattan District Attorney's office over the investment bank's activities leading up to the financial crisis. GS has been watched by lawmakers & regulators since marketing risky investments that bet on the housing market's success just before the mortgage meltdown. Simultaneously the bank reaped billions of dollars from its own bets that the housing market would collapse. Those gains have also made it the target of intense media scrutiny & public outrage. The subpoena follows the Apr release of a 639-page Senate report that showed Goldman had steered investors toward mortgage securities it knew would likely fail. The report found that GS marketed 4 sets of complex mortgage securities to banks & other investors & then failed to tell the banks & investors that the securities were very risky, while secretly betting against the investors' positions. GS has been under pressure for months, this legal setback hurts the credibility of all banks. The stock fell 1.79 to the 134s & from the 170s at the start of this year.

Goldman Said to Get Subpoena From New York Prosecutor

Goldman Sachs Group, Inc. (The) (GS)

The decline for gas prices at the pump has stopped & is poised to start rising with oil over $100.

	Regular	Mid	Premium	Diesel	85	**E85 MPG/BTU adjusted price
Current Avg.	$3.784	$3.923	$4.049	$4.007	$3.242	$4.267
Yesterday Avg.	$3.775	$3.917	$4.045	$4.008	$3.240	$4.264
Week Ago Avg.	$3.813	$3.952	$4.080	$4.032	$3.257	$4.287
Month Ago Avg.	$3.967	$4.104	$4.233	$4.161	$3.318	$4.367
Year Ago Avg.	$2.723	$2.891	$2.995	$2.998	$2.181	$2.870

Source: AAA

Groupon filed for an IPO of $750M, another social networking (internet) company that will easily sell those shares. This is considered to be "hotly anticipated" which makes me think of the word "speculation." IPOs for sexy companies are doing well but others are having a tougher time selling their shares. Markets remain weak, to say the least, ahead of the big jobs report which will set the pace for trading tomorrow. Dow is down 560 in May & early Jun, a far cry what the expects were saying 6 months ago when they were falling all over themselves raising economic forecasts. Now Greek debt & US debt are 2 main obstacles.