Another choppy day

Markets shot out of the gate very strong, but that feeling didn't last long. Dow rose to a 70 point gain, but slipped back to down 10, decliners over advancers by 20% & NAZ dropped 16. The Financial Index has been trading sideways around 160 for a couple of months. While it's double the recent low, sideways still spells going nowhere.

S&P 500 FINANCIALS INDEX

Value 166.42

Change -1.10

% Change -0.7%

The MLP index was even, the REIT index slipped 2% while junk bond funds were a little soft. Oil reached 71, another new high for 2009, before settling back a few cents. The average price at the pump rose to $2.63 yesterday.

CLN09.NYM

...Crude Oil Jul 09

...70.55

... 0.54 .......(0.8%)

Treasuries fell again. The 10 year Treasury bond has its highest yield since Nov as the gov prepares to sell $19B in the securities today. There are also rumors that Russia may sell some of its reserves in U.S. debt to buy IMF bonds. Finance Minister Alexei Kudrin said last month that Russia planned to buy $10 billion of IMF bonds using money from its foreign reserves. Russia holds $138B of U.S. debt & China, the largest U.S. creditor, holds $768B.

•Treasuries Decline After Reports Russia May Reduce Reserves in U.S. Debt

10-Year Treasury Yld Index - 1 month





After approval from the Supreme Court, Fiat now owns the bulk of Chrysler's assets, closing a deal that saves the automaker from liquidation & places a new company in the hands of Fiat. The deal clears the way for a new, leaner Chrysler to emerge from bankruptcy, which will focus on smaller vehicles. Fiat won't provide new money but will give Chrysler small car & engine technology.

Fiat Forms Sixth-Largest Carmaker With Takeover of Chrysler


Stocks are stuck in the mud. They want to go higher, but can't muster up enough steam. Yesterday the president announced a new concept about "pay as you go." Huh??? JUST TODAY, the gov has to borrow an additional $19B. Tomorrow brings more borrowings. What's Nancy Pelosi going to do, go over budgets line by line to save nickels & dimes? Gov spending is out of control & their way to solve the deficits is spend another $1+T on a new health plan. This is what $1T looks like:

$1,000,000,000,000

Dow Jones Industrials --- 1 month

Markets waver ahead of the stimulus package vote

Stock markets vacillated trying to figure out what to make out of the stimulus bill. Dow is down slightly while NAZ is even & advancers are 25% over decliners. S&P 500 FINANCIALS INDEX slipped 3.

The Alerian MLP Index continues on a tear, rising 2½ to the 205s:

Alerian MLP Index --- 2 weeks




REITs, junk bonds & even the VIX were weak but oil was strong (probably helping MLPs)

CLH09.NYM

...Crude Oil Mar 09

....35.96 1

... 1.98 .......(5.8%)

China's economy, 4th largest in the world, is showing signs of recovery after their enormous stimulus/recovery plan was announced in Nov. Their stock market has rocketed ahead in the last 3 months. In 2007, the Shanghai stock market virtually doubled only to lose those gains & more last year. Late last year, the Shanghai market was down to the 1700s (from a record high over 6K in 2007). Since then it has been moving up nicely. Today it closed up 72 to 2320, that's a partial recovery. Domestic growth may be giving them a lift, but export business must be soft.

•China's Economy Shows Signs of Recovery as Stimulus Package Takes Effect


Australia, like most of the other countries in Asia/Europe, has an economy that needs help. They just passed an enormous (for them) stimulus package to provide economic aid.

•Australian Senate Approves Rudd's $28 Billion Economic Stimulus Package


Toyota (TM), now the world's largest auto company, is facing the same issues as the US competitors, soft sales. In the US, they are using buyouts to lay off employees. Their Japanese business has already been hit hard between the forces of a weak local economy & high ¥ rates of exchange hurting export sales to a world in a severe recession. Their stock, however, has done much better than General Motors (GM). TM is down 1.28 today to the 66s (its all time high was in the 130s).

•Toyota Plans Wage Freeze, Buyouts in North America as Output Cuts Increase


The record spending stimulus package should be signed off this weekend. Legislators will be voting on a bill with several hundred pages written in bureaucratize (a language similar to English) after trying to assimilate its scope & meaning in just a few hours. All we can do is hope for the best. An agreement on bank bailout II still has to be reached, that will be even more complicated. Finance minister from around the world are meeting in Rome, looking to come up with solutions to the largest financial problems in history.

• Stocks waver as world's finance ministers meet- AP

Lower stocks on quadruple witching day

Markets were down on quadruple witching Fri, 4 types of options expire today adding an extra degree of volatility to already volatile markets. Dow is down 145 putting it below the important 12K line, decliners over advancers an impressive 4-1 & NAZ down 43. The Alerian MLP index slipped slightly, still in the 286s. Merrill Lynch (MER) said banks appear to be in a capitulation mode & will trade below fair value with div cuts looming. Ugh!! Div cuts were forecasted at:

Bank of America (BAC)
Regions Financial Corp (RF)
SunTrust Banks Inc (STI)
Wachovia (WB)

The first 2 are on the S&P Aristocrat Div list (more than 25 years of year over year higher divs) & BAC is a Dow stock. The banks mentioned took the gloomy forecasts fairly well with only moderate changes.

Oil was up almost 4 to 136 on today's rumor that Israel had practiced an attack on Iran. Last night Asian analysts said the 18% price hike for fuel in China, 2nd largest oil consuming country, will be absorbed by them. Their last increase of 10% in Nov, didn't cause problems. The terrible winter weather followed by the earthquake probably hurt the economy more. Quadruple witching may produce more wild price swings today.

Techs led stocks higher

Techs rose nicely, but the overall markets were mixed. Dow up 34, advancers equalled decliners & NAZ was up a big 32 largely on the strength of tech benefiting from the lower price of oil. Volume was a little stronger, nearing 1.3B on the NYSE. The 204 new lows on NYSE included: BAC, MOT, BBT, GE, UNH, RF, GM, NOK,& BMY. Banks continue to be well represented.

China raised regulated prices for fuel 18% which led to oil dropping 4.45 on the theory it will reduce their consumption. Although these days who knows what drives the wild swings in oil! Citigroup (C) warned more writedowns were coming for the usual reasons. Banks were weak although well off the lows around midday. REITs rebounded a little. The Alerian MLP index slipped 2.63 to the 286s, breaking decisively though the 290 barrier. The 2 Bear Stearns managers pleaded not guilty to charges which are complicated making them difficult to prove. In addition, another 400 or so lending officers have been arrested on practices related to loan activities.

Dow held 12K, but barely & remains only 63 above that support level. The Alerian MLP index broke 290, may be the start of another leg down. Tech was strong today, but the rest of the markets did not pay attention.