Markets mixed on lower consumer confidence

Dow was up 46 on the strength of Chevron (CVX), Exxon (XOM) & IBM (IBM). Decliners were modestly ahead of advancers & NAZ was off 10. Banks inched their way up.

S&P 500 FINANCIALS INDEX

Value 198.28

Change 0.33

% Change 0.2%

MLPs are off today, but something is peculiar about the 271 starting point for the Alerian MLP Index, the close yesterday was in the 261s. The spike up on the opening is shown in the Yahoo finance badge on the right & the graph below from BigCharts. My guess is Alerian did not adjust for taking out TEPPCO which disappeared after the merger with Enterprises Products (EPD) yesterday. The big picture is that MLPs are off modestly today as are REITs. Junk bond funds were little changed despite Bill Gross's comments (below). Treasuries were strong, the yield on the 10-year Treasury bond fell 3 basis points to 3.52%.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




Oil has backed off from the 80s into the high 70s & gold is flat after yesterday's big drop.

CLZ09.NYM

...Crude Oil Dec 09

...78.95

... 0.27 .......(0.3%)

GCV09.CMX

..Gold Oct 09

...1,042.10

...0.00 .......(0.0%)

The Consumer Confidence Index, sank unexpectedly to 47.7 in Oct taking it to its second-lowest recording since May, the forecast was for 53.1. As a frame of reference, a reading above 90 means the U.S. economy is on solid footing & above 100 signals strong growth. The index has vacillated since reaching a historic low of 25.3 in Feb & then climbed to 53.4 in Sep. Shoppers have a grim outlook for the future & are expecting a worsening business climate, fewer jobs & lower salaries according to the Conference Board. This is particularly bad news for retailers who depend on the holiday shopping season for a large share of their annual revenues & profits. Holiday sales are expected to be flat at best from a year ago (which saw the biggest declines since at least 1967 when data was first collected).

•Consumer Confidence in U.S. Unexpectedly Fell in October on Job Concerns

Consumer Confidence - 12 months





FED Interest rate -- 12 months






Bill Gross, a founder & co-chief investment officer of PIMCO the world’s biggest manager of bond funds, said the six-month rally in riskier assets is likely at its pinnacle, with U.S. economic growth to lag behind historical averages.

•Pimco's Gross Says Six-Month Rally in Appetite for Risk Assets at Pinnacle


US Steel (X) lost money for a 3rd straight quarter as the global economic downturn continued to dampen demand for the metal. However, the company said its production & shipments rose significantly from the previous quarter, & it expects a narrower loss in the Q4 as North American automakers order more steel for vehicles. CEO John Surma said the company remains cautious about its outlook as order rates have dropped in recent weeks, partly due to seasonal slowdowns at factories. US steel maker lost $2.11 per share in Q3 compared with a profit of $7.79 per share last year. Revenue tumbled 61% to $2.8B. The stock dropped 2.35 to 38.23.

US Steel Reports Third Quarterly Net Loss on Lower Revenue

US Steel --- 1 year




Stocks are floundering around. Earnings season has stalled the Dow's advance at 10K.

Dow Jones Industrials --- 2 weeks

Stocks & oil fall on rising dollar

Good but not great earnings reports along with a fall in commodities resulting from a higher dollar sank stock markets. Dow was off 104 (near the lows for the day), decliners over advancers 3-1 & NAS dropped 12. Banks were weak all day, the Financial Index closed below 200 for the first time in 4 weeks.

S&P 500 FINANCIALS INDEX

Value 197.95

Change -5.10

% Change -2.5%

MLPs fell, related to the drop in oil prices. The Alerian MLP Index fell a big 4+ to the 261s but the Dow Jones REIT index was down only pennies in its 2 month trading zone. Even hot junk bond funds saw selling. Treasuries fell sharply, ahead of a record $123B in Treasury notes to be sold this week (for funding the stimulus programs which have not been helping the economy so far & record deficits). The yield on 10-year Treasury bond reached its highest yield in 2 months, 3.55%.

Alerian MLP Index --- 1 year




Dow Jones REIT Index --- 1 year




Yield on 10-Year Treasury bond - 1 year





Enterprise Products Partners (EPD) & TEPPCO Partners completed the merger of the 2 partnerships. With a value of $30 billion, 48K miles of pipelines & a market capitalization of $18B, Enterprise becomes the largest MLP in the US.

Enterprise and TEPPCO Complete Merger; Announce Results of Exchange Offer for TEPPCO NotesBusiness Wire


Enterprise Products --- 1 year




Oil fell back below the important 80 level. Gold's decline took it back to its lowest level in 3 weeks.

CLZ09.NYM

..Crude Oil Dec 09

..78.72

.. 1.78 .......(2.2%)

GCV09.CMX

..Gold Oct 09

..1,039.90

.. 15.70 ......(1.5%)

Caterpillar (CAT), a Dow stock, had to lay off another 2500 workers but will be able to rehire 550 others because of increased orders. The stock fell 53¢ along with the markets but has doubled from its lows earlier this year.

