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Wednesday, December 30, 2009

Morning Market Report

It feels like a war movie in the markets. In that, it's very quiet. You're just waiting for the bombs to drop. The last two weeks or so have seen far less volatility than we've been used to. The markets have made their moves slowly, almost under the radar. The Dow crossed over 10500 and it's holding steady at 10544 right now. All three indices are relatively unchanged this morning.

Bonds are also quiet this morning. The ten year is still yielding 3.80%. The three month T bill has "shot" up to .071%. It's now just about safely above zero. The yield spread between the two and ten year is also about steady at 2.72%. That's still near all time highs and in ranges never seen prior to the last year. That's a massive point to intermediate term inflation. Bonds in London are largely unchanged and slightly worse in Germany.

Here's a story from the Oy Vay column.

The federal government will provide a new multibillion dollar cash infusion to stabilize auto financing company GMAC Financial Services, according to people
familiar with the matter. Sources say the financial aid could be $3.0-$3.5 billion and could come as soon as the next few days.

Given the staggering amount of the bailouts, it's hard to get upset about the GMAC bailout. Of course, there's absolutely no reason to give the financing arm of GM a bailout but that's what we've done. This isn't the first set either. The government has been propping up GMAC as long as it's been propping up GM itself. In for a dime in for a dozen they say.

On another note, we have breaking positive economic data.

Business activity in the U.S. Midwest expanded far more than expected in December, hitting its highest in nearly four years on a massive recovery in employment and accelerating new orders.

Midwest business activity rose to 60.0 in November. The Institute for Supply Management-Chicago said Wednesday its business barometer rose to 60.0 from 56.1 in November, marking its highest reading since January 2006.

We'll see how the market digests this.

On the commodities front, crude oil is up slightly. It's up to $78.30 a barrel that's up about 80 cents. It was up even more this morning until weak inventory numbers "pared the gains". Gold is down just slighly. It's at $1089 an ounce, down about $7 an ounce.

Tomorrow the weekly first time jobless claims come out and we'll see if there's any more excitement in this year.

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