Markets up in quiet trading

Markets were up a little in quiet trading day. Dow is up 74 thanx to Exxon (XOM), Chevron (CVX), Merck (MRK), Verizon (VZ) & Wal-mart (WM) but advancers are only 25% over decliners and NAZ is up marginally. This will be a short week with only 3½ days of trading, many traders are away for a long holiday. The European Bank is expected to raise its lending rate (it rarely does) which should strengthen the Euro. Oil went over 143 in its crazy world. This time buying was based on tensions in the Mideast, but it just slipped to "only" 141. Because of extensive flooding in the Midwest, farmers will plant corn on 8.7% fewer acres. This is a bullish signal for corn, but it pulled back 29¢ from record territory of 7½. Still 7.26 is plenty high. Corn is the #1 crop used to feed farm animals, so it has a vary large impact on inflation.

Here is an interesting report on the global economy facing a very ugly time. I also like the comments from Bill Gross, the bond expert of Pimco, that the gov needs to do even more for the economy. Trading for the balance of the day will be influenced by last minute buys & sells for quarter end portfolio adjustments.

Asian markets up a little

Following the big sell-off in stocks last Thurs & Fri, Asian markets are beginning June 30 generally up a little. They've all had a rough 6 months, like in the US. Shanghai at 2750 is down almost 50%, Hong Kong is down 20% & Tokyo is down 15%.

Oil has been trading up 1½ (at 141½) from the Fri close in NY. Major worries for oil traders revolve around possible conflicts between Israel & Iran. These markets along with European trading will influence the start of trading in NY. Mon is also end of month/qtr here, always worth a little extra in unexplained volatility. Later in the week, the European Central Bank is expected to raise their rate, a rare occurrence, to help fight inflation which should raise the price for the Euro above 1.58.

Bank problems sink stocks

Plenty of problems today, but bank worries were at the top of the list. Dow was down 131, decliners over advancers 3-2 & NAZ down a big 28 as NYSE volume continues at a low 1¼B. Morgan Stanley (MS) & FedEx (FDX) came out with ugly earnings reports, but banks dominated the negative news. Fifth Third Bancorp (FITB) cut its div 66% to raise $1B with a sale of preferred stock & sold businesses to raise another $1B. Div cuts have become common for large banks, especially in the last few days. Banks were weak along with REITs & junk bond funds. Dow just barely held above 12K, tomorrow will be another test. The Alerian MLP index fell 3 to 289, slightly below its important support of 290. That index has held flat all year (excluding 2 quick downturns which were recovered quickly).

Oil rose 2.67 to 136.68 on the inventory report & usual supply worries. President Bush gave a speech asking congress to pass legislation to drill offshore & to encourage more drilling for oil. Congress is not expected to respond & these would have little effect solving today's problems.

Continuing bank problems will weigh heavily on the markets, probably taking Dow below 12K, but I think the FedEx announcement is much more worrisome for the economy.