Caterpillar --- 1 year




Stock markets are not giving earnings reports a warm reception. This week Kellogg (K), Procter & Gamble (PG & a Dow stock), Met Life (MET) & the big oils will be reporting. Dow is back to its lowest level in 2 weeks (i.e. the start of earnings season).

Dow Jones Industrials --- 1 year

After a strong start, markets reverse direction

Stocks started the day with gains. The Dow was up 80 in the first hour, then sellers came in. Dow is down 43, decliners over advancers 4-3 & NAZ dropped 3. As expected banks are weak, the Financial Index fell below 200.

S&P 500 FINANCIALS INDEX

Value 199.80

Change -3.25

% Change -1.6%

MLPs are having another outstanding month, shown below, while REITs are stuck in sideways motion. But today The Alerian MLP Index is down 1.60 to the 263s while the REITs Index is up 2. Junk bond funds continue on their winning streak, the best performing group in an outstanding year for stocks. Yields on junk bond funds are around 10-12%, near low levels in the best of times. Treasuries are weak again, the yield on the 10-year Treasury bond rose 8 basis points to 3.56% taking it into the higher levels of this year. Oil dropped 1 to the 79s while gold was flattish at 1054.

Alerian MLP Index --- 1 month



Dow Jones REIT Index --- 1 month




10-Year Treasury Yld Index - 6 months





Earnings keep coming, but even when above estimates they are failing to bring enthusiasm back into the markets. Verizon (VZ), a Dow stock, said Q3 profits fell less-than-expected because it added more wireless customers than forecast. VZ added 1.2M net customers to its wireless network, better than estimates of 1M. Profits fell to 41¢ per share from 59¢ cents a share last year. Excluding one-time items, earnings were 60¢ per share, a penny better than estimates. Revenue rose 10.2% to $27B. The stock was down 6¢ & yields an impressive 6½%.

Corning (GLW) posted better-than-expected quarterly profits on stronger demand for glass for flat screen televisions & said it expects that market to grow 15% in 2010. GLW, the largest maker of glass for liquid crystal display screens, said Q3 EPS fell to 41¢ per share from 49¢ last year. However, excluding special items, EPS was 42¢ a share, beating estimates of 39¢. Revenue fell 5% to $1.48B (but above estimates of $1.42B). Display technologies combined glass volume increased 4% from Q2. The stock gained 7¢

Verizon Profit Exceeds Estimates on Wireless Gains
Corning Profit Beats Estimates on TV Glass Demand


Verizon --- 1 year




Corning --- 1 year




Bloomberg reported "Merrill Lynch’s High Yield Master II Index has climbed 51% in 2009, extending an advance from last year that pushed returns to the highest level ever relative to the S&P 500, which has increased 22%, including dividends. That compares with average annual gains of 9.3% for equities and 8.4% for high-yield credit since 1986, when monthly data on Merrill’s index begins." Opinions are divided between taking some profits now or riding the wave of optimism. Bullish thoughts for junk bonds are interwoven with favorable opinions about stock markets' future.

•Junk Bond Rally Signaling More Profits for Stocks With Markets' Divergence


Stocks are looking for direction. They're not getting support from earnings which beat estimates by a penny or 2 but are below last year. That broken record is not playing well. 10K is becoming a ceiling for the Dow.

Dow Jones Industrials --- 1 month

Markets stumble

Dow fell 109 taking it back below 10K, decliners ahead of advancers 3-1 & NAZ was off 10. For the 2 weeks of earnings season, Dow has hovered around that line. Banks suffered with the markets, the Financial Index fell all day.

S&P 500 FINANCIALS INDEX

Value 203.18

Change -3.08

% Change -1.5%

The MLP Index fell 1+ & REIT Index dropped 2. Junk bond funds were little changed. But the VIX, Volatility Index, shot up 1.79 to the 22s (still near its yearly low of 20). Treasuries continued weak, the yield on the 10-year Treasury bond rose 5 basis points to 3.48%. Oil dropped 1 to 80 & gold was off 3 to 1054.

Alerian MLP Index --- 1 year




Dow REIT Index --- 1 year





Housing is still stuck in a quagmire. Freddie Mac said its defaults rose to another record high last month as its portfolio of residential mortgages grew at an annualized rate of 7.3%. Mortgages at least 90 days late or in foreclosure rose to 3.33% in Sep up from 3.13% in Aug (up 1.22% from last year). Defaults have climbed for 28 straight months, starting to set records last year. Its holdings expanded by $4.8B to $784B, after declining in 4 of the previous 5 months & is down from $867B in Mar. These problems loans will bleed thru to lending banks.

Freddie Mac Defaults Set Record as Holdings Rise



Microsoft (MSFT), Dow stock, reported lower sales in the last qtr (partially attributable to deferring some Windows sales) but their profits of 40¢ per share beat estimates taking the stock up 1.46. The good showing in profits was from cost cutting, a common theme in earnings reports.

