Mixed markets on conflicting economic data

Dow was up 8, advancers ahead of decliners by 15% & NAZ rose 9. Banks are still sloshing around trying to find traction.

S&P 500 FINANCIALS INDEX

Value 196.95

Change -0.03

% Change -0.0%

MLPs are rising, the Alerian MP Index is up 1+ to the 268s & very near its yearly highs. The Dow Jones REIT Index is up taking it within 3 of its 2009 high. Junk bond funds are generally higher, at or near yearly highs (& lowest yields). The yield on the 10-year Treasury bond rose 5 basis points to 3.37%.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





Oil fell taking it closer to its 75 floor. Gold is also down, but remains above 1200.

CLF10.NYM

...Crude Oil Jan 10

...75.94

... 0.66 .......(0.9%)

GCZ09.CMX

...Gold Dec 09

...1,205.60

... 6.40 .......(0.5%)

The number of newly laid-off workers seeking unemployment benefits fell (unexpectedly) for the 5th straight week. However, claims remain above levels consistent with an economy that is adding jobs. First-time claims dropped 5K to 457K, the lowest in 15 months. The ongoing decline signals that employers could start adding jobs by as early as Jan or Feb. The economy has shed jobs for 22 straight months, the longest stretch since World War II. The employment report for Nov, to be released Fri, is expected to show that employers shed another 130K jobs after cutting 190K in Oct. However, the unemployment rate is estimated to remain at 10.2%.

U.S. Jobless Claims Unexpectedly Fall to One-Year Low

# filing unemployment claims - 1 year




# receiving benefits - 1 year

After 2 consecutive monthly sales gains, retailers posted a surprise 0.3% decrease for Nov. The decline is compared with last Nov when spooked shoppers went into a defensive crouch after the financial meltdown. Most stores, including department store chains Macy's (M), Children's Place Retail Stores (PLCE), teen merchant Abercrombie & Fitch (ANF) & discounter Target (TGT), posted sales declines. Their stocks are down around 5%.

• Retailers report surprise drop in November- AP

This is another day when markets are getting mixed signals from the news. The rest of the day should be quiet until the Nov jobs reports is released tomorrow before trading.


Dow Jones Industrials --- 2 weeks

Markets look for direction

Stocks were getting mixed messages from earnings reports which are failing to bring out the buyers. Dow was up 48 from good earnings reports in a few Dow stocks but advancers were over decliners 3-2 & NAZ was down 10. Banks rebounded after yesterday's decline in the last hour.


S&P 500 FINANCIALS INDEX

Value 202.28

Change 1.87

% Change 0.9%

MLPs are resting after their strong performance this month. The Alerian MLP Index fell ½ point. dipping below 265 but still up sharply form the 240-250 range it was in during Aug & Sep. The REIT index was down only a fraction in its sideways trading range since Aug. Junk bond funds were mixed at their high levels for the year. The VIX, volatility index, was up fractionally in the 22s after setting a new 2009 low of 20 yesterday. The 10-year Treasury bond yield went up 1 basis point to 3.42%. Oil slipped a little, taking it just below 81 & gold dropped 10 to 1053.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





Earnings from the heavyweights were mixed & mushy. 3M (MMM), Dow stock & Dividend Aristocrat, had a very good Q3 report & was up 1.84. It's also double the low earlier this year. 2 more Dow stocks, Travelers (TRV) & McDonald's (MCD), also a Dividend Aristocrat, were each up 2+ on good earnings. Merck (MRK), another Dow stock & Dividend Aristocrat, had good earnings but sold off as the drugs have been weak yesterday & today. AT&T (T), a Dow stock, did well in its wireless business & gained. UPS (UPS) does not consider the recession to be almost over. They are handling fewer packages & those are smaller. High fuel prices is a kick in the head they don't need. The last 5 have had charts that show more sideways trading in the last year.

3M Profit Beats Estimates; Full-Year Forecast Raised

• Merck posts big profit jump, slight rise in sales- AP
• AT&T profit dips but wireless results strong- AP
• UPS reports much smaller 3Q profit- AP
• Travelers profit jumps on lower catastrophe costsAP(Thu 10:04am)
• McDonald's sees profit climb 6 pct
  AP (Thu 10:58am)

3M --- 1 year




Travelers --- 1 year




McDonald's --- 1 year




Merck --- 1 year




AT&T --- 1 year




UPS --- 1 year





The index of US leading economic indicators rose 1% in Sept for a 6th straight month of gains, suggesting the economy is likely to expand. But there are significant headwinds. Home prices fell 0.3% in Aug. The number filing first time unemployment claims last week ticked up 11K to 531K, over 500K is considered troubling. The sideways Dow this week recognizes bumps the recovery is encountering.


