Stocks remained depressed all day

Dow remained weak all day. It tumbled in the first hour & then just kept drifting lower, closing down 289, decliners ahead of advancers 7-1 & NAZ fell 64. 18 Dow stocks fell 3+% including 4 which fell more than 10% each (AXP, BAC, C & GM).

This is today's bleak picture of the Dow (courtesy of Bloomberg):

DOW JONES INDUS. AVG MEMBERS

					Time
3M CO	51.96	-1.85	-3.44	4,225,322	15:57
ALCOA INC	8.35	-0.91	-9.83	33,119,032	15:57
AMERICAN EXPRESS	18.96	-2.84	-13.04	35,390,611	15:57
AT&T INC	25.33	-0.62	-2.39	23,964,596	15:57
BANK OF AMERICA	8.04	-2.56	-24.15	761,560,418	15:57
BOEING CO	36.53	-1.79	-4.67	6,445,650	15:57
CATERPILLAR INC	30.51	-1.78	-5.51	13,341,261	15:57
CHEVRON CORP	63.89	-2.12	-3.21	9,848,334	15:57
CITIGROUP INC	2.95	-0.70	-19.18	796,155,685	15:57
COCA-COLA CO	44.43	-0.59	-1.31	12,360,057	15:58
DU PONT (EI)	26.79	-1.63	-5.74	14,480,323	15:57
EXXON MOBIL CORP	65.21	-1.54	-2.31	27,101,277	15:57
GENERAL ELECTRIC	11.33	-1.06	-8.56	136,419,847	15:57
GENERAL MOTORS	1.67	-0.19	-10.22	26,951,171	15:57
HEWLETT-PACKARD	34.68	-1.62	-4.46	14,483,610	15:57
HOME DEPOT INC	25.18	-0.92	-3.52	16,307,086	15:57
IBM	100.58	-0.69	-0.68	9,578,843	15:57
INTEL CORP	15.12	-0.48	-3.08	56,752,484	15:57
JOHNSON&JOHNSON	52.50	-0.55	-1.04	13,863,636	15:57
JPMORGAN CHASE	29.79	-3.47	-10.43	95,070,036	15:57
KRAFT FOODS INC	22.50	-0.16	-0.73	9,813,838	15:57
MCDONALDS CORP	55.31	-0.78	-1.39	6,459,274	15:57
MERCK & CO	25.23	-0.50	-1.95	11,636,501	15:57
MICROSOFT CORP	18.68	-0.52	-2.71	52,293,901	15:57
PFIZER INC	13.58	-0.58	-4.10	48,155,770	15:58
PROCTER & GAMBLE	50.66	-1.00	-1.94	13,658,351	15:57
UNITED TECH CORP	45.79	-1.53	-3.23	5,212,017	15:58
VERIZON COMMUNIC	30.95	-0.83	-2.61	12,185,590	15:57
WAL-MART STORES	49.31	-0.89	-1.77	18,703,859	15:57
WALT DISNEY CO	19.44	-0.94	-4.61	13,033,985	15:57

Banks were the biggest drag following BAC reporting that it boosted reserves for loan losses. S&P 500 FINANCIALS INDEX had one of its largest losses ever, with many prominent banks falling around 20% each. BAC fell almost 25%.

Value 132.15

Change -17.03

% Change -11.4%

MLPs, REITs & junk bond funds all sold off. The 4+ drop for the Alerian MLP Index brought it back to the 200 line. Now it has to decide again whether to keep it as a floor or make it a ceiling as it has been for most of 2009. The Dow Jones REIT Index fell a very big 14 & junk bond funds sold off badly. On increased fears, the VIX shot up 5:


VIX ---- 2 weeks





Oil had one of its worst days in a long time resulting from a strong dollar & weak stock market.

CLK09.NYM

..Crude Oil May 09

..45.77

.. 4.56 ......(9.1%)

The rate on Treasury 90 day bills is falling, heading for zero (if not negative as in late 2008). China is now the biggest lending to the US gov, but they recently expressed their concern (dissatisfaction) with excessive gov borrowing. When buying gov paper, they are switching to shorter maturities with the lowest rates. Not sure how all this will play out (the big boys probably don't know much more), but worth keeping an eye on the 90 day rate which is only 12 basis points (annualized). Data courtesy of Bloomberg:

U.S. Treasuries

	COUPON	MATURITY DATE	CURRENT PRICE/YIELD	PRICE/YIELD CHANGE
3-Month	0.000	07/16/2009	0.12 / .12	-0.008 / -.008

•Zero Percent on Treasury Bills as China Demand Converges With Fed Policies


A leading economic indicator published by the Conference Board points to the recession lasting until later this year. Then the rebound may be slow, something recent stock market enthusiasm has not been counting on.

• U.S. recession seen likely to go through summer- Reuters

Dreary Mon is pointing to a very bad week for a very tired market. Dow has made virtually no progress in the last 3 weeks:


Dow Jones Industrials --- 1 month

Stocks gain on final hour rally

Markets fell in the PM on a weak response to the Treasury sale of $34B in bonds. In just 3 hours, the Dow plunged 300 points. However, buyers returned in the last hour taking the Dow back into the black. Dow gained 90, advancers ahead of decliners 2-1 & NAZ rose 12.

