| U.S. 3-month | 0.15% | |
| U.S. 2-year | 0.50% | |
| U.S. 10-year | 2.72% |
Sorry, I'll be away for awhile with an emergency dental visit. Best of luck to all.
Showing posts with label risk averse. Show all posts
Showing posts with label risk averse. Show all posts
Wednesday, August 11, 2010
Risk averse returns to the stock markets
Stock markets were shaken overnight & today after yesterday's Federal Reserve meeting. It signaled the economic recovery is in more trouble than had been thought. More taxes (many not so visible) from DC are not helping matters. There is a flight to safety once again plus the Treasury will be buying Treasuries. Treasuries continue red hot with the yield on the 2 year Treasury note falling below 50 basis points, another record low! The risk averse crowd is also buying gold, up $10. Stocks are preparing for a much lower opening with Dow futures off more than 100.
Sorry, I'll be away for awhile with an emergency dental visit. Best of luck to all.
Sorry, I'll be away for awhile with an emergency dental visit. Best of luck to all.
Tuesday, June 29, 2010
Global economic worries plague stock markets
Stocks sold off badly at the start & matters only got worse during the day. Markets recognized that economic problems are global. China & Japan (2 of the largest economies in the world) sent out negative signals on their economies. Europe (especially southern Europe) is a financial mess. Now there are more doubts about the recovery in the US. Dow slumped 268, decliners over advancers 7-1 & NAZ plunged 85 (almost 4%). For what it's worth, they closed above the lows! Bank stocks led the way down. The Financial Index is approaching its 186 support level. If that does not hold, the next support level could be 150 (shown in its chart).
S&P 500 FINANCIALS INDEX
The Alerian MLP index was weak all day, slipping 4¼ to 307. However it's up 22 YTD, few can make that claim! The REIT Index fell almost 7 to just over 190, also higher YTD. Junk bond funds were down 1-2%, about what is expected in this down market. The VIX shot up 5+ (huge by its standards) to the 34s & headed for its 2010 highs. Meanwhile Treasuries are red hot. The yield on the 10-year Treasury bond fell thru 3%, down 6½ basis points to 2.97%. Money is flowing out of stocks into Treasuries.
Alerian MLP Index --- 2 months
Dow Jones REIT Index --- 2 months
VIX --- 2 months
10-Year Treasury Yld Index - 2 months
Oil sold off badly but its bulls are happy it held above 75, a key support level. Gold rallied during the day, bringing it back into the black. Fundamentals remain strong for gold especially during these trying times for financials.
Consumer confidence - 1 year
Exxon Mobil (XOM) & Chevron (CVX) are the 2 big oils in the Dow & have been hit hard with selling in the last 2 years. The former is an S&P 500 Dividend Aristocrat & the latter should join in a few years. While it will probably be difficult for these stocks to attract buyers in the coming months, the long term outlook remains excellent. The world needs more energy! Their 10 year track records are shown below & they compare favorably with major indices, like Dow & S&P 500, which are lower. Their yields are 3% & 4% respectively & worth noting for value investors. Today each was down more than 2%.
Exxon Mobil --- 1 decade
Chevron --- 1 decade
This was the ugliest day for stocks in a long time because of the recognition that economic problems are spread around the world, not just in Europe. But Europe is getting a lot of attention. The € is $1.22 & looks to be heading much lower. The Senate is trying to round up enough votes (by throwing in extras) to get the financial regulation bill passed. It will go thru, one way or another. But the main worry for the markets is investors flocking to Treasuries with the 10-year Treasury bond yielding below 3% (a very important support level) & the 2 year note yield down to a mere 60 basis points. Until "risk averse" thinking is reversed, more selling can be expected while Dow is flirting with 9 month lows.
Dow Jones Industrials --- 2 months
S&P 500 FINANCIALS INDEX
| Value | 187.69 |  |
| Change | -7.58 (-3.9%) |
The Alerian MLP index was weak all day, slipping 4¼ to 307. However it's up 22 YTD, few can make that claim! The REIT Index fell almost 7 to just over 190, also higher YTD. Junk bond funds were down 1-2%, about what is expected in this down market. The VIX shot up 5+ (huge by its standards) to the 34s & headed for its 2010 highs. Meanwhile Treasuries are red hot. The yield on the 10-year Treasury bond fell thru 3%, down 6½ basis points to 2.97%. Money is flowing out of stocks into Treasuries.
