Markets drift after dreary consumer confidence report

Stocks did very little in quiet trading. Dow went up 12 (good enough to extend its winning streak to 4 days), decliners over advancers 4-3 & NAZ fell 8. The consumer confidence report was a drag, but not in a significant way. Banks stocks led the sideways trading.


S&P 500 FINANCIALS INDEX

Value	199.19
Change	0.21 (0.1%)

The Alerian MLP Index pulled back 6½ to the 327s, a very big drop by its standard & closing at its low. After its record run in the last 2 months, unit holders won't complain. The REIT Index fell a ½ to the 207s, pretty much sideways kind of trading. Junk bond funds continued flat to higher while the VIX was up a fraction to the 23s. The yield on the 10-year Treasury bond rose over 5 basis points to 3.05% & the € reached $1.30 (up more than 10¢ from its recent lows).


Alerian MLP Index -- 3 months




Dow Jones REIT Index -- 3 months




VIX -- 3 months




10-Year Treasury Yld Index -- 3 months





Oil prices dropped on disappointing reports about consumer confidence & manufacturing. But oil remains in the upper end of its sideways trading in the 70s. Gold had a bad day as Asian & other foreign buyers have been holding back lately.

CLU10.NYM

..Crude Oil Sep 10

..77.60

.. 1.38 ......(1.8%)

GCN10.CMX

..Gold Jul 10

..1,158.00

.. 25.00 ......(2.1%)

**Gold Super Cycle**
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DuPont (DD), a Dow stock, the 3rd-largest US chemical maker producing basic products used throughout the economies in the world, reported Q2 profits nearly tripled & offered a positive read on global economic health. It now expects 2010 EPS of $2.90-$3.05, excluding one-time items, up from a previous forecast of $2.50-$2.70 per share. Analysts had expected 2010 earnings of $2.64. But CEO Ellen Kullman said she expects the economic recovery to be "more moderate" in H2. "We continue to hit our productivity and cost-control targets, and remain highly disciplined in creating operating leverage to further grow the company," Kullman said. Sales in emerging markets jumped 33%, with Asia alone up 47%. US & Europe saw sales increase 18% & 24%, respectively. The agricultural & nutrition unit, which sells hybrid seeds under the Pioneer brand & is by far the company's breadwinner, saw sales jump 16% to $3B. DD expects seed sales to be "moderately higher" in H2, but said seasonal losses would likely increase. Since DD produces products which are included in final products manufactured by others, it represents a barometer of business activity in the US & around the world. The stock liked the news, up 1.39 to 40.38 (& still yields 4%).

DuPont boosts 2010 forecast
Reuters


DuPont --- 2 years






Stocks continue to lumber along. The retreat by the MLP index was the most exciting event of the day. Its recent run can only be described as stellar, helped by the new MLP funds coming to market. The next week or so will see ex-distributions included which will be a drag, but all that much. Cumulative annual distributions for the index (based on its yield) are 21.60. A qtr is 5.40 which will be factored into the index over a couple of weeks, not all that painful. The MLPL is getting more attention. This is the new doubler fund from UBS, designed to double price swings (UP & DOWN) & double the index yield to around 12% (after fees). Those interested should STUDY & UNDERSTAND the risks before investing. Those risks generally put the interests of the fund manager over investors. Ordinary tracking funds (like AMJ), not including the doubling feature, should do a good job of tracking.


Dow Jones Industrials -- 3 months

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Markets vacillate while waiting for the first Q2 earnings

Stocks hugged break-even all day. Dow finished up 18, decliners ahead of advancers almost 2-1 & NAZ gained all of 1+ as traders were awaiting earnings reports. Banks also went sideways.


S&P 500 FINANCIALS INDE

Value	195.55
Change	0.44 +0.2%

The Alerian MLP Index rose 1 to the 319s, setting a new high since Aug 2007! The index is up 34 or 12% YTD helped by all the new ETNs & mutual funds investing in MLPs. The REIT index rose a fraction in the 194s. Junk bond funds continued mixed to higher while the VIX slipped a fraction into the 24s & down sharply from just last week. The yield on the 10-year Treasury bond slid 1 basis point to 3.04%, still very low. The € lost recent strength, it's just under $1.26.

