Thursday, July 7, 2011

Markets rise ahead of jobs report

Stocks were strong all day. Dow rose 93, advancers ahead of decliners almost 4-1 & NAZ added 38. Banks led the way as they have in the last 2 weeks. The Financial Index is at its highest level since May 31 even though bank problems (such as European debts &.the prospect for sluggish Q2 earnings) have not gone away.

S&P 500 Financials Sector Index

Value	210.81
Change	3.27 (1.6%)

Higher yielding securities had an excellent day, a sign investors are eagerly accepting risk. The MLP index rose to within 14 of its highs reached 3 months ago & the REIT index gained 3 to the 252s, a new 2011 high. Junk bond funds were strong, heading for new yearly highs. Risk averse thoughts are being disregarded & Treasuries fell back, approaching the lower levels of last week. Even with industrial countries bringing more oil to market, the price of oil is rising again & $100 is not that far way. Gold marked time again.

Alerian MLP Index

Value	376.60
Change	2.48 (0.7%)

Treasury yields:

U.S. 3-month	0.020%
U.S. 2-year	0.474%
U.S. 10-year	3.147%

CLQ11.NYM

...Crude Oil Aug 11

...98.50

...

1.85

(1.9%)

The latest daily market update below:

Talks in DC to raise the debt ceiling are signaling fresh openness to a broad debt-reduction deal that might include entitlement cuts & tax increases. The president said he plans to meet again Jul 10 with top politicos in hopes of starting the “hard bargaining” necessary to reach an agreement, after a gathering at the White House today was called “very constructive.” “People were frank,” the president said. “We discussed the various options available to us. Everybody reconfirmed the importance of completing our work.” Translation, they're still trying to work out differences. The president acknowledged the difficulty of achieving the breakthrough in weeks of negotiating. “The parties are still far apart on a wide range of issues,” Obama said. “And everybody acknowledged there’s going to be pain involved politically on all sides.” Politicos had essentially no comments after the meeting today. The debt ceiling has not been raised & the clock keeps ticking.

White House, Republicans Signal Debt Opening

Warm weather & discounts of up to 80% on summer merchandise helped retailers deliver the best revenue gains since Jun 1999 in what's typically the 2nd-biggest shopping month of the year. But pressure on stores to pass along higher costs for everything has raised concerns that the momentum may not continue heading into the busy back-to-school shopping season. Revenue at major retailers rose 6.9% for Jun, according to the International Council of Shopping Centers. Gains were lopsided, with discounters & luxury brands benefiting the most & results for merchants serving the low- & middle-income shoppers lagging. The figures are based on revenue at stores opened at least a year. Discounter Target (TGT) & Costco (COST) were among the companies that posted results beating expectations. Luxury retailers like Nordstrom (JWN), Neiman Marcus & Saks (SKS) also posted excellent gains, as wealthy shoppers have gone back to spending. At the same time, JC Penney (JCP) registered a sales gain that came in below projections & released a disappointing profit outlook. Bon-Ton (BONT) announced a decline. In the next couple of weeks back to school shopping will begin, supplying more signals about the strength at retail.

Retailers post strong June sales AP

Dow is up an amazing 800 in the last 2 weeks, largely on the perception that European debts problems have been solved & the world economies have returned to their growing ways. The 200 day moving average line held last month when there was more impatience with stocks. It's unusual on the day before the monthly jobs report to have large gains as was the case today. Obviously bets have been made on a very good report. Maybe, maybe not.