Alerian MLP Index --- 2 months
Dow Jones REIT Index --- 2 months
VIX --- 2 months
10-Year Treasury Yld Index - 2 months
Oil sold off badly but its bulls are happy it held above 75, a key support level. Gold rallied during the day, bringing it back into the black. Fundamentals remain strong for gold especially during these trying times for financials.
| CLQ10.NYM | ..Crude Oil Aug 10 | ..75.83 | .. 2.42 ......(3.1%) |
| GCN10.CMX | ..Gold Jul 10 | ..1,242.00 | .. 3.80 ......(0.3%) |
The Conference Board’s confidence index dropped to 52.9 in Jun from a revised 62.7 in May (versus a forecast of 62.5). The lack of stronger gains in the biggest part of the economy reinforces the Federal Reserve’s forecast for a “moderate” recovery. Today’s report runs counter to the final reading of the Thomson Reuters/University of Michigan index which showed its confidence level rose to 76 this month from 73.6 in May. Go figga, although I suspect the Confidence Board index gives a more accurate picture of what's happening.
Consumer Confidence in U.S. Fell More Than ForecastConsumer confidence - 1 year
Exxon Mobil (XOM) & Chevron (CVX) are the 2 big oils in the Dow & have been hit hard with selling in the last 2 years. The former is an S&P 500 Dividend Aristocrat & the latter should join in a few years. While it will probably be difficult for these stocks to attract buyers in the coming months, the long term outlook remains excellent. The world needs more energy! Their 10 year track records are shown below & they compare favorably with major indices, like Dow & S&P 500, which are lower. Their yields are 3% & 4% respectively & worth noting for value investors. Today each was down more than 2%.
Exxon Mobil --- 1 decade
Chevron --- 1 decade
This was the ugliest day for stocks in a long time because of the recognition that economic problems are spread around the world, not just in Europe. But Europe is getting a lot of attention. The € is $1.22 & looks to be heading much lower. The Senate is trying to round up enough votes (by throwing in extras) to get the financial regulation bill passed. It will go thru, one way or another. But the main worry for the markets is investors flocking to Treasuries with the 10-year Treasury bond yielding below 3% (a very important support level) & the 2 year note yield down to a mere 60 basis points. Until "risk averse" thinking is reversed, more selling can be expected while Dow is flirting with 9 month lows.
Dow Jones Industrials --- 2 months
Tuesday, October 6, 2009
Markets surge, nearing 2009 highs
Dow soared again today, up 167 nearing its 9830 close just 2 weeks ago. Advancers are 6-1 ahead of decliners & NAZ shot up 40. Banks are leading the way as the Financial Index is up an impressive 9 this week.
S&P 500 FINANCIALS INDEX
As stocks recover lost territory of the last 2 weeks, high yield sectors are hot again. The Alerian MLP Index is up 3 to the 252s, aiming for a new 2009 high. REITs are strong, the Dow Jones REIT Index is up 3 & almost 10 from the lows 2 days ago. Junk bond funds are also higher. Given the rallies in all the markets, Treasuries sold off. The yield on the 10-year Treasury bond slipped 3 basis points to 3.25% but it remains near its recent interim low yield below 3.20%.
Alerian MLP Index --- 2 weeks
Dow Jones REIT Index --- 2 weeks
Higher stocks bring higher commodity prices. Huh? Oh well, oil passed 71 but is still in its sideways trading pattern since May. But gold is another story. While stocks have been soaring this year on inflation fears, gold shot up from the mid 800s to well over 1K (another record). Investors are scrambling to buy stocks & risk averse gold, that's not supposed to happen at the same time!
GLD (ETF) --- 6 months
The House wants new regulations for a financial overhaul, hearings begin today. The administration proposed legislation to protect investors by bolstering the authority of the SEC (you know the guys who were watching Bernie Madoff), putting stockbrokers & investment advisers under the same standards of conduct and strengthening rules governing the timing & quality of disclosures by investment funds. In addition they proposed putting private pools of capital -- hedge funds, private equity & venture capital funds -- under gov supervision by requiring they register with the SEC. This would open their books & they would be subject to disclosure requirements. Expect a lot of bloviating from congress. Somehow they say this won't interfere with passing a massive health care plan.
