Friday's selling was not over

Stocks started stronger despite selling in Asian markets. But that strength did not last, sellers took over after lunch & selling accelerated in the last hour. Dow fell 115 to 9816 (closing at its lows), decliners over advancers 5-2 & NAZ dropped 45 (2%). European bank problems, oil spill mess, high unemployment rates, that's a lot for markets to absorb! Banks led the way down as the Financial Index is flirting with its lows of the last 9 months.

S&P 500 FINANCIALS INDEX

Value 186.43

Change -3.87

% Change -2.0%

The Alerian MLP Index dropped 2.82 back to the 289s. The chart shows it has held up well during recent selling, but selling pressure is taking its toll. The REIT index was down 1 to the 186s after an awful Fri. Junk bond funds inched higher. The VIX climbed 1 to the 36½, fears are on the rise. The yield on the 10-year Treasury bond dropped another 1 basis point to 3.18%. Low yields on the Treasuries spell trouble for the stock markets.


Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD




VIX --- YTD





Oil is slogging along in its sideways pattern, but gold got hot. Financial worries are on the increase, prompting gold buying (1250 represents its next record price). Investors buy gold as a safety net looking for a place to put their money & are choosing gold again. A link below is provided to learn more about gold & its cycles.

CLN10.NYM

..Crude Oil Jul 10

..71.53

.. 0.02 ......(0.0%)

Gold Super Cycle!!
Click Here

CEO Steve Jobs opened Apple's (AAPL) annual conference revealing the iPhone 4, which will cost $199 or $299 in the US with a 2-year AT&T contract (depending on the capacity). The next iPhone will be sold on Jun 24 & will have a higher-resolution screen, longer battery life & thinner design. iPhone 3GS, which debuted last year, will still be available, for $99. The iPhone 4 is about 3/8 of an inch thick; the previous iPhone was nearly ½". It has a camera on the front that could be used for videoconferencing, in addition to a 5-megapixel camera & a flash on the back. It can shoot high-definition video, catching up to some other smart phones. The display on the new iPhone remains 3½" diagonally, but it can show 4 times as many pixels, the individual colored dots that make up an image, as the previous screen. The stock fell 5 to below 251 & has a chart that looks like it's topping out.

•Apple's Jobs Unveils IPhone 4 to Fend Off Gains of Google's Android System


Apple --- 2 years






Goldman Sachs (GS) has been accused of stonewalling an investigation by a panel probing the causes of the financial meltdown. The Financial Crisis Inquiry Commission said it had sent GS numerous requests for information, documents & interviews, but found it necessary to issue a subpoena for documents. GS claims they have cooperated. The stock was down 3½ to the 138s & its chart looks very soggy in 2010.

•Financial crisis panel subpoenas Goldman
AP


Goldman Sachs --- 2 years





The € is just above $1.19, another new low. European financial problems are far from over. Stocks have given up & they look tired. Dow is down almost 440 in 2 days. It will need a major lift to get back to 10K & it's hard to see where that will come from.

Dow Jones Industrials --- YTD

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After starting higher, markets sink

Asian stocks sold off badly, but US market were able to begin with a modest advance which did not last. Dow is off 43, decliners over advancers 4-3 & NAZ is off a big 21 (2%). Banks also began higher, but gave up those gains.


S&P 500 FINANCIALS INDEX

Value 189.18

Change -1.12

% Change -0.6%

Like stocks, MLPs were higher but selling is getting the upper hand reducing the gain on the index to a modest fraction in the 292s. The REIT index is up 1 to the 188s. Junk bond funds are generally a little higher. The VIX, volatility index, is about even at 35½. The yield on the 10-year Treasury bond is up a tad to just under 3.20%, still very low.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





There is little going on in the commodities. But oil is holding above the important support at 70 while gold is not far from setting new records at 1250.