Microsoft Profit Beats Estimates After Cost Cuts

Microsoft --- 1 year




This was an important earnings week with many of the big heavyweights reporting. Revenue gains were largely missing. Dow should have had a better week than just treading sideways & finishing down 24 for the week.


Dow Jones Industrials --- 1 week




Dow Jones Industrials --- 1 year

Markets zig, then they zag

Dow is down 77 (flirting with 10K again), decliners over advancers 3-2 & NAZ is even. Excitement over the earnings reports from Dow has ebbed. Banks slipped, the Financial Index is stuck going nowhere, just over 200.


S&P 500 FINANCIALS INDEX

Value 204.21

Change -2.05

% Change -1.0%

The Alerian MLP Index is down pennies in the 266s. All considered it's entitled to a rest. The Dow Jones REIT Index is off 1 in what has been a choppy period. Junk bond funds are steady at their yearly high (& correspondingly low yields) levels. The VIX is back up 1+ to the high 21s. Treasuries sold off, the yield on the 10-year Treasury bond is up 5 basis pints to 3.48%. Oil & gold are weak, but only slightly.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




Purchases of US homes in Sep rose to their highest levels in more than 2 years. Homebuyers rushed to take advantage of a tax credit before it runs out on Nov 30. Home sales jumped 9.4% to a 5.6M annual rate, following a 5.1M rate in Aug & above estimates. The median price fell at the slowest pace in a year as the number of houses on the market shrank. Higher sales were also helped by low mortgage rates. The number of previously owned homes on the market dropped 7.5% to 3.6M in September (shown in the graph). At this pace, it would take 7.8 months to sell those houses, the lowest level in 2½ years. Implications going forward are fuzzy. Further gains in housing may be related to Congress extending the tax credit.

•U.S. Existing Home Sales Jump as Buyers Seek Tax Credit Before Expiration

Homes on the market - 12 months




Markets are having a tough time, the Dow keeps waffling around 10K. Fridays tend to be quiet days & today may prove no exception.

Dow Jones Industrials --- 2 weeks




Very smart investing is based on good education. I am increasing my ties with MarketClub & Ino.com which provide helpful information for the verysmartinvestor:





Get 10 Trading Lessons FREE Click Here

Gold video that redirects to the Course landing url! Click Here

What does winter look like for Crude? Click Here

Dow advances to new 2009 high

Markets began the day with sideways trading following the sharp sell-off in yesterday's last hour. Buyers returned during the day despite a gloomy weekly unemployment report. Dow rose 131, to 10,081 (barely reaching another 2009 high), advancers over decliners 2-1 & NAZ was up 14 (not quite good enough for a new 2009 high). 3M (MMM), Exxon Mobil (XOM), IBM (IBM), McDonald's (MCD) & Travelers (TRV) had big gains taking the Dow to new heights. Banks snapped back strongly after the late day sell-off yesterday but the Financial Index needs to get to 212 for another 2009 high.


S&P 500 FINANCIALS INDEX

Value 206.26

Change 5.85

% Change 2.9%

MLPs continue their winning streak. The Alerian MLP Index gained 1.31 to the 266s. The index rose 10% off its low in the trading band it was stuck in during Aug-Sep. That's not a bad move for an entire year, but this was done in just 3 weeks. The Dow Jones REIT Index had a good day, gaining 4+. The YTD chart for the REIT index better describes the how the US recovery has progressed (compared with the straight up chart for MLPs or the Dow Jones Industrial charts shown at the bottom of the post). Junk bond funds were higher & the VIX, volatility index, slipped in the PM, taking it back near 20 (a 14 month low). The yield on the 10-year Treasury bond was flattish, up 1 basis point to 3.44%.


Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD




VIX --- YTD





Oil buyers returned in the PM to limit the loss for the day to only pennies, essentially at yesterday's yearly high. Buyers also had bid up the price of gold to near yesterday's close. Commodities benefit from the low dollar. The dollar is at its lowest value in over a year. The € is above $1.50 while the Japanese ¥ weakened ever so slightly to more than 91 (needed to buy a dollar). The weak dollar generally helps earnings for multi nation companies.

CLZ09.NYM

..Crude Oil Dec 09

..81.10

.. 0.27 ......(0.3%)

GCV09.CMX

..Gold Oct 09

..1,059.50

.. 4.20 ......(0.4%)

Lavish gov spending & bank lending helped China's growth rate accelerate to an 8.9% rate in Q3, far outstripping other expansions elsewhere & raising questions about whether the rapid rebound can be sustained. That rates puts the economy on track to at least meet the official target of an 8% expansion rate for 2009. China announced that industrial production & investment spending are growing at a faster pace. But this news unsettled local investors on fears Beijing may need to rein in its stimulus policies to avoid asset bubbles & inflation. The Shanghai Composite slipped 19 to 3051.


China's growth rate - 1 year




Shanghai Composite - 1 year





A dreary jobless report was forgotten in the PM as buyers bid up the Dow to a new 2009 high. The first chart below shows that impressive gain.


Dow Jones Industrials --- 2 weeks




Dow Jones Industrials --- YTD

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