Swine flu & auto worries drag markets down

Dow stayed above 8000, but just barely. It couldn't break away from the break even line. Dow fell 51, decliners over advancers 2-1 & NAZ slipped 14. Banks have been leading the 2 month rally & continue to lead, only to the downside. Big name banks dropped 2-5% today.

S&P 500 FINANCIALS INDEX

Value 142.53

Change -4.68

% Change -3.2%

In the high yield sector, MLPs have risen far above the rest. The Index shot up 3.23 to 209.82, a YTD high & nearing the 6 month highs. REITs have also bounced back but still have a lot more ground to cover before reaching recent high territory especially after dropping 9 today. The high yield index chart looks better, although down .15 today (with a 17% yield).


Alerian MLP Index --- 6 months




Dow Jones REIT Index --- 6 months




Barclays Cap Hi Yld Bond ETF - 6 months





Swine flu has the potential of disrupting a fragile worldwide economic economy & its recovery. Export restrictions are being put into effect & that could put a major dent in global trade. The trade between the US & Mexico is large, above the drugs & guns business. Right now there is a lot of talk about contingencies, but shock waves are scaring investors. Oil was down on fears of slowing intl trade.

CLM09.NYM

Crude Oil Jun 09

..50.16

.. 1.39 ......(2.7%)

• Analysts: Swine flu could derail fragile global economy- CNNMoney.com

Filene’s Basement may seek bankruptcy protection this week. This would be its 2nd Chapter 11, the first was in 1999. This retail failure will hurt mall & shopping center owners (REITs). There is a conference going on in LA discussing commercial real estate. Participants include top businessmen in the field. They said that REITs are getting thru the financial crisis fairly well (even after the Chapter 11 filing by Gen Growth). Lenders feel more comfortable about the property & building assets backing loans compared with factories & offices which may have dubious value in troubled times.

•Filene's Basement Retail Chain Said to Ready Second U.S. Bankruptcy Filing


Swine flu problems & GM-Chrysler worries are plenty for the markets to digest. Once again, the Dow failed to significantly break above 8K.

Mixed markets on auto company worries

Stocks initially fell & have been hugging the break even line since then. Dow is up 25, decliners over advancers 3-2, & NAZ is even. Banks are soft on growing worries about the fate of the the 2 big auto companies.

S&P 500 FINANCIALS INDEX

Value 145.29

Change -1.92

% Change -1.3%

MLPs continue strong while Dow (reflecting ordinary stocks) has been flat in Apr. The index is up 2 to 209 & up sharply from 191 where it ended Mar. REITs are weak while junk bond funds are mixed at best.


Alerian MLP Index --- 1 month




Demand for oil is off, taking it back below 50:

CLM09.NYM

...Crude Oil Jun 09

...49.73

... 1.82 .......(3.5%)

General Motors (GM), is fighting hard to stay alive. It's shedding the Pontiac car, dealers, laying off more workers & hoping that 90% (to avoid bankruptcy) of the bondholders will swap a $1000 bond for 225 common shares. Existing shareholders will own 1% of the new GM. If the gov swaps its debt for common, it will own about half the company although they claim they have no interest in running the company. OK! Meanwhile, Chrysler worked out agreements with its unions in the US & Canada. Now it has to hope their stock for debt swap is successful & complete a partnership deal with Fiat. This has to be accomplished by the Apr 30 deadline. The 2 clocks keep ticking.

•GM to Increase Job, Dealer Cuts, Offer Swap to Reduce Debt by $44 Billion
•Chrysler Reaches Labor Agreement With U.S. Union, Ratification in Canada


The swine flu has gotten big very quickly. There are growing worries about it spreading in North America. It's also taken very seriously in Asia, they have memories of Severe Acute Respiratory Syndrome (SARS) 6 years ago which heavily damaged many of their economies. Generally drug related stocks are up on this news.

•Novavax, BioCryst, Gilead Rise on Products That May Fight Swine Flu Spread


Earnings season is winding down. But fate of the 2 autos & the potential for swine flu spreading will be driving forces for the markets.