CLN10.NYM

...Crude Oil Jul 10

...71.80

... 0.29 .......(0.4%)

GCM10.CMX

...Gold Jun 10

...1,215.40

... 0.80 .......(0.1%)

Gold Super Cycle!!!
Click Here

A lack of comment on the 17% drop in the € versus the $ at last week’s G-20 meeting signals they approve of the currency’s direction. G-20 leaders promised to “safeguard recovery” in a statement released after their talks on Sat. They replaced an endorsement of budget stimulus with a pledge to pursue “credible, growth-friendly measures to deliver fiscal sustainability.” Jean-Claude Trichet, European Central Bank President, said at the meeting that fiscal tightening in “old industrialized economies” would aid the expansion by shoring up investor confidence. He said the € is keeping its value in a “remarkable fashion.” I'm not sure what he means but the € slipped at fraction, under $1.19½. Hungary is a looming big problem, but nobody is sure what is going on.

G-20 Silence on Euro Drop Signals Approval, Morgan Stanley Says



BP (BP) said it was capturing most of the oil gushing from its leaking Gulf of Mexico well, & that an additional capture system would be ready next week. Its containment cap had captured 10K barrels on Jun 5, compared with an estimated daily flow of 12-19K barrels. An additional system to capture more of the leaking oil via equipment previously developed for the failed "top kill" attempt to shut the well, could allow BP to siphon the vast majority of the leaking oil, BP said. It's believed they turned the corner on plugging the leak. It is also thought that capturing most of the oil in the coming weeks would make it easier for BP avoid cutting its Q1 div. The stock is up 34¢ to 39.50 & yields 9% for the very brave.

BP Spending Picks Up on Spill as Capture Rate Rises


BP --- YTD





Apple (AAPL) will unveil its latest iPhone today, as it aims to stay a step ahead of rivals in an increasingly competitive smartphone market. The bar is set high & it will be a challenge to wow investors after the stock has already gained more than 20% YTD & the company overtook Microsoft (MSFT, a Dow stock) to become the world's most valuable tech company. The new iPhone is expected to be faster, sport a front-facing camera for videoconferencing, boast longer battery life & a better screen. Although the iPhone is gaining share globally, it faces a lot of new competitors. Nervous investors are selling AAPL, down 2 to the 253s.

Apple’s Jobs Seen Revamping the IPhone to Stay Ahead


Apple --- YTD





Not very much was accomplished at the G-20 meeting, as expected. There are technical indicators that a small cap drop may signal bears are in charge & another that the "painful retreat" may be over. Take your pick! Markets are soft while volatility is high, not good.

Dow Jones Industrials --- 2 weeks

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Markets collapse after a bad jobs report

Stocks went from bad to worse. Dow began down 100+ & ended falling 324 (closing near its lows & below 10K), decliners over advancers 7-1 & NAZ dropped 83. All 30 Dow stocks sold off including defensive types like Coca Cola (KO) & Johnson & Johnson (JNJ), both Dividend Aristocrats. Banks also had a terrible day. The Financial Index is within a few points of its 9 month lows.


S&P 500 FINANCIALS INDEX

Value 190.30

Change -7.85

% Change -4.0%

Selling hit MLPs later in the day. The Alerian MLP Index dropped 5½ to the 291s while the Dow Jones REIT Index plunged 11½ to 187 (a very ugly day for REITs). Junk bond funds were down around 1-2%. The VIX, soared 6½ to 36 heading back to 40s on higher investment fears, very scary territory. Treasuries soared! The yield on the 10-year Treasury bond plunged 18+ basis points to just under 3.20%.

Alerian MLP Index -- YTD




Dow Jones REIT Index -- YTD




VIX --- YTD




10-Year Treasury Yld Index - YTD






Negative thoughts about stocks bled thru to commodities, i.e.oil. But it's still in its sideways range, little changed in the last 18 months. However gold came back into favor with demand by investors looking for a safe haven & is only 35 away from setting a new record. The 2 year chart for the gold ETF (GLD) is the envy of 99% of the stocks.