Weekly jobless claims - 12 months




Dow Jones Industrials --- 2 weeks

Dow charges ahead to new 2009 high

Stocks had strong gains. Buyers were encouraged by relatively good earnings reports & a favorable unemployment report for last week. Dow shot up 154, advancers over decliners better than 5-1 & NAZ rose 34 taking it over 2K (not bad after starting 2009 at 1577). Banks are also having a great day. The Financial Index is trying to take out the previous high of 175 reached in May.

S&P 500 FINANCIALS INDEX

Value 174.38

Change 5.50

% Change 3.3%

MLPs are not sharing today's gains, the Alerian MLP Index is up only 1. But at 244, it's just 6 below its high on Mon. REITs are having a great day, the Dow Jones REIT Index is up 6 (one of its best days this year). Junk bonds continue strong. Risk investments are being bought up. The yield on the 10-year Treasury bond is up 4 basis points to 3.71% (Treasuries are being sold on balance).


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




The gains on Wall Street are being shared by oil futures which recovered half of yesterday's big drop.

CLU09.NYM

...Crude Oil Sep 09

...65.34

... 1.99 .......(3.1%)

The number of claims for jobless benefits rose last week due to seasonal distortions. However, the number remaining on the jobless rolls fell to 6.2M from 6.25M in the prior week, the lowest level since mid-April. New claims for unemployment increased 25K to 584K (above analysts' estimates of 570K). The increase comes after claims were artificially depressed earlier this month by the timing of temporary auto factory shutdowns. This week's total is below the 617K claims reported in late Jun before seasonal distortions began reflecting a trend that indicates a slowing pace of layoffs. The 4-week average fell to 559K, the lowest level since Jan. Unfortunately, jobs remain scarce & the unemployment rate, which hit 9.5%, is expected to exceed 10% by year's end. And weekly claims remain far above the 300K - 350K that is consistent with a healthy economy.

•Initial Jobless Claims in U.S. Increase; Total Rolls Unexpectedly Decline

Exxon-Mobil (XOM), Dow stock & Dividend Aristocrat, reported Q2 net income of $3.95B (81¢ per share), down sharply from $11.7B ($2.22 per share) a year earlier. Excluding one-time items, earnings were $4B (84¢ per share). Analysts expected $1.02 per share. Revenue plunged 46% to $74.5B. XOM said, "Global economic conditions continue to impact the energy industry both in the volatility of commodity prices and reduced demand for products." Q2 production fell ONLY 3% from last year. XOM will reduce stock buybacks in Q3 to $4B from $5B in Q2. The stock was down 1. Royal Dutch Shell (RDS.A), the 2nd biggest oil producer, reported a similar decline in revenues & profits. Shell stock was up fractionally. Exxon & Shell produce 1/7 of the world's oil.

•Exxon Mobil, Shell Earnings Plummet After Recession Curbs Demand for Fuel

Exxon Mobil --- 1 year

Royal Dutch Shell --- 1 year

Risk is being rewarded.s Dow is setting another high for this year & NAZ wants to top 2K. The high yield sectors are benefiting from buyers' eagerness to accept more risk.


Dow Jones Industrials --- 2 weeks

Stocks still undecided

Dow rose 33, advancers ahead of decliners almost 3-2 & NAZ was up 9. Banks are back in favor:

S&P 500 FINANCIALS INDEX

Value 165.38

Change 4.50

% Change 2.8%

The Alerian MLP Index was up 2¼ to 230 following yesterday's sell-off, helped by the rise in oil. REITs were higher & junk bond funds mixed.

Oil was strong on the weaker dollar. Traders are buying commodities to safeguard against inflation & dollar weakness

CLN09.NYM

...Crude Oil Jul 09

...68.04

... 1.92 .......(2.9%)

Initial jobless claims slipped 4K to 621K last week, in line with forecasts. The number collecting unemployment insurance fell for the first time in almost 5 months, breaking a string of 17 consecutive records. The unemployment report for May, expected tomorrow, may show unemployment going over 9% for the first time in over 25 years.

•Initial Unemployment Claims in U.S. Decrease, Signal Worst of Slump Ending

The average 30-year rate on mortgages last week rose to 5.29% from 4.91% in the prior week. The last time the rate was higher was Dec. 11, at 5.47%. Treasury yields are climbing which bleed thru to mortgage rates. The yield on the 10-year Treasury is 3.64%, up 8 basis point today, compared with 3% on March 17, the day before the FED announced its plan to boost mortgage-backed bond purchases & buy Treasuries.