Boeing (BA), Dow stock, will take a charge of $1B (90¢ per share) in Q3 from higher costs in its 747-8 freighter program & general market conditions. Last year BA delayed deliveries of the 747-8 freighter & passenger jets due to design changes, limited engineering resources & had a strike that shut down the its commercial jet factories for 8 weeks. The stock is down 1 to the 51s & has had only a limited recovery since early 2009.
Boeing --- 2 years
US markets followed the lead of higher markets around the globe. Australia's central bank (Royal Bank of Australia) raised interest rates (from a 29 year low) 25 basis points to 3¼% & signaled there may be more rate hikes coming. Bulls viewed this a sign of economic strength which increased their expectations for worldwide earnings reports in the next few weeks. With today's rally, Dow has recovered most of the losses in the last 2 weeks.
Australia cash interest rate - 1 year
Dow Jones Industrials --- 2 weeks
S&P 500 FINANCIALS INDEX
| Value 203.04 | Change 4.47 | % Change 2.3% |
As stocks recover lost territory of the last 2 weeks, high yield sectors are hot again. The Alerian MLP Index is up 3 to the 252s, aiming for a new 2009 high. REITs are strong, the Dow Jones REIT Index is up 3 & almost 10 from the lows 2 days ago. Junk bond funds are also higher. Given the rallies in all the markets, Treasuries sold off. The yield on the 10-year Treasury bond slipped 3 basis points to 3.25% but it remains near its recent interim low yield below 3.20%.
Alerian MLP Index --- 2 weeks
Dow Jones REIT Index --- 2 weeks
Higher stocks bring higher commodity prices. Huh? Oh well, oil passed 71 but is still in its sideways trading pattern since May. But gold is another story. While stocks have been soaring this year on inflation fears, gold shot up from the mid 800s to well over 1K (another record). Investors are scrambling to buy stocks & risk averse gold, that's not supposed to happen at the same time!
| CLX09.NYM | ...Crude Oil Nov 09 | ...71.67 | ... 1.26 .......(1.8%) |
| GCV09.CMX | ...Gold Oct 09 | ...1,035.80 | ... 19.10 .......(1.9%) |
GLD (ETF) --- 6 months
The House wants new regulations for a financial overhaul, hearings begin today. The administration proposed legislation to protect investors by bolstering the authority of the SEC (you know the guys who were watching Bernie Madoff), putting stockbrokers & investment advisers under the same standards of conduct and strengthening rules governing the timing & quality of disclosures by investment funds. In addition they proposed putting private pools of capital -- hedge funds, private equity & venture capital funds -- under gov supervision by requiring they register with the SEC. This would open their books & they would be subject to disclosure requirements. Expect a lot of bloviating from congress. Somehow they say this won't interfere with passing a massive health care plan.
Boeing (BA), Dow stock, will take a charge of $1B (90¢ per share) in Q3 from higher costs in its 747-8 freighter program & general market conditions. Last year BA delayed deliveries of the 747-8 freighter & passenger jets due to design changes, limited engineering resources & had a strike that shut down the its commercial jet factories for 8 weeks. The stock is down 1 to the 51s & has had only a limited recovery since early 2009.
Boeing --- 2 years
US markets followed the lead of higher markets around the globe. Australia's central bank (Royal Bank of Australia) raised interest rates (from a 29 year low) 25 basis points to 3¼% & signaled there may be more rate hikes coming. Bulls viewed this a sign of economic strength which increased their expectations for worldwide earnings reports in the next few weeks. With today's rally, Dow has recovered most of the losses in the last 2 weeks.
Australia cash interest rate - 1 year
Dow Jones Industrials --- 2 weeks
Thursday, October 16, 2008
Late day rally for stocks
A late day rally brought the Dow big gains, up 401 (as shown in the Bigcharts graph on the right). This is hard to figure when decliners led advancers 5-1 (down from 10-1 earlier in the day) but NAZ participated, up 89. 3M, Exxon, Johnson & Johnson, IBM, McDonalds, Procter & Gamble, United Tech & Walmart (up over 4) led the charge up for the Dow. Clearly, hedge fund sellers took the last hour off.