CLN10.NYM

..Crude Oil Jul 10

..71.18

.. 3.43 ......(4.6%)

GCM10.CMX

..Gold Jun 10

..1,217.70

.. 9.40 ......(0.8%)

Gold Super Cycle!!!
Click Here

GLD (ETF) --- 2 years

Photo: Bloomberg


Standard & Poor’s lowered its long-term corporate credit rating on BP (BP) to ‘AA-’ from ’AA’. S&P also placed both the long & short term ratings on CreditWatch with negative implications. The short-term credit rating remains ’A-1+’. BP said its effort to divert oil leaking from its Gulf of Mexico well to a ship on the surface is working, with a goal of capturing more than 90% of the spill. Recovery may have reached a rate of 1K barrels a day, based on a BP estimate. Gov scientists estimate the well was leaking 12-19K barrels of oil a day. BP fell 2.09 to 37.18 & yields 9% for the very hearty.

BP Long-Term Corporate Credit Rating Cut to AA- by S&P
•BP Recovers Gulf Oil Via Cap, May Be Able to Capture 90% of Leaking Crude


BP --- YTD





The € dropped below $1.20. All of a sudden, Hungary appears on the radio screen of troubled countries in Europe. One more worry the Euro group does not want! The oil spill situation is getting better, but there is also worry it might not be properly plugged until Dec. Nobody knows. The jobs picture in the US is back to bleak. No wonder worries are running high again. Dow went below 10K, where it was in Oct when it was on the rise. This is not the picture of a strong recovery! This weekend, the G-20 countries may come up with another silver bullet, but that could be seen as trying to fix financial problems with 1 or 2 band aids.


Dow Jones Industrials -- YTD

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Markets tumble on disappointing jobs report

Stocks sunk at the start & drifted lower. Dow dropped 206 (session lows), decliners over advancers 5-1 & NAZ lost 36. Banks stocks led the way down. The Financial Index is approaching its 9 month lows of 186.

S&P 500 FINANCIALS INDEX

Value 193.90

Change -4.25

% Change -2.1%

MLPs were weak at the opening, but rebounded to a loss of only 1+ in the 296s. The favorable article in the Wall Street Transcript yesterday has been helpful. Meanwhile REITs, dropped off. The Index fell 5+ to the 193s. Junk bond funds sold off 1-2%. The VIX rose 2½ to the 32s. Treasuries soared on the unemployment news. The yield on the 10-year Treasury bond dropped 12 basis points to 3.27%, heading back down to its yearly low under 3.2% reached last week.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index -- 2 weeks




VIX --- 2 weeks




10-Year Treasury Yield Index - 2 weeks





The weak jobs report hurt oil on fears there will be less demand for oil from the US. Nervous money is going into Treasuries, ignoring gold. That disconnect shouldn't last.

CLN10.NYM

...Crude Oil Jul 10

...73.08

... 1.53 .......(2.1%)

GCM10.CMX

...Gold Jun 10

...1,197.90

... 10.40 .......(0.9%)

Gold Super Cycle!!
Click Here

The May jobless report greatly disappointed the markets. Payrolls rose 431K in May, including a 411K jump in gov hiring for the 2010 census. The projection was for a 536K gain. Private payrolls only rose 41K, less than forecast & followed an increase of 218K in Apr (revised from 231K). Because of the impact of hiring Census workers, private payrolls will be a better gauge of the state of the labor market for much of 2010. The jobless rate fell to 9.7%. While the economy may be mending, it's not making a significant dent in the unemployment rate. In addition, the underemployed rate, including those working at menial jobs to get by or have given up looking for work, is about 17%, a very troubling number.

