Now that markets have calmed down, we have time to evaluate what happened last week plus try to figure out where the markets are going. Last week near the market's bottom I put out an article at SeekingAlpha on junk bond funds, giving quick thoughts about them. It has gotten good reception, but during these calmer times more might be interested in reading it:
Why Buy High Yield Bond Funds?
Many are very thankful for the Dow's rebound back to 13.3K. Of course it was just a couple of months ago many were cursing that Dow had fallen all the way down to 12½K. What a difference a couple of months make!
Saturday, September 20, 2008
Friday, September 19, 2008
Money meets Congress
The Wall Street rally faded a little off the highs but ended with strong gains. After being up 460, Dow pulled back to up only 368. Of course, the witches were out today, so anything was possible near day's end. Advancers were over decliners almost 7-1 & NAZ is up 74. S&P 500 FINANCIALS INDEX has been leading the charge upward with a very strong finish at the end, up 29 to almost 303 essentially on the high of its recent trading range.
I get a sense that reality is starting to sink in. Chairman Bernanke met with Congress last night & sort of scared them about the consequences of what would happen if they did not pass new legislation. Now they've had a day to think things over. I suppose everybody is looking at the political implications in everything. After all, an important election approaches to select the next president of the US. Reality tells me that politics will play a big part of the massive changes coming to financial markets.
Meanwhile oil had a pretty good day (as the inflation threat rears its ugly head):
With markets up big-time, gold pulled back 33 to 860 (that money went to buy stocks). The Alerinan MLP index rose 19 to 241, normally that might be a decent YEAR! Of course, it was coming off a 3 year low & still yields near 9%, for those interested in yields. The DOW JONES EQUITY REIT INDEX rose 3 to 267 after a very strong close. Generally they have followed the lead of banks, but not as impressive today. This may come as a shock, but junk bond funds rebounded 10-15% from overly depressed levels with yields over 15%. For this group, a 10¢ move (maybe 2-3%) is a very big deal.
My article on REITs was just published at SeekingAlpha, check it out.
Why Buy Real Estate Investment Trusts?
Not much is happening in the business world over the weekend. But Congress will be working on legislation which will shape financial markets going forward. Follow events, nobody knows how that will come out.
I get a sense that reality is starting to sink in. Chairman Bernanke met with Congress last night & sort of scared them about the consequences of what would happen if they did not pass new legislation. Now they've had a day to think things over. I suppose everybody is looking at the political implications in everything. After all, an important election approaches to select the next president of the US. Reality tells me that politics will play a big part of the massive changes coming to financial markets.
Meanwhile oil had a pretty good day (as the inflation threat rears its ugly head):
| CLV08.NYM | Crude Oil Oct 08 | __104.55 | __ 6.67 (6.8%) |
With markets up big-time, gold pulled back 33 to 860 (that money went to buy stocks). The Alerinan MLP index rose 19 to 241, normally that might be a decent YEAR! Of course, it was coming off a 3 year low & still yields near 9%, for those interested in yields. The DOW JONES EQUITY REIT INDEX rose 3 to 267 after a very strong close. Generally they have followed the lead of banks, but not as impressive today. This may come as a shock, but junk bond funds rebounded 10-15% from overly depressed levels with yields over 15%. For this group, a 10¢ move (maybe 2-3%) is a very big deal.
My article on REITs was just published at SeekingAlpha, check it out.
Why Buy Real Estate Investment Trusts?
Not much is happening in the business world over the weekend. But Congress will be working on legislation which will shape financial markets going forward. Follow events, nobody knows how that will come out.
Wild, Wild West on Wall Street
There may be no need to put restrictions on shorts, the enormous rally in the last 2 days should have wiped them out! Markets in Asia, Australia & Europe rose dramatically, typically 5+% following the big rally in NY yesterday. Today Dow roared up 381 (continuing strong), advancers ahead of decliners 5-1 (could have been a little better) and NAZ was up 63. This is also option expiration day, adding to the wild quality. Financials led the charge, S&P 500 FINANCIALS INDEX was up 21 to 294 (although off its high of 307 in this crazy stock market). Marginal financial/banks are flying. For example at midday yesterday Wachovia (WB) was 10, now it's 19. That's what I call spinning on a dime!
