Markets extend yesterday's gains

Stocks were higher largely due to late day buying. Dow added 50 & closed at its highs, advancers over decliners better than 2-1 & NAZ rose a bigger 23. Banks gained, giving the Financial Index a nice bounce off the yearly lows set last week.

S&P 500 FINANCIALS INDEX

Value	191.08
Change	1.78 (0.9%)

The Alerian MLP Index rose 2½ to the 325s & continues to hold up well in the face of selling in the markets in the last month. REITs were also strong. The index gained 2½ to the 211s & not far from the this year's high of 219. Junk bond funds were steady at or near 2010 highs. The VIX fell a fraction in the 23s & hasn't done much in recent weeks. The € was up a smidgen, just above $1.28. Treasuries sold off again. The yield on the 10 year Treasury bond rose almost 5 basis points to 2.62%, still at very low levels.

Treasury Securities

U.S. 3-month		0.12%
U.S. 2-year		0.49%
U.S. 10-year		2.62%

Alerian MLP Index -- 1 month




Dow Jones REIT Index -- 1 month




VIX -- 1 month




10-Year Treasury Yld Index -- 1 month





Oil rose after a platform in the Gulf of Mexico was struck by an explosion, bolstering concern that regulations will reduce output in the region. Gold climbed for a 3rd day this week on speculation that central banks will keep interest rates low for an extended period, boosting the appeal of gold as an alternative investment. Gold is nearing its record levels reached in Jun. The chart below shows gold already has a substantial gain this year (while stocks are floundering).

CLV10.NYM

..Crude Oil Oct 10

..74.98

.. 1.07 ......(1.5%)

GCU10.CMX

..Gold Sep 10

..1,249.80

.. 3.50 ......(0.3%)

+++ Gold Super Cycle +++
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GLD (ETF) --- YTD






There is a new oil leaking problem in the Gulf of Mexico. The Coast Guard reported that a mile-long oil sheen is spreading from the site of a petroleum platform that exploded 90 miles off the Louisiana coast, west of where BP's (BP) massive spill occurred. The Coast Guard said no one was killed by the explosion, all 13 aboard the rig were found floating in the water in survival gear. The blast was spotted by a commercial helicopter flying over the site. The platform is owned by Mariner Energy (ME), the stock sold off 60¢.

Oil Sheen Spreading From Gulf Platform Explosion- AP


Mariner Energy --- 2 years





Volume on NYSE floor was 1B shares, low volume can magnify fluctuations of buying or selling. Tomorrow, before the markets open, the jobs report will be released & the gut reaction today is positive, although nobody is expecting a break-thru report. Dismal unemployment numbers will remain for many months. The chart shows Dow is trying to build a base at 10K (after failing to do so this year). NAZ closed just over 2200 for what it's worth.

Dow Jones Industrials -- 1 month




Nasdaq --- 1 month

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Markets do little after jobless claims report

Stocks were slightly higher with only limited trading. Dow added 1, advancers ahead of decliners 2-1 & NAZ was up 13. Bank stocks also rose as the Financial Index is up 10 off its recent yearly lows.

S&P 500 FINANCIALS INDEX

Value	190.54
Change	1.25 (0.7%)

The MLP index was up a fraction in the 323s while the REIT index was up 2 to the 211s. Junk bond funds were flat & the VIX was down a fraction in the 23s (lowish territory). The € was flat at $1.28. Treasuries sold off. The yield on the 10 year Treasury bond rose 4 basis points to 2.62%.

Treasury Securities

U.S. 3-month		0.12%
U.S. 2-year		0.49%
U.S. 10-year		2.62%

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




VIX --- 2 weeks




10-Year Treasury Yld Index --- 2 weeks





Oil was little changed but gold has been attracting interest for more than a month because of its safe haven qualities & as a long term portfolio investment.

CLV10.NYM

...Crude Oil Oct 10

...73.56

... 0.35 .......(0.5%)

GCU10.CMX

...Gold Sep 10

...1,249.80

... 3.50 .......(0.3%)

$$ Gold Super Cycle $$
Click Here

Photo: Bloomberg


The requests for unemployment benefits declined for the 2nd straight week. New claims fell 6K last week to 472K according to the Labor Dept (a slight increase had been expected). The 4-week average of claims fell 2K to 485K, its first decrease after 4 straight increases. However even with the declines, claims are still at much higher levels than they would be in a healthy economy. The number continuing to receive jobless benefits fell 23K to 4.46M. More indecisive news on the unemployment front.

