FED eases liquidity

Fed has a new plan to help major financials, big banks & investment banks. They will provide $200B in Treasury securities so there will be an ample supply of treasury securities. This is a bit technical for ordinary investors to digest but banks rallied big out of the gate gaining 4%. Now they're pulling back after investors got a chance to think about it. Bank of America (BAC) a new member of the Dow, was up almost $2 but has sold off so it's only up 61¢ presently. Dow is up 150, advancers over decliners 4-1 & NAZ is up 29.

Back to ordinary news, gas prices inched up to a record level $3.23 & are poised to go higher. The price of oil got within a hair's breath of 110. The US trade deficit widen in Jan to $58 as the weak dollar benefits exports but we continue to import a lot of gas.

Enthusiasm following the FED's announcement will diminish going forward. The steady stream of negative news reports on the economy should keep taking it's toll.

Dow falls to new low

Dow fell 153 to 11,740. The losers lead advancers better than 5-1 & NAZ was down 43. Last week, an analyst from Asia said 1270 was an important resistant level for S&P 500. It closed at 1273, can you spell uh-oh? The Alerian MLP index (on the right side of this page) fell to 281, another new low for it. Meanwhile the Treasury bond rallied, reducing its yield to 3.44%. When stock are sold, money goes into bonds.

Negative news keeps coming. Thornburg Mortgage (TMA) is at 1 (not down 1 but at 1). It looks like billions more will have to be written off the books of it's lenders. The head of OPEC gave a gloomy outlook for oil prices as oil reached 108. Texas Instruments (TXN), up 35¢, reduced forecast for Q1. Bear Stearns (BSC), down 7.58, dropped as Moody's downgraded BSC securities backed by Alt-A mortgages (home loans given to people lacking proof of income or with minor credit problems). During the financial crunch in the summer, there were all kinds of worries about BSC & its survival. BSC survived but the stock is almost 40 points lower.

Dow sinks to under 11,800

Dow is down 104 to under 11.8K, decliners ahead of advancers 3-1 & NAZ is down 24. The next important downside level for the Dow will be 11.5K. In pre-trading markets, there was a rumor that FED would have an emergency rate cut in a few minutes. So much for that rumor. They were also talking about a rate cut of 75 basis points at next week's meeting. Meanwhile, the usual array of gloomy news continues. Gasoline prices are nearing record levels of $3.23 a gallon as oil reaches 107. Based on these trends, analysts are looking for gas to go to $4 a gallon. Blackstone (BX), down 55¢, reported a major write-down on it's bond insurer FGIC. Blackstone was the sexy darling of Wall Street when it went public last June, now it's down 50% from the original price. Recently the markets have had to absorb a lot of negative news on bond insurers, key players in credit markets.

An interesting article that caught me eye is Citigroup (C) sees write-downs of an additional $9B by investment banks. If they are right, that can bring forced selling in stocks when these funds try to liquidate. This is shaping up as another tough week even as the projected FED rate cuts nears.

Job report sinks stocks

Stocks were down largely based on the negative job report suggesting we are already in a recession. Dow was down 146 to 11.9K (yes, it broke 12,000), losers outnumbered advancers 2-1 & NAZ was down 8. There were 396 new lows on the NYSE. As bad as the numbers sound, it wasn't that bad for beaten up stocks. REITs were up, bargain hunting helped. Financials did fairly well, betting that the FED moves announced this AM will help. However, some worry the FED is doing everything it can but that's not helping. MLPs continued their decline, down 2.97 to 286.56. Oil closed over 105. Thornburg Mortgage (TMA) is on the verge of failing which will only add to bad debts at major financial institutions.

Comparisons are being tossed around between this bear market & the major one early in the decade. This one isn't as big (yet) but it has fallen at a faster rate & it's not over yet. We'll see what next week brings.

Stocks down after FED moves

Stocks sold off but not too badly. Dow is down 112, however NAZ is down 8 & decliners are only slightly ahead of advancers. Many of the beaten up ones I follow are up. i.e. bargain hunting.

The Labor Dept reported employers cut jobs by 63K in Feb, the most since March 2003. The unemployment rate fell to 4.8% reflecting people leaving the labor force. The FED announced it will boost the size of the next 2 auctions by $50 billion each up from the $30 billion limits it had previously announced. Additionally, the FED said it will make $100 billion available to a broad range of financial players starting on Friday. Consumer confidence was reported at the lowest level in 6 years. Oil reached another record, over 106.

In the last hour, Dow pulled back 100, sending it below 12K. It looks like the PM will see more selling as traders want to lighten up going into the weekend.

Asian markets tumble following US decline

Asian markets tumble following the decline of US markets. Most are down 2-3% in their Fri morning sessions. YTD they are down 12-18%, worse off than US markets. They are heavily influenced by the US economy since it is typically their largest market.

Alerian MLP index

The Alerian MLP index closed at 289.53, just below the line of 290 which has pretty much held in recent months. Once again, this is a technical indicator testing whether buyers will support this line as in the past or give up. 4 times in recent months it held. This is also important for fundamental reasons. Limited partnerships own pipes moving oil & gas around the country. If this line can not hold, the markets are giving up on basics. For the brave who like high yields & are willing to put up with tax hassle, they offer excellent values as their long term track record indicates. The index was started on 12/31/96 at 100, today they are triple, a second index including reinvested distributions is 662.

Down down 215, testing 12,000

Ugly day in the markets. Dow as down 215 very near 12K & testing that sensitive level. Decliners led advancers 7-1 & NAX was down 52. S&P 500 and NAZ are at 52 week lows. Dow closed at the lowest close (intra day in Jan was lower) in almost 18 months. Retailers & financials led the markets down. Nothing really new, same old negative news getting the better of the markets. Negative stories & credit concerns got the better of buyers. Oil closed at 105.47, another record. The FED issued a report that homeowners equity dipped below 50%, first time since they've been keeping records. Citigroup (C), a Dow stock, said it will shrink its mortgage business by $45B.

Junk bond funds yield 11%. Many REIT's yield 6%, 8% or more & generally have partially tax free divs. The S&P 500 Dividend Aristocrat list has 56 companies with excellent long term track records of paying divs. Today the Alerian MLP index closed just below 290, for the last 8 months it has largely lived in the 290-310 range. They offer attractive yields. However they are sending out their K-1 tax reports next week, offering a fair mount of tax hassle. But I like them.