No surprise this an outstanding day. Last night Asian/Australian markets followed through on the big gains in US markets. Those markets rose 3-6% with many banks bid up 6-10% or more. Of course, these gains were coming off heavily hammered markets selling at 2-3 (if not more) year lows. Dow futures were trading up a couple hundred in anticipation of another strong market on Fri.
Seat of the pants and gut instincts have taken control of the markets. There is a lot to absorb here. Last night Congress presented a united front backing a bold action plan. Now they will have to pass legislation which will require $B & $B. One estimate puts the cost to tax payers over $500B which would compete with the cost for the war in Iraq.
My favorite MLP story:
Constellation Energy Partners (CEP) is a small MLP I've been following for a year which has been hammered down below 10 (but rebounded above 12 today) even though their distribution was increased to the present level of $2.25. That's right $2.25. Their senior partner is Constellation Energy (CEG), a big energy company, which has gone over big bumps (very volatile) this year especially in recent weeks. Warren Buffett just announced that CEG will be merged into his company Mid America Corp.
CEP reaffirmed their intention to pay the declared distribution. That yield is eye popping. While there is a lot of uncertainty, having Warren Buffett in the background seems to provide a certain level of comfort for an investor. Being an MLP means less than 20% of the distribution should be taxable. Also, they will send out a K-1 tax form on March 15 using terms like depletion & amortization plus profits for various states where they do business. The brave who are looking for a very high yield might want to check out CEP to determine if it's a good investment
Constellation Energy Partners Reaffirms Third Quarter Distribution Guidance
•Buffett in deal to buy Constellation Energy Group at a discount
Oil is back over 100, even if it's being overlooked. The Alerian MLP Index is up 15 to 236, has to be its biggest daily gain ever.
The US economy still needs a lot of help. This AM on Bloomberg TV, a housing executive said the slump in housing will last into next year. Autos should track that performance. After the financial mess, the fundamental problem is housing (maybe autos should be added) which still has to be addressed!
Earlier this week, I pointed out that it was too early to get Chicken Little's phone number. I was right. But over optimism & enthusiasm may have gotten the better of many today. Try to remain cool while enjoying the gains.
No surprise this an outstanding day. Last night Asian/Australian markets followed through on the big gains in US markets. Those markets rose 3-6% with many banks bid up 6-10% or more. Of course, these gains were coming off heavily hammered markets selling at 2-3 (if not more) year lows. Dow futures were trading up a couple hundred in anticipation of another strong market on Fri.
Seat of the pants and gut instincts have taken control of the markets. There is a lot to absorb here. Last night Congress presented a united front backing a bold action plan. Now they will have to pass legislation which will require $B & $B. One estimate puts the cost to tax payers over $500B which would compete with the cost for the war in Iraq.
My favorite MLP story:
Constellation Energy Partners (CEP) is a small MLP I've been following for a year which has been hammered down below 10 (but rebounded above 12 today) even though their distribution was increased to the present level of $2.25. That's right $2.25. Their senior partner is Constellation Energy (CEG), a big energy company, which has gone over big bumps (very volatile) this year especially in recent weeks. Warren Buffett just announced that CEG will be merged into his company Mid America Corp.
CEP reaffirmed their intention to pay the declared distribution. That yield is eye popping. While there is a lot of uncertainty, having Warren Buffett in the background seems to provide a certain level of comfort for an investor. Being an MLP means less than 20% of the distribution should be taxable. Also, they will send out a K-1 tax form on March 15 using terms like depletion & amortization plus profits for various states where they do business. The brave who are looking for a very high yield might want to check out CEP to determine if it's a good investment
Constellation Energy Partners Reaffirms Third Quarter Distribution Guidance
•Buffett in deal to buy Constellation Energy Group at a discount
Oil is back over 100, even if it's being overlooked. The Alerian MLP Index is up 15 to 236, has to be its biggest daily gain ever.
| CLV08.NYM | Crude Oil Oct 08 | __101.29 __ | 3.41 (3.48%) |
The US economy still needs a lot of help. This AM on Bloomberg TV, a housing executive said the slump in housing will last into next year. Autos should track that performance. After the financial mess, the fundamental problem is housing (maybe autos should be added) which still has to be addressed!