Jobless Claims in U.S. Decreased to 472,000 Last Week


Jobless claims - 1 year





# receiving benefits - 1 year





The number of buyers who signed contracts to purchase previously occupied homes increased in Jul but remained well below last year's levels. The National Association of Realtors said its index rose 5.2% from a month earlier to a reading of 79.4. But the index was still down 19% from the same month last year & the Jun reading (revised slightly downward to 75.5) was the lowest on records dating to 2001 . Recovery looks to be a long way off.

Pending Sales of Existing Homes Unexpectedly Increase in July



American shoppers took advantage of deep discounts & tax-free holidays, giving retailers surprisingly solid gains in Aug. The results provided a sliver of hope for the recovery amid a batch of bad news. However the retail data masks underlying weakness in consumer spending as they're being compared with declines a year ago. Shoppers remain selective & are focusing on the necessities, a trend that is expected to continue through the holiday shopping season. Cost (COST) posted a robust gain, boosted by higher gas prices & improved international revenue. Limited Brands (LTD) & Macy's (M) also had solid revenue increases. But a number of clothing stores, such as Aeropostale (ARO) & Gap (GAP), had weak results & Target (TGT), a Dividend Aristocrat, came in below expectations. Most of their stocks were up 1+%.

U.S. Retail Sales Top Estimates on Tax Holidays, Discounts

Volume is very light, not much happening. Tomorrow's jobs report for Aug may add some excitement for traders who are not taking a long weekend. Next week, serious trading will resume.

Dow Jones Industrials --- 2 weeks

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Dow has its biggest advance in 8 weeks

After rising in early trading, markets held their gains for the rest of the day. Dow rose 254, advancers were 5-1 ahead of decliners & NAZ added 62. Banks took the Financial Index substantially higher.


S&P 500 FINANCIALS INDEX

Value	188.29
Change	7.02 (3.9%)

The MLP index had one of its best days in awhile, up 4¾ to 323 while the REIT index rose 6½ to almost 209. Junk bond funds were generally higher, near their best levels of the year, while the VIX fell 2 to the 24s. The dollar weakened, taking the € up a penny to $1.28. Treasuries sold off. The yield on the 10 year Treasury bond rose 10 basis points to 2.57% (remaining at very lows levels).


Treasury Securities

U.S. 3-month		0.13%
U.S. 2-year		0.50%
U.S. 10-year		2.57%

Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD




VIX --- YTD




10-Year Treasury Yld Index --- YTD





Oil befitted from the euphoria in the stock markets. Gold held up well considering the selling in Treasury securities.

CLV10.NYM

..Crude Oil Oct 10

..74.05

.. 2.13 ......(3.0%)

GCU10.CMX

..Gold Sep 10

..1,244.20

.. 4.10 ......(0.3%)

*** Gold Super Cycle Link! ***
Click Here

General Motors cars
Photo: Bloomberg


Auto sales, once a bright spot in the economic recovery, grew fainter in Aug & the pain was widespread. Big car companies General Motors, Ford (F) & Toyota (TM) all saw sales slip. Smaller ones like Subaru suffered too, as did companies that appeal to the budget minded, such as Kia & Hyundai. Because buyers are nervous about the economy's health they stayed away from showrooms, a worrisome sign since Aug is typically a strong month. Industry sales could fall below 1M new vehicles when automakers finish reporting later this week, making it the worst Aug in 27 years. However, most automakers are making money at lower sales levels because they've cut production.

GM's Aug sales fell 7% from Jul & a sharper 25% from Aug 2009 (when sales were boosted by the Cash for Clunkers rebates). All 4 of GM's continuing brands saw sales drop from Jul with pricier Cadillac & Buick leading the way lower, down 15%. Ford saw sales slip 5% from Jul, while Toyota's fell 12%. Subaru sales fell 7.2%. Kia sales were off 8% & Hyundai sales were essentially flat. The recovery of auto sales from its depths last year has been uneven, as these figures point out.