•Payrolls in U.S. Climb Less Than Estimated as Confidence in Recovery Wanes


Unemployment rate - 1 year






Bill Gross, co-chief investment officer & manager of the world’s biggest bond fund said Treasuries are the premier holdings for fixed-income investors with the U.S. economy failing to produce private sector jobs & Europe’s sovereign-debt crisis threatening the region’s banking sector. “The U.S. is the least dirty shirt,” Gross said & continued, “The world is full of dirty shirts in terms of excessive debt, and the United Sates is one of those countries, but it still remains the reserve currency and still remains the flight to quality haven.” He added that Treasuries in the 5-10 year range & 30-year debt have become “the focus for us.” His fund’s investment in US gov-related debt in Apr was raised to the highest level in 5 months.

•Gross Says Treasuries Are `Least Dirty Shirt' in World of Debt: Tom Keene



This is one of those glum days. The unemployment report was very disappointing to say the least. Worse, there is no sign of a quite reversal of these dreary figures. The € sank to $1.20½, another new 4 year low. Now there is greater appreciation of how much damage the oil spill is doing to the economy. The Dow is less than 50 away from the 10K level. Maybe that support will hold.

Dow Jones Industrials -- 2 weeks

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Markets a little higher ahead of jobs report

Stocks started the day with gains, slid into the red at lunchtime followed by a recovery to near break even. Dow rose 5, advancers over delciners 3-2 & NAZ gained a big 21. There was not a lot going on in the Dow, 17 up & 13 lower. Bank stocks were lower all day, but not by very much.

S&P 500 FINANCIALS INDEX

Value 198.15

Change -1.04

% Change -0.5%

The Alerian MLP Index jumped 6 to 297+ while the Dow Jones REIT Index fell 1 to the 198s. MLPs received a nice mention in the link below. Junk bond funds rebounded after yesterday's selling, up 1% or so. The VIX has had a bumpy time of it in the last month (shown below), but it has settled down in the last week. However, 30 still qualifies as a high reading from nervousness. Today it dropped ½ to the 29s. Treasuries continued weak, taking the yield on the 10-year Treasury bond up 4½ basis points to 3.38% (another sign of easing fears, at least for the moment).

Bottom Up Stock Analysis For MLPs Yields Key Stocks For 2010 And 2011 From Swank Group: Specialty Refiner And Growth Oriented Pipeline Two Key PicksWall Street Transcript


Alerian MLP Index --- 1 month




Dow Jones REIT Index -- 1 month




VIX --- 1 month





Oil had a good day, but remains range-bound while gold slipped again. The weak € has not been helping either Treasuries or gold, unusual.

CLN10.NYM

..Crude Oil Jul 10

..74.42

.. 1.56 ......(2.1%)

GCM10.CMX

..Gold Jun 10

..1,208.00

.. 12.60 ......(1.0%)

Gold Super Cycle!
Click Here

The group of 20 central banks (G-20) are delaying their withdrawal of emergency stimulus as Europe’s debt crisis shakes financial markets & threatens to hinder the global recovery. G-20 countries began talks to identify investor reaction to Europe’s indebtedness as a hurdle to higher interest rates. It's anticipated that the countries are less eager to tighten given uncertainties in the global economic recovery. The European $1T bailout financing will be discussed, the package hasn’t been enough to pacify investors concerned sovereign debt is the biggest threat to the recovery from last year’s global slump. Central banks are concerned the biggest threat to the recovery is banks ceasing to lend & financial markets freezing as happened in 2008, rather than weaker European demand. Stay tuned for announcements over the weekend.

•G-20 Central Banks Delay Stimulus Exit as Europe Debt Woes Rattle Markets


The graph below shows the fall of the € in the last 3 months, pretty dramatic. The decline over the last 5 years is more disturbing. This loss is what the finance ministers are fighting. Today the € sank to $121½, not good.

Euro (€) -- 3 months



Euro (€) -- 5 years






As usual at this time of the month, markets are trying to guess what the unemployment report will show tomorrow. Estimates for the gain in jobs ranges from 200K- 700K+, quite a range. My guess is that 500K+, at a minimum, is already baked into the markets. Less would be disappointing. The G-20 meeting also has the power to shake markets one way or the other.

Dow Jones Industrials -- 1 month

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