Earlier this week, I pointed out that it was too early to get Chicken Little's phone number. I was right. But over optimism & enthusiasm may have gotten the better of many today. Try to remain cool while enjoying the gains.
Thursday, September 18, 2008
Stocks have biggest gain in 6 years
Plans for the US gov to shore up financial markets plus UK officials changed rules barring short-selling on financials brought back buyers in droves to markets in NY. Stocks rose sharply in the last hour. Dow was up 410, advancers over decliners better than 2-1 while NAZ popped 100. Financials in NY liked that news, the S&P 500 FINANCIALS INDEX had a 28 point gain to 273 ending its short term bear market. Oversold markets have a way of spinning on a dime when its time to rebound. The marginal banks benefited the most as Wachovia (WB) rebounded 5½ to 14½.
•U.S. Stocks Soar Most in Six Years on Government Plan to Shore Up Markets
UK Regulator Bars Short-selling on Financials- AP
Volatility has exploded in securities markets. Today it reached 42 before settling back, down 2½ to "only" 33. Above 20 is considered very high, 30 is much higher & 40 is astronomical. The last time it reached the 40s was 6 years ago.
Gold has had a wild couple of days as many went overboard searching for safety. Stocks were sold to buy commodities, especially gold (note the price collapse in the PM when stock markets took off). That market should quiet down but there are still gold bulls who see much higher prices in this new financial world we're entering:
Gold
General Electric, a Dow stock, AAA rated debt, a S&P 500 Dividend Aristocrat, has had a rough time, especially in the last year as shown on its graph (today GE popped 1.85, contributing to the Dow rally):
General Electric (GE)
Recently it was the biggest company in the world in terms of market value but has dropped out of investor favor, down 50% from its high last year. Worries about its health, particularly its large financial businesses, cost it many old friends. Some are even questioning its AAA credit rating, only about a dozen companies remain with this elite credit status. GE is a crude proxy for the market, when it ails markets are hurting.
Back to economic news, oil ended essentially flat in the 97s after reaching 100 earlier in the day. The Alerian MLP index calmed down, recovering from a 10 point loss to end at break even (in 3 year low territory).
Despite the good news lifting markets in the PM, fundamentals remain entrenched. Financials still have whopper size problems. Late news is that Morgan Stanley is taking a hard look at Wachovia. Even if they merge, plenty of financial problems remain. In addition the economy is limping along with high unemployment & inflation problems. I just got a couple of extra bottles of Diet Coke & Sprite Zero to help get me through this period.
•U.S. Stocks Soar Most in Six Years on Government Plan to Shore Up Markets
UK Regulator Bars Short-selling on Financials- AP
Volatility has exploded in securities markets. Today it reached 42 before settling back, down 2½ to "only" 33. Above 20 is considered very high, 30 is much higher & 40 is astronomical. The last time it reached the 40s was 6 years ago.
Gold has had a wild couple of days as many went overboard searching for safety. Stocks were sold to buy commodities, especially gold (note the price collapse in the PM when stock markets took off). That market should quiet down but there are still gold bulls who see much higher prices in this new financial world we're entering:
Gold
General Electric, a Dow stock, AAA rated debt, a S&P 500 Dividend Aristocrat, has had a rough time, especially in the last year as shown on its graph (today GE popped 1.85, contributing to the Dow rally):
General Electric (GE)
Recently it was the biggest company in the world in terms of market value but has dropped out of investor favor, down 50% from its high last year. Worries about its health, particularly its large financial businesses, cost it many old friends. Some are even questioning its AAA credit rating, only about a dozen companies remain with this elite credit status. GE is a crude proxy for the market, when it ails markets are hurting.
Back to economic news, oil ended essentially flat in the 97s after reaching 100 earlier in the day. The Alerian MLP index calmed down, recovering from a 10 point loss to end at break even (in 3 year low territory).