GM, Ford Sales Slump as `Nervous' Buyers Stay Away


US auto sales - 1 year

Steve Jobs
Photo: Bloomberg


Apple (AAPL) announced a smaller, cheaper version of its Apple TV device for streaming movies & television shows over the internet & into the living room. It also unveiled a new line of iPods, including a touch-screen Nano model. The tiny new Apple TV system will only let people rent, not buy, content. For first-run high-definition movies the day they will have to pay $4.99. High-definition TV show rentals will be 99¢. The price of the box is also being cut to $99, from $229. AAPL has been the darling of Wall Street, but has lost zest in recent months (shown in the chart below) even with the introduction of new products. Today the stock was up $7+, but at $250 it's little changed from mid Apr.

Apple Adds Social Features to ITunes, Unveils IPods


Apple --- YTD





Markets had a tremendous rally, but there was no follow thru in the PM. After the gains came in the first hour of trading, markets settled down & where they remained (closing essentially at their highs). The auto sales for Aug were sobering & will make more gains this week difficult. Fri is the big monthly jobs report for Aug & expectations are that dreary unemployment numbers will drone on.

Dow Jones Industrials --- YTD

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Markets begin a new month with a strong rally

Oversold markets shot up today but volume remains low. Stocks are starting strong on the first day of trading in Sep as they were in Aug. Dow is up an impressive 244, advancers over decliners 7-1 & NAZ rose 61. Bank stocks are on fire, but the Financial Index remains in the lower end of its trading range over the last year.

S&P 500 FINANCIALS INDEX

Value	187.69
Change	5.42 (3.0%)

The Alerian MLP Index gained 4½ to the 322s & the REIT index was up almost 4 to 206. Junk bond funds were higher & the VIX, volatility index, dropped almost 2 to the 24s. The dollar was weak, taking the € up 1½ pennies to almost $1.28½. Largely overlooked with the strong stock market rally is a sharp decline in Treasuries. The yield on the 10 year Treasury bond leaped 11 basis points to 2.59%.

Treasury Securites

U.S. 3-month		0.13%
U.S. 2-year		0.51%
U.S. 10-year		2.59%

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




VIX --- 2 weeks




10-Year Treasury Yld Index --- 2 weeks





Oil advanced from a one-week low as the dollar fell against the € & Chinese manufacturing accelerated at a faster pace than expected in Aug. With strong stock markets, gold did well to just hold its own.

CLV10.NYM

...Crude Oil Oct 10

...73.48

... 1.56 .......(2.2%)

GCU10.CMX

...Gold Sep 10

...1,247.60

... 0.70 .......(0.1%)

$$ Gold Super Cycle $$ Click Here

Private employers unexpectedly cut jobs in Aug, delivering another blow to the already faltering economic recovery. A separate report showed the number of planned layoffs at U.S. firms fell to their lowest level in 10 years though, but there is still little to suggest companies are on the verge of hiring on a scale that would lower the unemployment rate. The private sector cut 10K jobs in Aug compared to a revised gain of 37K in Jul, according to ADP Employer Services. The ADP release followed the Challenger report, which showed the number of planned layoffs at US firms fell 17% in Aug from the prior month - employers announced 34K planned job cuts last month, down from 41K in July. It was the first month-on-month decline since Apr, when planned job losses had hit a 7-year low, & the lowest level since Jun 2000.

ADP Estimates Companies in U.S. Unexpectedly Cut Job

• U.S. planned layoffs in Aug hit 10-year low- Reuters

Manufacturing companies grew faster in Aug as the industrial sector continues to lead the recovery. Rising exports overseas & demand from businesses for capital equipment & supplies have helped propel production in factories for a year. The Institute for Supply Management said its manufacturing index rose to 56.3 in Aug from 55.5 in Jul (a reading above 50 indicates growth) & beating estimate of 53.0. The manufacturing sector has expanded for 13 straight months. While momentum had slowed this summer, the survey also shows manufacturing managers' desire to hire increased in Aug.

Manufacturing Index for U.S. Increased in August


Manufacturing factory index - 1 year





There was really no special new news to account for unusually strong stock markets in a quiet week when many are away on holiday. Extreme moves with low volume is always suspicious. Manufacturing in China grew at a faster pace in Aug after a weak Jul signaling that the economy’s slowdown is stabilizing, giving buyers more courage. Dow is doing better, but has yet to test the 9.6-9.8K lows.

Dow Jones REIT Index --- 2 weeks

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