From the peak around midday, Dow lost 100 to close down 34, decliners over advancers almost 2-1 & NAZ was up a couple of pennies. Bank stocks were under pressure all day, taking the index down 2½ to 199 (where it was one month ago). There was selling in MLPs late in the day, taking the index down 1½ to the 383s (down 6 YTD) while the REIT index was about even at 260. Junk bond funds inched higher & Treasuries also had a modest rise (after yields have dropped for 8 straight weeks). Oil fell again, down almost 15% from its peak in early Mar while gold is near its lows going back to Jul. Commodities are not doing well in what should have been a robust global recovery.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
US consumer sentiment rose to its highest level in more than 4 years in early May as Americans were upbeat about the job market & buying plans improved, an encouraging sign for the economic recovery. The Thomson Reuters/University of Michigan's preliminary May reading on the overall index on consumer sentiment improved to 77.8 from 76.4 in Apr, topping forecasts for a small decline to 76.2, the highest level since Jan 2008. Despite the recent slowdown in job growth, nearly twice as many consumers reported hearing about new job gains than said they had heard about recent job losses. Even so, consumers were only slightly more optimistic about declines in the unemployment rate than they were a year ago, with only one in 4 expecting it to fall in the year ahead. Employers cut back on hiring in Apr & Mar after an acceleration at the start of the year. Consumer buying plans for vehicles & durable goods improved at the beginning of the month, with 65% saying buying conditions were favorable, the highest level in more than a year. After a run-up at the start of the year, gasoline prices have pulled back in recent weeks, providing more breathing room for stretched consumers, & the survey found no further gains in prices were expected in the year ahead. Survey director Richard Curtin said that while the lower gasoline prices are good news for consumers, he expects the sentiment index will likely be stuck around current levels until the presidential election in Nov. This is favorable news about the US economy.
Consumer Sentiment in U.S. Climbs to Four-Year High: Economy
Protest against evictions outside Bankia SA
Photo: Bloomberg
Spain will force banks to increase provisions against real estate loans by €30B ($38B) & will hire 2 auditors to value banks' assets in a 4th attempt to clean up the industry. Banks will have to raise provisions on €123B of real estate-linked loans that are still performing to 30% from 7% on average, & the gov will provide funds for those that need support the Economy Minister said. The state will inject less than €15B into struggling banks, & the funds won’t add to the budget deficit, he said. The gov will also force all banks to move foreclosed real estate assets into separately managed companies so they can be sold, he said. Spain’s 10-year bond yield jumped to 6.05% after the measures were announced, before retreating to 6%. Today’s announcement follows the state’s May 9 takeover of Bankia, the banking group with the most real estate, in another step to bolster confidence in a financial system burdened by €184B of assets the Bank of Spain terms “problematic.” This is a step in the right direction, but it follows other steps that were also in the right direction. Spain remains very shaky.
The Greeks socialist leader & former finance minister said efforts to form a coalition gov have failed. Evangelos Venizelos, who was the last of 3 party leaders to try to reach an agreement, said he would hand the mandate back to the country's president tomorrow. The comments were made after meeting with Radical Left Coalition leader Alexis Tsipras, whose party came 2nd in the Sunday election. Tsipras said he would not join any gov that intended to continue implementing the terms of Greece's intl bailout agreement, which he says is too harsh. Their debt mess is going from bad to worse.
Greek Socialist head: coalition talks fail, will inform president Saturday AP
Photo: Yahoo
Dow started the week just over 13K but couldn't hold that level. It fell 200 in what has been a tough week. Given the abundance of dreary news, it could have been much worse, the bulls should be thankful about that. The news from Europe shows no improvement in the sovereign debt mess. As bad as that was, the loss at JPMorgan (JPM) jolted the markets. The loss was not the largest, such losses have almost become common in recent years. But JPM had the reputation of being the best bank & that image has been severely tarnished. It's hard to avoid the thought there may be more ugly stories coming from banks. Dow is down almost 600 from its recent highs & mighty Apple (AAPL) fell almost 80 from its highs made a month ago. Stocks are back on defense. In these tough times, Treasuries are in demand , but the traditional safe haven, gold, is not.