Despite the good news lifting markets in the PM, fundamentals remain entrenched. Financials still have whopper size problems. Late news is that Morgan Stanley is taking a hard look at Wachovia. Even if they merge, plenty of financial problems remain. In addition the economy is limping along with high unemployment & inflation problems. I just got a couple of extra bottles of Diet Coke & Sprite Zero to help get me through this period.
A bounce in oversold markets
Markets rebounded, largely on rumors flying around. Last night Asian markets sold off 3% or more (led by big losses at banks) following US markets. Oil futures were higher last night following gains in the US. Morgan Stanley (MS) was rumored to be combining with Wachovia (WB). Then they were trying to get a major investment from a Chinese bank which was denied (check on latest updates below). Today a trader said because shorts are hammering Morgan Stanley (down another 8% today), it may be forced to combine with a bank to remain alive. Confusion continues in full force as authorities have to make up the rules as they go along. Here are latest thoughts about Morgan Stanley along with a long term graph showing how far they've fallen in recent days & weeks:
•Morgan Stanley Said to Be in Talks to Sell Stake to China Investment Corp.
Morgan Stanley (MS)
Today Dow is up only 54 & dropping as I write, advancers over decliners less than 2-1 (rather quiet all considered) and NAZ is up 4 on worries the banking recession will bleed through to techs. S&P 500 FINANCIALS INDEX is 244, flattish & down 5 since I began writing. The Alerian MLP Index is even, drifting at 221, a 3 year low (matching the major indices at 3 year lows). Yesterday it had an 11 point drop aggravated by Jim Cramer comments. He said with $90 oil, MLPs were not good investments, naming some of the biggies I follow on the right. However, they do not sell oil & gas, just move it along their pipelines so they should not be affected greatly by swings in commodity prices.
Oil continues on a roll, just another confusing situation to keep track of:
Reserve banks AROUND THE WORLD, this is not just a US problem, are going overboard adding reserves trying to prop up financial markets. Little noticed among all the confusion is the dollar after a very big short term rally is now weak in recent days. The Euro after sliding to about 1.38 is up to 1.44 in just a few days.
•U.S. Stocks Rise on Central Banks' Fund Injections, Short-Sale Crackdown
•Fed, ECB, Bank of Japan Lead Global Plan to Pump $247 Billion Into Markets
Macro economic news continues to come, but is getting overlooked. Jobless claims rose 10K to 455K in the aftermath of the hurricane.
As I'm writing, markets are selling off. The PM may see more selling helping to make for one of the market's worst weeks in some time!
•Morgan Stanley Said to Be in Talks to Sell Stake to China Investment Corp.
Morgan Stanley (MS)
Today Dow is up only 54 & dropping as I write, advancers over decliners less than 2-1 (rather quiet all considered) and NAZ is up 4 on worries the banking recession will bleed through to techs. S&P 500 FINANCIALS INDEX is 244, flattish & down 5 since I began writing. The Alerian MLP Index is even, drifting at 221, a 3 year low (matching the major indices at 3 year lows). Yesterday it had an 11 point drop aggravated by Jim Cramer comments. He said with $90 oil, MLPs were not good investments, naming some of the biggies I follow on the right. However, they do not sell oil & gas, just move it along their pipelines so they should not be affected greatly by swings in commodity prices.
Oil continues on a roll, just another confusing situation to keep track of:
| CLV08.NYM | Crude Oil Oct 08 | ...100.28 | ... 3.12 (3.21%) |
Reserve banks AROUND THE WORLD, this is not just a US problem, are going overboard adding reserves trying to prop up financial markets. Little noticed among all the confusion is the dollar after a very big short term rally is now weak in recent days. The Euro after sliding to about 1.38 is up to 1.44 in just a few days.
•U.S. Stocks Rise on Central Banks' Fund Injections, Short-Sale Crackdown
•Fed, ECB, Bank of Japan Lead Global Plan to Pump $247 Billion Into Markets
Macro economic news continues to come, but is getting overlooked. Jobless claims rose 10K to 455K in the aftermath of the hurricane.
As I'm writing, markets are selling off. The PM may see more selling helping to make for one of the market's worst weeks in some time!
