Dow drifts

Dow is up 29 on a nothing special kind of day. Advancers are 3-2 over decliners & NAZ was even. The Financial Index shows the banks are just bumbling along.

S&P 500 FINANCIALS INDEX

Value 195.47

Change -0.86

% Change -0.4%

MLPs are having a good day. The Alerian MLP Index is up 2 to the 268s bringing it close to overhead resistance at 270. If it breaks thru that ceiling in a meaningful way, it could attract more buyers. The REIT index was off 1+ after an excellent week. It deserves a rest. Junk bond funds were higher. Some have more than doubled from their depressed levels earlier this year, an amazing run. The yield on the 10-year Treasury bond fell 4 basis points to 3.44%. The chart below shows the yield has had a very volatile couple of weeks.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




10-Year Treasury Yld Index - 2 weeks






Commodities are taking the thoughts very hard about the FED unwinding its positions. This has led to a rising dollar. Oil went below its 75 floor signaling its on defense again. Gold is in its own world. It's down 75 (equivalent to a barrel of oil) in a couple of days, but that can happen with any high flyer. Fundamentals for gold remain strong. Those who are cautious but interested in dabbling may be more interested after the sell-off. Over the short term, markets have told us that gold, in particular, is very much tied to the strength or weakness of the dollar. It now takes almost 90 ¥ (vs 87 a few days ago) to buy a dollar & the € has dropped 3¢ to $1.48, both dramatic moves in such a short time.

CLF10.NYM

...Crude Oil Jan 10

...74.46

... 1.01 .......(1.3%)

GCZ09.CMX

...Gold Dec 09

...1,143.60

... 25.20 .......(2.2%)

Dubai World may unload assets to raise cash. Dubai Finance Department Director did not say which pieces of the company are for sale. However, the assets would be Dubai World's alone -- underscoring the gov's position that it is not responsible for debts racked up by a company it created & backed.

•Dubai World May Sell Domestic, Foreign Assets to Repay Debt, Official Says



The chart shows Dow has been plodding along in the last 2 weeks. The Dubai scare has receded, now the major worries relate to the strengthening dollar. For the time being there is no hint the FED will ease soon as unemployment drones on at unacceptable levels. But the easy money policy will come to an end & those thoughts are keeping buyers away.

Dow Jones Industrials --- 2 weeks

Markets slip on Dubai debt uncertainty

Dow dropped 30 after a positive start, decliners ahead of advancers by 15% & NAZ was down 14. Banks were a little higher, but off their highs.


S&P 500 FINANCIALS INDEX

Value 193.66

Change 1.90

% Change 1.0%

The Alerian MLP Index is down pennies in the 267s, just off its yearly highs, but the Dow Jones REIT Index gained 1½ after its recent sell-off. Junk bond funds were mixed after a slightly up week. Treasuries slipped, the yield on the 10-year Treasury bond rose 2 basis points to 3.23%.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





In the worldwide confusion about Dubai, oil & gold found a few buyers.

CLF10.NYM

...Crude Oil Jan 10

...76.71

... 0.66 .......(0.9%)

GCZ09.CMX

...Gold Dec 09

...1,175.70

... 1.50 .......(0.1%)

Heavily indebted Dubai World is not guaranteed by their gov, offering little direction to anxious investors. On the first day of trading since news of Dubai World's debt crunch became public, Dubai's main stock exchange dropped 7+% while the Abu Dhabi exchange fell 8+% -- the steepest falls in at least a year. Driving the financial avalanche was the announcement last Wed that conglomerate Dubai World would seek at least a 6 month reprieve on its $60B in debts. The obligations were amassed during years of a building spree that turned the desert emirate into the Middle Eastern version of Las Vegas & Wall Street. Uncertainty about what step the emirate would take next had cast a pall on world markets. However, Asian markets rebounded Monday after taking a tumble late last week while European markets were down slightly.

•Dubai Shares Sink, Abu Dhabi Index Drops Most in Eight Years on Debt Delay
•Dubai World's Debt Isn't Guaranteed by Government, Finance Official Says


Dubai Financial Market Index - 1 year




Abu Dhabi ADX Index - 1 year





The good news is that holiday shopping held steady through the Thanksgiving weekend. But economic worries about jobs were still apparent as shoppers mostly stuck to their lists & focused on practical items. The big worry is that consumers may not return until the final hours before Dec 25. According to preliminary figures released by ShopperTrak, a research firm that tracks more than 50K outlets, sales rose 0.5% over last year to $10.66B on Fri. That represented a 3% increase above last year. Online sales Thurs & Fri, however, rose 11% to $913M, according to Score, an Internet research firm. The National Retail Federation trade group said it's sticking to its forecast for holiday sales to decline 1% from last year.

•Holiday Sales Will Drop 1% in U.S. as Forecasters See `Disciplined' Buying



Holiday sales were mushy & the Dubai situation is cloudy. Stocks are back on defense. At least they held up pretty well all considered.

Dow Jones Industrials --- 2 weeks

Stocks tumble on Dubai debt crisis

Dow recovered to a loss of 130 after a plunge of 200 at the opening, decliners ahead of advancers 5-1 & NAZ dropped 26. Dubai worries dominate thinking. Banks slumped taking the Financial Index to the low end of its current trading range.


S&P 500 FINANCIALS INDEX

Value 194.19

Change -2.98

% Change -1.5%

Like the general market high yielders plunged on the opening, but buying reduced losses. The Alerian MLP Index was down 5, then the loss was cut to only pennies. The REIT index has recovered more than half of its original 4 point drop. Junk bond funds sold off in sympathy with the stock markets fall. The VIX jumped more than 5 on the opening, but that has been reduced to less than 3. Treasuries were in demand. The yield on the 10-year Treasury bond dropped 5 basis points to 3.23%, near its lowest levels in more than 6 months.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




VIX --- 2 weeks




10-Year Treasury Yld Index - 6 months





Oil sank to the low end of its recent trading range, but at least that floor held. Gold is down, but starting from almost 1200 gold bugs aren't complaining.

CLF10.NYM

...Crude Oil Jan 10

...75.13

... 2.83 .......(3.6%)

GCZ09.CMX

...Gold Dec 09

...1,172.50

... 14.50 .......(1.2%)

BlackFriday sales result should be dominating stock market worries, but not today. There is plenty of confusion about Dubai & its debts. Stocks sold off badly based on gut reactions. Buyers are returning, narrowing the early AM losses. No point discussing Dubai debt problems since few have any idea what's going on. The articles below give some thoughts.

•Dubai Woes May Escalate to `Major Sovereign Default,' Bank of America Says
•Mobius Sees a `Correction' From Dubai Crisis as Das Predicts Risk Aversion
•Dubai Debt May Exceed $80 Billion on Off-Balance-Sheet Liability, UBS Says



This was supposed to be a quite day of trading with markets closing at 1PM EST. Not today. The worry is that perhaps $80B in Dubai debt could default creating another Lehman kind of disaster. Fears subsided allowing stocks to recover (great opportunity for day traders to buy on the opening & take profits before starting the weekend). If Dubai doesn't blow up, attention will switch back to BlackFrdiay sales & implications for retail sales. By the middle of next week, Nov auto sales will be reported giving a clue about consumer buying habits.

Dow Jones Industrials --- 2 weeks