•Fixed 30-Year Mortgage Climbs to Highest Level of Year, Freddie Mac Says


10-Year Treasury Yld Index - 2 weeks




May same-store sales fell below expectations, from rising unemployment curtailing consumer spending. Luxury chains & department-store operators continued to be the weakest sectors, while discounters & teen apparel retailers did well.

• US retailers report May sales declines- AP

Stocks are meandering, but the Dow may be trying to get up a head of steam to go into the black for the year. It only needs another 70 points.

Dow Jones Industrials --- 2 weeks

Markets meander, looking for direction

After excitement by the Federal Reserve yesterday, markets are trying to figure out which way to go. Dow slipped 24, advancers over decliners 3-2 while NAZ is even (lingering effects from the Sun buyout has to be helping).

S&P 500 FINANCIALS INDEX is giving back some of the recent gains in this confusing market.

Value 122.07

Change -3.94

% Change -3.7%

Alerian MLP Index is up 2 to 194. REITs are down & junk bonds funds have modest gains.

Oil shot up on the FED's announcement about buying bonds. The $ is very weak & gold is strong, its flight to safety quality is attracting buyers.

CLJ09.NYM

...Crude Oil Apr 09

...51.35

... 3.21 .......(6.7%)

ZGH09.CBT

..Gold 100 oz. Mar 09

..933.00

.. 43.50 ....(4.9%)

The weekly data on unemployment continues grim. Last week, 646K filed for unemployment (down slightly from the prior week). The number drawing unemployment surged 185K to almost 5½M (as of the prior week), the highest number on record. The economy keeps bleeding jobs with no end in sight.

• U.S. workers on jobless benefits at record high- Reuters

FedEx (FDX) reported dismal earnings. Profits plunged 75% on lower sales, the first sales decline in a decade. They reduced earnings guidance in what is considered a difficult year to forecast. FDX feels the pulse of the economy (US & around the world), making their earnings announcement more important than most other companies.

•FedEx Profit Slumps, Sales Drop for First Time in Decade; Job Cuts Planned


Citigroup (C) is trying to fight back from the gloom which brought the stock down to 1. They will have a reverse stock split to boost the share price (stockholders then will be able to see a $50 price, whatever, on far fewer shares). They are also proposing a stock swap for preferred stockholders to swap for common at a $3.25 value. The idea is to boost common equity which has been draining fast. Also, Citi will need $10M to renovate a floor for top executive officers in their main building at 399 Park Ave. Sounds like they are getting inspiration about spending from gov spending programs. In all fairness, they are trying to do something for the economy. Citi will sell $3B in bonds backed by credit card payments under the new gov program TALF.

Citigroup Said to Commit $10 Million for New Executive Suite
•Citigroup Plans to Sell $3 Billion in Credit-Card-Backed Bonds Under TALF

• Citigroup offers stock swap to boost capital- Reuters

The AIG hearings are a big joke. Congress screwed up by passing rescue packages & spending programs in a hurry & now seems shocked to find out that haste makes waste. They need to understand the meanings of sloppy & careless. Punishing a few AIG guys sends a bad signal that Congress will second guess everything bailout companies are doing. Much worse is the $180B (whatever) used to save AIG is being ignored. They know how to watch the mice while ignoring the mountains! I'm not sure how rushed & sloppy behavior by Congress is supposed to increase confidence for investors so they will buy more stock.

Confusing markets plus the strongest 7 day period since the depression can keep stocks under pressure.

Pre-trading markets are lower

Jobless claims fell 21K to 509K in the latest week, sort of a hopeful sign. But over 4MM are receiving unemployment checks, the highest number in 26 years. This is the kind of news which feeds into dreary retail sales figures.

•Unemployment Benefits Claimed by 4.09 Million Americans, Most in 26 Years


Retail sales for Nov are being reported & expectations are grim. Wal-Mart (WMT), a Dow stock, beat expectations with a 3.4% increase for same store sales but others, especially retailers with mall stores, suffered huge declines. BlackFriday was a better day, but results were poor for the rest of the weekend.

Wal-Mart Stores' November same-store sales rise- AP
Retailers post steep sales declines in November- AP

DuPont (DD) & Merck (MRK), 2 Dow stocks, came out with gloomy outlooks.

DuPont warns of quarterly loss, to cut 2,500 jobs- Reuters
Merck 2009 profit outlook misses estimates- AP

Oil is settling back to lower levels, in the 46s (4 year low). Expectations are prices will slip further to 40 on expectations of lower demand caused by the worldwide economic meltdown.