The weaker than expected Treasury market bled thru to banks. The S&P 500 FINANCIALS INDEX gave up an early gain in the AM, turning into red in the PM. But the late day rally put the index solidly in the black:

Value 126.27

Change 5.52

% Change 4.6%

The Treasury auction was unsettling to say the least. They auctioned off $34B in 5 year notes. The expected rate was 1.80%, but the final rate, just shy of 1.85%, was just plain disappointing. The 10 year Treasury bond fell sharply, sending the yield up 12 basis points to 2.77%. One immediate effect of a disappointing auction is that Treasury borrowing costs are increased, today & going forward. Related, the UK failed to attract enough bidders on an auction involving £1¾B of borrowings. This was their first such failure in 7 years. These responses sent a strong signal to markets that there are limits to borrowings, even by the biggest govs.

•Treasuries Decline After Sale Produces Higher Yields, U.K.'s Auction Fails


High yield sectors (MLPs, REITs & junk bond funds) were up thanks to the late day rally.


Oil dropped after the weekly inventory report showed inventories at a 16 year high (suggesting lower future demand). This type report causing oil to sell off is generally favorable for stocks. Unfortunately, today it reinforces the deepness of the recession.

• Oil prices fade as storage levels hit 16-year high- AP

CLK09.NYM

..Crude Oil May 09

..52.86

.. 1.12 ......(2.1%)

There are a lot of questions about today's economic statistics combined with the recent run-up in stocks signaling the "end" of the recession. No way. It looks like current macro economic data suggests that the steep fall, which is very scary, may be ending. But the recession will continue. Unemployment will keep rising, it may go up another 1 or 2 percentage points. That's plenty to worry about. More div cuts are coming. General Motors (GM) is still sweating tires about staying alive, next week will be their next big test. But an end to free-fall provides a modest sense of relief. A new wrinkle, when the gov has to struggle to sell debt, in front of selling massive amounts of debt, more financing problems are ahead.


Jake DeSantis, an exec VP at AIG publicly resigned by having his letter published in the NY Times. He charges that Liddy, the CEO working for a salary of $1, gave into public pressure during a feeding frenzy last week. His complaint is another example of the sloppy handling of this mess by Congress & problems with their eagerness to cover-up their complicity in AIG's problems. The link below has a good discussion about this matter.

• Betrayed by AIG: Exec VP Resigns, Publicly Skewers CEO Liddy- Tech Ticker

Today was an unusually volatile day (for this year at least) as shown in the BigCharts widget in the right sidebar. However, the VIX changed little at 43. Below is a chart for the Dow in 2009:


Dow Jones Industrials --- YTD

Markets struggle with gloomy news

Asian markets had another terrible day following all the bloodletting in the US, especially in the last hour of trading. Hong Kong & Tokyo, 2 of the bigger ones, were down 1K apiece, reaching new multi year lows. The declines followed an enormous rally on the previous day. European markets also sold off.

Dow is trying to rally after being down more an hour ago. It reduced the loss to 45 & remaining near the 8451 Fri closing low. Decliners are ahead of advancers a solid 10-1 (10-1 has been holding steady as I write) & NAZ is even:


Dow Jones Industrials -- 5 days




S&P 500 FINANCIALS INDEX is down 5 to 205, still above the 184 Fri low. The Alerian MLP Index is down 10 & the Dow Jones REIT Index is up 3½ after getting punished badly yesterday

Oil & gold are selling off again as stocks pull back, don't see that too often. The 10 point drops yesterday for Dow oils, Exxon (XOM) & Chevron (CVX), were responsible for about 130 points of the Dow decline. Today Chevron is down 1.44 but Exxon is up 44¢. The message from these declines is lower worldwide demand for oil & gold is coming from a global recession.

CLX08.NYM

Crude Oil Nov 08

...70.13

... 4.41 (5.9%)

GCV08.CMX

Gold Oct 08

...792.40

... 43.10 (5.2%)

Gloomy news is taking control of the markets, it's getting hard to keep track of all the negative news! These stories tell us that the recession is badly hurting the US economy.

•U.S. Industrial Production Falls Most Since 1974 on Storms, Boeing Strike
•Paulson Signals Hedge Funds Aren't Currently Eligible for Government Money
•Crude Oil Falls Below $70 as U.S. Inventories Rise; OPEC Moves Up Meeting

• Philly Fed factory activity index crashes in Oct- Reuters
• Worries over economy spread; global markets sink- AP

2 enormous, but troubled, financials, Citigroup (C) & Merrill Lynch (MER), reported ugly losses, stocks sold-off 7% & 4% respectively. Since they are low price stocks, percentage changes mean more than changes measured in cents. Now traders are paying more attention to the losses rather than worrying about "beating" lowered estimates.

• Citigroup posts another loss amid credit woes- AP
• Merrill 3Q loss widens on mortgage-related charges- AP

I don't follow specific hedge funds, but a news item caught my eye. This group had $40B in Mar which is down to $33B today (maybe even less, who knows?). This specific fund had $1½B, they've got a lot of stock to sell & fast. Let's see if today's last hour proves to be another selling period for hedge funds.

•Highland to Close $1.5 Billion in Hedge Funds Amid `Unprecedented' Turmoil

Markets are testing lows, looks like the lows may not hold.