Tuesday, April 21, 2009

Market Reflections 4/20/2009

News from Bank of America that it is having trouble finding qualified borrowers is a new twist for the markets which had been focused on whether banks were bankrupt or not. The change to mark-to-model accounting is giving a boost to bank profits including profits at Bank of America. Not doing as well are the bank's customers who are being pulled under by the wave of layoffs.

Investors ran back into safety Monday in a big move that raises the question whether five weeks of stock-market gains were grounded in fundamentals. The S&P 500 ended at their lows, down 4.3 percent at 832.39. Investors also ran to the dollar, which jumped 1 cent against the euro to $1.2924. Treasuries were in high demand with the yield on the 10-year falling 11 basis points to 2.83 percent. The yield on the 3-month bill tightened a notch to a thinning 12 basis points.

Investors fled commodities which had been benefiting from expectations for economic improvement together with inflation. Oil touched $44 for the first time in five weeks, ending down 4-1/2 dollars to $45.60. Grains and industrial metals, two groups that had been very strong, were down across the board. Gold of course was one commodity that didn't suffer. Gold, which just last week seemed to be finally wavering, gained $15 to end at $885.

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