Other indices didn't do as well. S&P 500 FINANCIALS INDEX rose only 3½, Dow Jones REITs rebounded 8 after yesterday's terrible beating & the Alerian MLP index cut losses, down only 9. The change doesn't tie with last night's close, they should be showing a modest gain (maybe it's one of those computer glitches). Junk bond funds were also up, hard to measure without a good index. But some brave souls are willing to gamble to obtain yields around 15-20%. REITs & MLPs also have yields well into 2 digits.
Beware:
The VIX, Volatility Index, reached new heights but closed down 1.64 to 67.61 after topping 81 during the day:
Volatility Index -- 5 days
This measure, some call it the fear index, is in record territory. Fear sounds like a good way to describe as it measures anxieties about job losses, inflation worries & the credit mess, giving investors a lot to worry about (or fear). Just a couple of weeks ago 20 was considered high & 30 was a heavenly kind of maximum. No more:
VIX Options Index Tops 80 for First Time as Stocks Extend Slump
US Treasury securities are highly prized for their high degree of security. The table below shows what investors earn on them today. For the short term, they are willing to accept little interest when "risk averse" becomes their primary focus. The shortest term securities are most highly prized with only nominal or modest interest rates. Proceeds from stock sales can be used to buy Treasuries.
Today's rally sounds like one of those attributed to "technical reasons" (short covering, whatever). Dreary economic reports during the day were forgotten in the last 2 hours of trading. I am not encouraged by this rally.
Other indices didn't do as well. S&P 500 FINANCIALS INDEX rose only 3½, Dow Jones REITs rebounded 8 after yesterday's terrible beating & the Alerian MLP index cut losses, down only 9. The change doesn't tie with last night's close, they should be showing a modest gain (maybe it's one of those computer glitches). Junk bond funds were also up, hard to measure without a good index. But some brave souls are willing to gamble to obtain yields around 15-20%. REITs & MLPs also have yields well into 2 digits.
Beware:
The VIX, Volatility Index, reached new heights but closed down 1.64 to 67.61 after topping 81 during the day:
Volatility Index -- 5 days
This measure, some call it the fear index, is in record territory. Fear sounds like a good way to describe as it measures anxieties about job losses, inflation worries & the credit mess, giving investors a lot to worry about (or fear). Just a couple of weeks ago 20 was considered high & 30 was a heavenly kind of maximum. No more:
VIX Options Index Tops 80 for First Time as Stocks Extend Slump
US Treasury securities are highly prized for their high degree of security. The table below shows what investors earn on them today. For the short term, they are willing to accept little interest when "risk averse" becomes their primary focus. The shortest term securities are most highly prized with only nominal or modest interest rates. Proceeds from stock sales can be used to buy Treasuries.
U.S. Treasuries rates, courtesy of Bloomberg:
| COUPON | MATURITY DATE | CURRENT PRICE/YIELD | PRICE/YIELD CHANGE | ||
| 3-Month | 0.000 | 01/15/2009 | 0.43 / .44 | 0.22 / .223 | |
| 6-Month | 0.000 | 04/16/2009 | 1.12 / 1.14 | 0.26 / .266 | |
| 12-Month | 0.000 | 09/24/2009 | 1.22 / 1.25 | 0.17 / .175 | |
| 2-Year | 2.000 | 09/30/2010 | 100-24½ / 1.60 | -0-03 / .048 | |
| 3-Year | 4.500 | 09/30/2011 | 107-16 / 1.88 | -0-03½ / .034 | |
| 5-Year | 3.125 | 09/30/2013 | 101-12+ / 2.82 | 0-00 / -.000 | |
| 10-Year | 4.000 | 08/15/2018 | 100-15 / 3.94 | 0-01 / -.004 | |
| 30-Year | 4.500 | 05/15/2038 | 104-14 / 4.24 | -0-24+ / .044 | |
Today's rally sounds like one of those attributed to "technical reasons" (short covering, whatever). Dreary economic reports during the day were forgotten in the last 2 hours of trading. I am not encouraged by this rally.
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