Wednesday, September 17, 2008
Financial chaos continues
In the panic to sell financial, the flight to quality is going extremes. The US Treasury 90 day bill rate is under 1%, the lowest price since 1954. The Treasury 10-year bond rate is at 3.4%, again - very, very low. By way of comparison. High yield bonds yield over 14%, many REITs yield above 10%, the MLP Alerian index is 9% (double digit yields are available on individual issues), not to mention very high yields on securities issues. Bank of America (BAC) has a dividend yield of 9% (although all banks are suspicious these days).
All investment banks are under a very black cloud. Goldman Sachs (GS) is down 26 after being down more than 30 earlier & Morgan Stanley (MS) is almost 9 after being down 13 earlier. They each had their worst day on very ugly credit crisis worries. Suspicious investors are imagining the worst. The entire securities business is going through a wrenching experience, later on we will call this "history." Meanwhile gold is having a stellar day, rising 70 to 850 after reaching an earlier high of up 90. Not a bad day to own gold! Oil was up sharply after it had fallen almost 50 from its peak a couple of months ago.
In this kind of environment stocks sold off big time (as shown in the Bigcharts widget). Dow tumbled 217, decliners over advancers 9-1 and NAZ was down 65. The S&P 500 support level of 1200 gave way, it's now 1157, down 56.
Leading the decline was:
S&P 500 FINANCIALS INDEX
Value__244.54 ...Down__(23.89).... Down__(8.9%)
It is now at headed for the 232 Jul 15, the more than 5 year low!
S&P 500 -- 2008 YTD
The Alerian MLP index dropped (shown on the right) to another multi year low, down 11 to 221 (this is a low beta index!).
There may be a lot who are trying to Chicken Little's phone number. Try to relax. Congress will begin hearings in a couple of days. That does not sound promising. Hopefully the markets will adapt to new legislation that is coming. These are unusually brutal times, but reason will win out. It's best to hunker down & prepare for outstanding buying opportunities which will come.
All investment banks are under a very black cloud. Goldman Sachs (GS) is down 26 after being down more than 30 earlier & Morgan Stanley (MS) is almost 9 after being down 13 earlier. They each had their worst day on very ugly credit crisis worries. Suspicious investors are imagining the worst. The entire securities business is going through a wrenching experience, later on we will call this "history." Meanwhile gold is having a stellar day, rising 70 to 850 after reaching an earlier high of up 90. Not a bad day to own gold! Oil was up sharply after it had fallen almost 50 from its peak a couple of months ago.
| CLV08.NYM | Crude Oil Oct 08 | __97.21 | __ 6.06 (6.7%) |
In this kind of environment stocks sold off big time (as shown in the Bigcharts widget). Dow tumbled 217, decliners over advancers 9-1 and NAZ was down 65. The S&P 500 support level of 1200 gave way, it's now 1157, down 56.
Leading the decline was:
S&P 500 FINANCIALS INDEX
Value__244.54 ...Down__(23.89).... Down__(8.9%)
It is now at headed for the 232 Jul 15, the more than 5 year low!
S&P 500 -- 2008 YTD
The Alerian MLP index dropped (shown on the right) to another multi year low, down 11 to 221 (this is a low beta index!).
There may be a lot who are trying to Chicken Little's phone number. Try to relax. Congress will begin hearings in a couple of days. That does not sound promising. Hopefully the markets will adapt to new legislation that is coming. These are unusually brutal times, but reason will win out. It's best to hunker down & prepare for outstanding buying opportunities which will come.
Controlled bankruptcy for AIG
These are historic times for financial markets. AIG had been one of the few (about 12) companies with AAA rated debt (probably downgraded one notch in the last few months) & a Dow stock. Their bonds are now a touch above default & their Dow history should only last for another day or 2. The gov assessed that letting them fail would do brutal damage to the world economies, so they stepped in to save them.
