Tuesday, September 6, 2011

Late day buying reduces market losses

Dow fell 100 (but finished 200 above the AM lows), decliners ahead of advancers 3-1 & NAZ fell 6. Bank stocks continue weak with a chart that looks dreary. There were 2 attempts to rally off the lows around 160 & they failed.

S&P 500 Financials Sector Index

Value	165.55
Change	-2.98 (-1.8%)

MLP losses were reduced, but the index is still below 350, & the REIT index was off only ½ to just below 220. Junk bond funds fell about 1% but Treasuries continued in strong demand with the yield on the 10 year benchmark below 2%. Oil recovered some of its AM losses & gold has been bobbing around $1900.

Alerian MLP Index

Value	345.82
Change	-3.71 (-1.1%)

Get the latest market update below:

Treasury yields:

U.S. 3-month	0.015%
U.S. 2-year	0.192%
U.S. 10-year	1.968%

Source: Bloomberg

CLV11.NYM

...Crude Oil Oct 11

...85.86...

0.59

(0.7%)

Photo: Bloomberg

Greece will accelerate austerity measures in return for intl financing as pressure mounted from European partners before the payment of more bailout loans. “Greece isn’t a pariah in the European Union or an open wound,” Finance Minister Evangelos Venizelos said. “Greece is an equal member of the European Union with deficit and debt problems. Greece can overcome these problems with these reforms.” He received approval from the Cabinet to immediately transfer state assets to a special fund for sale, place civil servants in a “reserve” system to retrain them & cut expenses, as well as merge & shut down dozens of gov agencies that are a drag on spending. The German Finance Minister said Greece won’t get its next bailout installment unless it meets goals under the aid package, spending cuts are “unavoidable” for indebted euro-area members. The yield on 2-year Greek notes rose above an astonishing 52% as Greece’s economic predicament, a wavering commitment to budget cuts in Italy & mounting borrowing costs for European banks underscore investor concern that efforts by euro-area officials to contain the debt crisis are unraveling. Ugh, when will this crisis end? The reduction in gov services is what the US faces in trying to reduce its massive deficits. The economic implications are not pretty, i.e. growth not contraction is what's needed to solve economic problems.

Greece Pledges to Accelerate Austerity

Photo: Yahoo

Dell will partner with China's top search engine Baidu (BIDU) to develop tablet computers & mobile handsets. BIDU offered a glimpse of its upcoming mobile operating system & launched a new mobile application platform aimed at bolstering its presence in the increasingly competitive mobile web market. "We have a partnership with Baidu and you know we have the Streak 5 tablet, so the partnership will be in that space," said Dell, adding that both firms were also cooperating on the mobile handset front. China media reported that the new product may come as early as Nov. The Streak 5 tablet from DELL, a 5" Android-based tablet, was discontinued in the US last month. BIDU was up $2.83 & DELL gained a penny.

Dell to Produce Smartphones With Baidu Software for China Wireless Users

Dell Inc. (DELL)

Bargain hunters returned in the PM, limiting the damage for the day. But the stock market remains in trouble. In just the 3 trading days of Sep, Dow fell almost 500. The US economy is drifting instead of recovering. Euro bank debts go from bad to worse. MLPs have been riding along with the declining stock market. Because of the record low yield on the 10 year Treasury, the spread over the MLP index yield is almost 500 basis points above the depressed 10 year Treasury yield. The only time it was wider was during the ugliest days 3 years ago. I view that comparison as a reminder that the spread can get worse, not necessarily making this a buying time for MLPs.