Wednesday, July 13, 2011

HIgher markets while gold reaches a new record

Dow rose 44 (120 below the AM highs), advancers were ahead of decliners 5-2 & NAZ was up 15. Bank stocks led the markets today in both directions, up & down. The implications involving another stimulus package weighed on the markets.

S&P 500 Financials Sector Index

Value	201.98
Change	0.33 (0.2%)

The indices for the MLPs & REITs slipped into the red by the finish. The REIT index dropped 2 to 246. Junk bond funds were mixed on cross currents in the financial markets, benefitting from a flight out of European debts. Treasuries also rose following a succesful offering of 10 year bonds at lunchtime. Oil climbed after an Energy Dept report showed a bigger-than-expected decline in inventories. While industrial countries are selling large amounts of oil, oil prices have been climbing from their lows last month.

Alerian MLP Index

Value	371.41
Change	-0.28 (-0.1%)

The latest daily market update below:

Treasury yields:

U.S. 3-month	0.005%
U.S. 2-year	0.355%
U.S. 10-year	2.890%

CLQ11.NYM

...Crude Oil Aug 11

...97.99

...

0.56 (0.6%)

The federal budget deficit is on pace to break $1T for the 3rd straight year, ratcheting up the pressure to reach a deal to rein in spending. The deficit totaled $971B for the first 9 months of the budget year according to the Treasury (3 years ago, that would have been a record high for the full year!!). This year's deficit will likely top last year's $1.29T, according to an estimate by the CBO, but is expected to come in below the record $1.41T reached in 2009. For Jun, the deficit was $43B, below the $68B imbalance in Jun 2010. Much of the improvement was due to a one-time drop in the estimated cost of education loans. If the Treasury can not borrow additonal money in Aug, payments on the budget gap will deferred until the Treasury can resume borrowing.

U.S. Budget Gap Narrowed in June

Gold remains red hot as it has been for more than a decade. Today it closed at $1585, up $23 today & more than 10% YTD, to a new record. This is the classic "safe haven" investment.

There was no major corp news today, but tomorrow JPMorgan (JPM), a Dow stock, & Google (GOOG), among others, will report Q2 earnings. With all the attention on the rush to raise the borrowing ceiling for the Treasury, the story on the federal budget gap in Jun & fiscal YTD is timely because it's at the center of the debate. European borrowing problems are being pushed aside, but haven't gone away. Refinancing Greek debts is still not a done deal & more countries are waiting in the wings for their bailouts. These are troubling times for stock markets.