Gov involvement in financial markets has EXPLODED this year. The FED is actively providing credit to investment banks, etc. when they think it's in the national interest. Their lending is backed by collateral they would not have dreamed of accepting just a year ago. A band aid approach to monumental problems is about all that can be done, but it is unclear how long run implications will play out. Need evidence of active FED involvement with the financials:
•Treasury Plans Special Auctions of Debt to Help Fed Manage Balance Sheet
Below is a tiny glimpse based on the first news release of how this will play out:
Dow is down 253, decliners over advancers 7-1 & NAZ declined 61. The closely watched S&P 500 is back below the important 1200 line in the sand:
S&P 500 FINANCIALS INDEX is down 15 to 253, nearing the 252 low reached a couple of days ago & not far from 232 low on July 15. Not too bad a performance considering how the ugly the news has been!
Let's not forget about oil. After dropping 10 in 2 days (an eye popping decline), it's back on the rebound amidst all the confusion in financial markets. The Alerian MLP index after pulling back to lows last seen over 3 years ago is down 4 today to 288.
I'm a big fan of the long run. Below is S&P 500 since the 70s:
S&P 500
10 years ago it went through 1K, today's it's less than 20% higher. That's one rough decade.
By way of contrast, the MLP index is about double the value 10 years ago (not to mention getting through the awful 2000 era decline in much better shape):
Alerian MLP index
At times like these it's easy to think that Chicken Little got it right, The Sky is Falling. The long run track records reminded us that there have been big bumps along the way (i.e. 2000 era was an enormous one), but the economy & stock markets persevered, and, eventually, went up. This is the time for dull homework to plan for purchases at attractive, depressed prices.
Gov involvement in financial markets has EXPLODED this year. The FED is actively providing credit to investment banks, etc. when they think it's in the national interest. Their lending is backed by collateral they would not have dreamed of accepting just a year ago. A band aid approach to monumental problems is about all that can be done, but it is unclear how long run implications will play out. Need evidence of active FED involvement with the financials:
•Treasury Plans Special Auctions of Debt to Help Fed Manage Balance Sheet
Below is a tiny glimpse based on the first news release of how this will play out:
Dow is down 253, decliners over advancers 7-1 & NAZ declined 61. The closely watched S&P 500 is back below the important 1200 line in the sand:
| S&P 500 | ... 1,181.00 | ...-32.59 | ...-2.7% |
S&P 500 FINANCIALS INDEX is down 15 to 253, nearing the 252 low reached a couple of days ago & not far from 232 low on July 15. Not too bad a performance considering how the ugly the news has been!
Let's not forget about oil. After dropping 10 in 2 days (an eye popping decline), it's back on the rebound amidst all the confusion in financial markets. The Alerian MLP index after pulling back to lows last seen over 3 years ago is down 4 today to 288.
| CLV08.NYM | Crude Oil Oct 08 | __ 93.66 | __ 2.51 (2.75%) |
I'm a big fan of the long run. Below is S&P 500 since the 70s:
S&P 500
10 years ago it went through 1K, today's it's less than 20% higher. That's one rough decade.
By way of contrast, the MLP index is about double the value 10 years ago (not to mention getting through the awful 2000 era decline in much better shape):
Alerian MLP index
At times like these it's easy to think that Chicken Little got it right, The Sky is Falling. The long run track records reminded us that there have been big bumps along the way (i.e. 2000 era was an enormous one), but the economy & stock markets persevered, and, eventually, went up. This is the time for dull homework to plan for purchases at attractive, depressed prices.
Tuesday, September 16, 2008
Markets higher on hope for saving AIG
After starting out down more than 100 on the opening, Dow recovered & ended with a gain of 141 taking it over 11K. Buyers may have been brought out by encouraging words about the FED coming up with a rescue package for AIG. NAZ was up 28 despite a dreary forecast by Dell (DELL). However decliners led advancers 3-2. This qualifies as a recovery, but limited in effect. The financials led the way:
S&P 500 FINANCIALS INDEX recovered nicely from the sharp fall on Mon:
Value _268.55 --- Change_up 15.73 --- % Change_up 6.2%
They had been down on the opening, then buyers snapped up bargains. The FED did not cave into trader's desires and left rates alone at their meeting. Good for them! The sick economy needs help in other forms. Instead their attention wandered over to save AIG:
•AIG Loan Package Under Consideration by Federal Reserve, Reversing Course
American International Group (AIG), still a Dow stock at only $4, is struggling to come up with a rescue package. Now the FED may get involved, uh-oh. Without a FED rate cut, the markets will take a rescue for AIG which sent stocks higher:
•AIG Loan Package Under Consideration by Federal Reserve, Reversing Course
The future for Washington Mutual (WM) is still a whopper size unknown & there are more financials that may need help. Last night Asian markets fell 5% (most were off for a holiday on Mon), financials led the way down with declines of at least 5%. They were all issuing statement about their exposure to Lehman & other loans such as sub prime mortgages. Again, these are Asian banks, the credit crisis is global!