Alerian MLP Index -- 3 months




Dow Jones REIT Index -- 3 months




VIX --- 3 months




10-Year Treasury Yld Index --- 3 months





Oil & gold pulled back a little in lackluster stock trading.

CLQ10.NYM

..Crude Oil Aug 10

..74.92

.. 1.17 ......(1.5%)

GCN10.CMX

..Gold Jul 10

..1,204.80

.. 4.80 ......(0.4%)

*** Gold Super Cycle ***
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Consumer Reports said iPhone 4 has reception problems caused by its antenna design. After the phone went on sale in Jun, buyers complained that holding the phone a certain way could cause calls to drop. Apple (AAPL) said that any phone will lose signal strength when gripped in certain ways & the new iPhone seems to show a larger drop because it has been using a faulty formula to decide how many signal bars to show. But Consumer Reports tested several phones that use AT&T's network & only the iPhone 4 seemed to have the reception issue. As a result, the iPhone 4 will not be marked "recommended" on its updated smart phone ratings list because of this problem. The stock took this setback calmly, it only lost 2 to the 257s & has done very well during the recent difficult time for stocks.

Consumer Reports Says Apple IPhone 4 Has `Significant' Flaw


Apple --- 3 months

Photo: Bloomberg

FriendFinder Networks, owner of Penthouse adult magazine, intends to submit a bid for Playboy (PLA) after Hugh Hefner offered to buy all remaining shares of PLA for $123M. FriendFinder CEO, Marc Bell, said the company is “looking at alternatives.” Hefner plans to offer $5.50 apiece in cash for the Class A & Class B shares. The offer values PLA at about $185M. PLA said Hefner isn’t interested in a merger or sale out of concern for the company’s brand & Playboy magazine’s editorial direction. PLA was up 1.62 taking it above the 5.50 offering price on hopes of a better offer.

Penthouse Owner to Compete With Hefner for Playboy Control


Playboy --- YTD






Trading was very light (NYSE volume on the floor was under .9B shares). The outstanding performance for MLPs coincides with the rise of ETNs & mutual funds introduced for the sector (such as MLPL last week). A key advantage of these securities is they don't have tax hassle of MLPs but they also lack the tax privileges. However when a lot of new investors rush into a sector, I get nervous. MLPs are having a 2nd spectacular year but this time without any significant changes in the fundamentals.

Dow Jones Industrials -- 3 months

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Sticks advance on earnings hopes

Markets extended their gains during this week. Dow gained 510 in 4 days. Today Dow was up 58 helped by buying into the close, advancers ahead of decliners 3-1 & NAZ was up 21. Bank stocks led the rally, the Financial Index is up 14 off its recent low.


S&P 500 FINANCIALS INDEX

Value	195.50
Change	3.03 (1.6%)

The Alerian MLP Index added 1½ to almost 319, esentialy reaching its high 10 weeks ago & only 24 below its all-time record high reached Jul 2007. New funds tracking or investing in MLPs have to be responsible for much of this strength. MLPL, an ETN which tries to double the moves in the Alerian index, was up 1.4% today versus a 0.5% gain for the index. But bigger swings mean bigger risks. I will write an article on this investment to be posted at SeekingAlpha.com on Mon. The REIT Index was up 2.32 to 193½ & has also had a nice run this week. Junk bond funds were generally a little higher. The VIX slipped almost 1, taking it below 25 & approaching its 2 month lows in the 23s. Easing fears caused Treasuries to be sold. The yield on the 10-year Treasury bond rose 4 basis points to 3.06%. While the yield is up from the 2.92% lows last week, it still remains very low. A side benefit is that it will bring lower mortgage rates to help the ailing housing market.


Alerian MLP Index --- 2 months





Dow Jones REIT Index -- 2 months





Oil rebounded 5 off the recent lows, but has done little for those with a longer term outlook. Gold found buyers after the recent decline from its record highs. The bulls are happy to see it above 1200.