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Treasury yields:
U.S. 3-month | 0.092% | |
U.S. 2-year | 0.258% | |
U.S. 10-year | 1.841% |
| CLM12.NYM | Crude Oil Jun 12 | 96.29 |  0.79 (0.8%) |
US consumer sentiment rose to its highest level in more than 4 years in early May as Americans were upbeat about the job market & buying plans improved, an encouraging sign for the economic recovery. The Thomson Reuters/University of Michigan's preliminary May reading on the overall index on consumer sentiment improved to 77.8 from 76.4 in Apr, topping forecasts for a small decline to 76.2, the highest level since Jan 2008. Despite the recent slowdown in job growth, nearly twice as many consumers reported hearing about new job gains than said they had heard about recent job losses. Even so, consumers were only slightly more optimistic about declines in the unemployment rate than they were a year ago, with only one in 4 expecting it to fall in the year ahead. Employers cut back on hiring in Apr & Mar after an acceleration at the start of the year. Consumer buying plans for vehicles & durable goods improved at the beginning of the month, with 65% saying buying conditions were favorable, the highest level in more than a year. After a run-up at the start of the year, gasoline prices have pulled back in recent weeks, providing more breathing room for stretched consumers, & the survey found no further gains in prices were expected in the year ahead. Survey director Richard Curtin said that while the lower gasoline prices are good news for consumers, he expects the sentiment index will likely be stuck around current levels until the presidential election in Nov. This is favorable news about the US economy.
Consumer Sentiment in U.S. Climbs to Four-Year High: Economy
Photo: Bloomberg
Spain will force banks to increase provisions against real estate loans by €30B ($38B) & will hire 2 auditors to value banks' assets in a 4th attempt to clean up the industry. Banks will have to raise provisions on €123B of real estate-linked loans that are still performing to 30% from 7% on average, & the gov will provide funds for those that need support the Economy Minister said. The state will inject less than €15B into struggling banks, & the funds won’t add to the budget deficit, he said. The gov will also force all banks to move foreclosed real estate assets into separately managed companies so they can be sold, he said. Spain’s 10-year bond yield jumped to 6.05% after the measures were announced, before retreating to 6%. Today’s announcement follows the state’s May 9 takeover of Bankia, the banking group with the most real estate, in another step to bolster confidence in a financial system burdened by €184B of assets the Bank of Spain terms “problematic.” This is a step in the right direction, but it follows other steps that were also in the right direction. Spain remains very shaky.
The Greeks socialist leader & former finance minister said efforts to form a coalition gov have failed. Evangelos Venizelos, who was the last of 3 party leaders to try to reach an agreement, said he would hand the mandate back to the country's president tomorrow. The comments were made after meeting with Radical Left Coalition leader Alexis Tsipras, whose party came 2nd in the Sunday election. Tsipras said he would not join any gov that intended to continue implementing the terms of Greece's intl bailout agreement, which he says is too harsh. Their debt mess is going from bad to worse.
Greek Socialist head: coalition talks fail, will inform president Saturday AP
Photo: Yahoo
Dow started the week just over 13K but couldn't hold that level. It fell 200 in what has been a tough week. Given the abundance of dreary news, it could have been much worse, the bulls should be thankful about that. The news from Europe shows no improvement in the sovereign debt mess. As bad as that was, the loss at JPMorgan (JPM) jolted the markets. The loss was not the largest, such losses have almost become common in recent years. But JPM had the reputation of being the best bank & that image has been severely tarnished. It's hard to avoid the thought there may be more ugly stories coming from banks. Dow is down almost 600 from its recent highs & mighty Apple (AAPL) fell almost 80 from its highs made a month ago. Stocks are back on defense. In these tough times, Treasuries are in demand , but the traditional safe haven, gold, is not.
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