Favorable job figures do not excite markets

Dow was up 15, advancers ahead of decliners 3-2 & NAZ was up all of 2. Banks were off only marginally.

S&P 500 FINANCIALS INDEX

Value 200.93

Change -0.22

% Change -0.1%

Buyers keep snapping up MLPs, the Alerian MLP Index is up another 1 to the 296s. It looks like nothing can stop the advance as shown in the charts, a scary thought. The Dow Jones REIT Index is up fractionally, I think its chart gives a better representation of what is happening with the economic recovery. Junk bond funds are flat. Treasuries sold off, the yield on the 10-year Treasury bond is up 6 basis points to 3.81% which is going to make new mortgages more expensive.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





Oil is soggy but gold is picking up steam. For the time being, the 1100 floor has been able to hold pretty well.

CLG10.NYM

...Crude Oil Feb 10

...81.35

... 0.42 .......(0.5%)

GCF10.CMX

...Gold Jan 10

...1,136.00

... 17.90 .......(1.6%)

GLD (ETF) --- 2 months







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Planned layoffs at US firms fell in Dec to their lowest level in 2 years. Employers announced 45K planned job cuts, the fewest since Dec 2007, marking a 73% decline from 12 months ago. Over the course of 2009 employers announced plans to cut 1.3M jobs, the most since 2002. The pace of layoffs fell by 56% in H2 of 2009. While this news was expected, it is of little help to the 10% looking for jobs.

•U.S. December Job Cuts Drop to 84,000, Fewest Since March 2008, ADP Says


Announced corp layoffs - 1 year





This is another sideways day & MLPs remain the hottest group on the stock exchanges. In addition, junk bond funds are in demand.

Dow Jones Industrials --- 2 week

Stress test rally

Dow jumped 80, advancers over decliners better than 3-1 but NAZ was only even.

In the last 2 months, the financial index has doubled from a severely depressed level of 81:

S&P 500 FINANCIALS INDEX

Value 167.24

Change 4.90

% Change 3.0%

In Apr, employers cut 539K jobs, the fewest in six months. These figures were helped by increased federal hiring of temporary workers for the 2010 Census. The Apr number wasn't as deep as the 620K job cuts forecasted by economists. Since the recession began in Dec 2007, the economy has lost 5.7M jobs. The deepest job cuts, 741K, came in Jan, the most since 1949. The unemployment rate climbed to 8.9%, the highest in 25 years, versus 8.5% in Mar.

Public payrolls rose 72K last month after falling 6K in the prior month, aided by the Census Bureau which will hire more than 1.4M over the next year. The big problem with the numbers is that factory payrolls fell 149K after decreasing 167K Mar.

•U.S. Loses 539,000 Jobs, Fewer Than Forecast, in Sign Economy Stabilizing


There are a bunch of post stress test stories. Wells Fargo (WFC) & Morgan Stanley (MS) will have large stock sales to boost capital. Bank of America (BAC) faces the greatest challenge, needing to raise $34B. BAC will raise capital through asset sales, earnings in the upcoming quarters and raising capital from private investors. The problem is that selling stock & asset sales used to be considered signs of weakness & growing capital with earnings looks to be of little help in the short run. There's also Fannie Mae, forgotten about with the emphasis on commercial bank problems. They need more gov money as they face a grave future.

• Banks' 'stress test' lift cloud of uncertainty- AP
• Wells Fargo prices stock offering at $7.5 billion- AP
• Morgan Stanley offers $3.5 billion in stock- AP
• Fannie Mae seeks $19B in US aid after 1Q loss- AP
• BofA CEO Lewis lays out plans for bank's future- AP

.name.....price......% change..................volume

BAC		13.6801	0.1701	1.26%	263,664,760
MS		25.98	1.16	4.27%	64,175,370
WFC		24.8525	0.0925	0.37%	183,595,309

Strong demand for the high yield sector continues while the VIX, volatility index, dropped 1 to the 32s, another 2009 low.


Alerian MLP Index ---- 2 weeks




Dow Jones REIT Index --- 2 weeks





Barclay's Hi Yield Bond ETF - 2 weeks




Oils are participating in the rally.

CLM09.NYM

...Crude Oil Jun 09

...57.39

... 0.68 .......(1.2%)

The Federal Reserve gets high marks for leaking enough about stress tests results ahead of time to ease fears before the official report was given last night. But the economy still faces a grim short term future.