CLQ10.NYM

..Crude Oil Aug 10

..76.16

.. 0.72 ......(1.0%)

GCN10.CMX

..Gold Jul 10

..1,208.90

.. 13.10 ......(1.1%)

**Gold Super Cycle**
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Photo: Bloomberg

A new containment cap & an additional ship collecting oil could effectively contain the Gulf oil spill in the next 3 days. The work to replace a leaky containment cap on the well head with a tighter one will begin Sat. At the same time, a ship connecting to a different part of the leak is expected to come online Sun. But oil will flow unimpeded into the Gulf during the cap switch for at least part of the weekend. If all goes according to plan, the combination of the cap & the new vessel could collect all the leaking oil by Mon, stopping it from escaping into the Gulf of Mexico for the first time since Apr 20. Work will continue on what is hoped to be the final plugging of the well, drilling 2 relief wells through which mud & cement will be pumped to stop the oil flow. That's expected to happen by mid-Aug. The schedule for both efforts has been accelerated to take advantage of what could be a rare window of good weather. BP was up 31¢ on this news (along with more talk about mideast money willing to BP assets & invest in BP stock).

BP, U.S. Aim to Seal Gulf Oil Gusher Within Days, Allen Says


BP --- YTD





Markets had an impressive week, up on all 4 trading days with large gains. European debt problems are fading, the € has risen back to $1.26½. Progress on plugging the leak in the Gulf gave the markets an intangible lift. But dreary economic recovery data keeps coming. Next week the first Q2 earnings reports will drive stocks. The advance this week shows traders have high expectations.

Dow Jones Industrials -- 2 months

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After choppy trading, markets rally in last hour

A late day rally gave stocks good gains. Dow was up 120 closing at the highs, advancers over decliners almost 3-1 & NAZ added 15. Bank stocks had been in the red but buying in the PM brought the Financial Index back into the black.


S&P 500 FINANCIALS INDEX

Value	192.47
Change	1.23 (0.6%)

The Alerian MLP Index rose 2 to the 316s, getting very near the 319 high from 10 weeks ago, not to mention the all time high of 342 reached 3 years ago. The new MLPL index (MLPL) attempts to double the swings in AMZ, rose 1½% today versus ½% for the Alerian Index. But longer term strange things can happen after it goes up & then pulls back, beware. The REIT index gained 2 to the 191s. Junk bond funds were mixed to lower, although not far from their yearly highs reached 2 months ago. The VIX dropped 1 into the 25s, improvement over last week. Treasuries were weak, the yield on the 10-year Treasury bond rose 4 basis points to 3.02% (remaining in very low territory).

Alerian Announces Launch of Leveraged ETN Tracking the Alerian MLP Infrastructure IndexPR Newswire


Alerian MLP Index --- YTD




Dow Jones REIT Index -- YTD




VIX --- YTD




10-Year Treasury Yld Index --- 2 years





Oil had a good day, but it's still trading sideways longer term. Gold has lost its fans after pulling back over 65 from its highs. But believers are using lower prices to buy for the long term which remains bright.

CLQ10.NYM

..Crude Oil Aug 10

..75.74

.. 1.67 ......(2.3%)

$$$ Gold Super Cycle $$$

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H&R Block (HRB), the US tax preparer, fell to a 9-year low after the president & CEO quit. Investors may conclude that HRB will lose its fierce competitiveness & leadership to outperform. Last month HRB reported profits for FY 2010 from continuing operations dropped 4.7%. The stock dropped 1.27 to 14.22 with a yield of 4.2%.

H&R Block Plunges After CEO Smyth Quits Tax Preparation Firm


H&R Block -- 10 years






The climb of the € has not been getting a lot of attention, but it's back to $1.27. The brave traders who bought under $1.20 are very happy. The sense of panic over European debts has eased quite a bit. But the US economic recovery keeps plodding along. The jobless numbers had a little bit for everybody but decided little. Jun retail sales were soggy. The list of unemployed who have given up looking for work & will no longer receive payments from various govs is growing. Morgtage rates are at record lows of 4.57% (resulting from low rates on long term gov debt) but home buyers are not returning to the market. Stock buyers were buying ahead of earnings season which begins next week.


Dow Jones Industrials -- YTD

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