Oil hits near 4-year low on weak economic news- AP

Based on the continuation of gloomy stories, Dow futures in pre trading are down 100. Meanwhile the CEOs of the Big 3 are back in DC begging for $B in help. Today could be another glum day.

Markets plunge again!

Asian stocks last night followed US stocks, down sharply. During trading, down 5% was common among the stock markets. European stocks continued with Dow futures this morning indicating a sharply lower opening.

Dow is now down 277 taking it below 9K, decliners ahead of advancers almost 4-1 & NAZ dropped 43. S&P 500 FINANCIALS INDEX is down 6½ to 195, the Alerina MLP Index is down 12 (very big drop for AMZ) to 207, the Dow Jones REIT Index is down 5 to 152 (after yesterday's big drop) & high yield (junk) bond finds are also headed lower.

Oil is down again. Its down 9 in just 2 days on worries about sagging economies buying less oil.

CLZ08.NYM

Crude Oil Dec 08

....61.41

.... 3.89 (6.0%)

United States Oil Fund is an ETF which tracks oil. Below is their almost 3 year track record showing how far oil has risen & retreated this year, back to 2 year lows.


USO --- 3 years




As expected rate cuts around the world keep coming. The Bank of England cut its lending rate 150 basis points, the European central bank cut its rate 50 basis points (it takes a lot to get them to cut) & the Swiss policy makers cut their lending rate 200 basis points at an unscheduled meeting. These large rate cuts are highly unusual & indicate how seriously central bankers are taking the global slowdown affecting their economies.

•Bank of England Leads European Central Banks in Rate Cut as Economies Slow


New jobless claims dropped slightly to 481K last week but still remain very high as 400K is considered the worrisome level. The number of people receiving benefits lags, it increased to 3.84MM, the highest level in 25 years. Tomorrow the Oct unemployment numbers will be reported, everybody is dreading what they will say.

• Jobless claims drop slightly from elevated level- AP

Retail sales were awful, although Wal-Mart (WMT), a Dow stock, managed a 2.4% same store sales gains (stock up 66¢).

•Macy's, Target, Gap October Sales Fall; Wal-Mart's Climb, Beating Forecast


Blackstone Group (BX) reported a huge $½B loss in Q3, its worst since going public last year. The stock was sold at 27 & rose to 35 very quickly as it was one of the sexy stocks (the darling of Wall Street) last year, just before the credit crisis was recognized. Now it can be bought for $7.63. I'm not showing the chart because nobody wants to see it.

•Blackstone Misses Estimates, Reports Biggest Loss Since IPO; Shares Slump


Since I began writing, Dow dropped another 100 taking it far below 9K. Deary economic reports will keep coming, the unemployment one tomorrow is the big one everybody fears.

Home sales decline again

Stocks sank on negative economic news. Dow is down 107, decliners ahead of advancers better than 3-2 & NAZ is down 17. New home sales for June fell 2.6% from the prior year, double the estimates & the median price for a home was down 6% from last year. Gloomy news in the housing sector drags on. The Labor Dept reported that new claims for unemployment benefits shot up 34K to 406K (a recession kind of number for many). The forecasted number was 375K & last year it was only 308K. Oil rebounded 1 to 125½. Gasoline demand in the US fell 2.4% from the prior year, high prices are biting the consumer. Dreary economic news drones on.

Ford (F) lost almost $9B mostly on asset write-downs, down 40¢ (a lot for a $5 stock). Southwest airlines (LUV - love that symbol) reported higher sales & higher earnings from the sales increase & hedging oil. They remain under pressure from higher costs & cut back growth plans to 4% or less this year, stock slipped 28¢.

Master Limited Partnerships

MLPs are one of my favorite investments, let me explain them for newbies. They trade like stocks but are actually limited partnerships in pipeline businesses. These pipelines move oil & gas around the US, expanding this network is a national priority. Many of the units yield 8+% which is 80-90% tax-free. However there is a fair amount of tax hassle associated with distributions, the non-taxable portion is generally reduces cost basis plus you learn more about depletion. Annual tax statements are sent on March 15. However, tax package programs are supposed to handle these numbers well. They have an excellent track record, with or without reinvested distributions (see the Alerian MLP index based only on security prices below).





One year ago, the index maxed out at 342 followed by a sharp drop taking it under 300 from which it hasn't been able to recover. It has been trading sideways this year with a downward bias. Joe has an excellent blog on MLPs, limitedpartnerships.blogspot.com, if you want to follow them more closely. The long term outlook is excellent & high yields makes it easier to wait for higher markets. Today the index is down about 1 to 267 after a one day rally of 8 last week.