News on oil's price decline has been little noticed. Oil dropped again to the lowest price in months:
Oil dropped 10 in the last 2 days, but gas at the pump has spiked up to 3.85 on worries about future supplies at gas stations. The Alerian MLP index dropped 4 to 232, but recovered 9 points from the severe drop early in the morning. They remain in 3 year low territory.
Dell (DELL) got hammered, down more than 10% on a very dreary announcement. This is very important, they are a huge global company & reinforces the idea about a slowdown in the US bleeding to other countries.
Dell Drops to Lowest Level in 7 Years After Predicting Slowdown ...
REITs had a great day following the lead of the financials. However, junk bond funds sold off again. Their 2 day delcine must be over 10%, but no fundamentals have changed. They invest in company bonds with below investment (BBB) ratings. These funds sold off sharply in line with the recent decline in financials & have gotten hammered in the last 2 days. Those boring bonds should work out, 14-15% yields are available for the brave who want higher income. Check out yesterday's article on high yield (junk) bonds:
http://seekingalpha.com/article/95533-why-buy-high-yield-bond-funds
Another article on: MLPs - part II should come out in the next few hours.
My computer is back working again, thanx. Cleaning out the registry & then CCleaner did wonders.
S&P 500 FINANCIALS INDEX recovered nicely from the sharp fall on Mon:
Value _268.55 --- Change_up 15.73 --- % Change_up 6.2%
They had been down on the opening, then buyers snapped up bargains. The FED did not cave into trader's desires and left rates alone at their meeting. Good for them! The sick economy needs help in other forms. Instead their attention wandered over to save AIG:
•AIG Loan Package Under Consideration by Federal Reserve, Reversing Course
American International Group (AIG), still a Dow stock at only $4, is struggling to come up with a rescue package. Now the FED may get involved, uh-oh. Without a FED rate cut, the markets will take a rescue for AIG which sent stocks higher:
•AIG Loan Package Under Consideration by Federal Reserve, Reversing Course
The future for Washington Mutual (WM) is still a whopper size unknown & there are more financials that may need help. Last night Asian markets fell 5% (most were off for a holiday on Mon), financials led the way down with declines of at least 5%. They were all issuing statement about their exposure to Lehman & other loans such as sub prime mortgages. Again, these are Asian banks, the credit crisis is global!
News on oil's price decline has been little noticed. Oil dropped again to the lowest price in months:
| CLV08.NYM | Crude Oil Oct 08 | __91.15 | _ 4.56 (4.76%) |
Oil dropped 10 in the last 2 days, but gas at the pump has spiked up to 3.85 on worries about future supplies at gas stations. The Alerian MLP index dropped 4 to 232, but recovered 9 points from the severe drop early in the morning. They remain in 3 year low territory.
Dell (DELL) got hammered, down more than 10% on a very dreary announcement. This is very important, they are a huge global company & reinforces the idea about a slowdown in the US bleeding to other countries.
Dell Drops to Lowest Level in 7 Years After Predicting Slowdown ...
REITs had a great day following the lead of the financials. However, junk bond funds sold off again. Their 2 day delcine must be over 10%, but no fundamentals have changed. They invest in company bonds with below investment (BBB) ratings. These funds sold off sharply in line with the recent decline in financials & have gotten hammered in the last 2 days. Those boring bonds should work out, 14-15% yields are available for the brave who want higher income. Check out yesterday's article on high yield (junk) bonds:
http://seekingalpha.com/article/95533-why-buy-high-yield-bond-funds
Another article on: MLPs - part II should come out in the next few hours.
My computer is back working again, thanx. Cleaning out the registry & then CCleaner did wonders.
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