Oil Rally Taking a Pause?

Its worse in Europe than here in the U.S. Industrial production dropped 1.9% in a particularly cruel April, nearly double the 1% drop that was expected. First quarter GDP was also down 2.5% for the 16 Euro-zone countries. 
The recession there seems far from over, and Europe’s weakness might be contagious because it should act as a stark reminder just how tenuous global economic recovery is.

IEA Revises Oil Demand Numbers: Good News for Investors?

The International Energy Agency (IEA) reported that demand for oil is picking up. Instead of the 3% drop in demand, the IEA says that it now expects demand to be off a whopping – drumroll please – 2.9%. Sheesh. 
When you’re talking about 83.5 million barrels a day, a one-tenth of a percent revision should not be headline news. Somebody owes me an apology.

New Form of Mortgage-Backed Security Losses Ahead

"The worst is to come…"  
That’s what MetLife’s (NYSE:MET) Chief Investment Officer Stephen Kandarian told Bloomberg this morning.  
He was talking about commercial mortgage defaults. He notes that "[t]ypically there’s a lag between when the economy softens and when the defaults actually occur." 

How Bernanke and Geithner String Along the Rally 24/7

Bravo. The government’s handling of the financial crisis and recovery should be recognized as a masterful performance. At least, so long as you don’t look too deeply into the numbers… 
Bernanke and Co. have managed to restore confidence to the point that economist Paul Krugman has joined the ranks of those who think we are only a couple months away from actual GDP growth.

C and WFC “Profits” in Question

I don’t like to accuse people of lying. Those are fighting words. But after last night’s 60 Minutes interview with Fed Chief Ben Bernanke I am compelled to say that I don’t think he’s telling the truth about America’s banks. 
The interviewer asked point blank if Bernanke believed our banks are solvent. Bernanke responded with an unblinking, unflinching "yes." 
Of course he used the recently performed "stress tests" as his measuring stick. And that’s where the problems begin…

Financials Lead: GS, KEY, FITB Up

No sooner do I say that the news cycle is turning negative, we get some significant upgrades in the financial sector. Goldman Sachs (NYSE:GS) got an "outperform" rating and rose 5.2%. 
RBC Capital Markets called KeyCorp (NYSE:KEY) a "top pick" and the shares ramped 20%. And Fifth Third Bancorp (Nasdaq:FITB) rose 7% after it reported that it has filled the capital shortfall identified during the Treasury’s "stress tests."

Bernanke and Geithner Comments Conflicting

Yesterday, Ben Bernanke told the House Budget Committee: 
"In recent weeks, yields on longer-term Treasury securities and fixed-rate mortgages have risen…[t]hese increases appear to reflect concerns about large federal deficits…" 
Hmmm. I would swear that Treasury Secretary Geithner just told China that rising interest rates were a sign of optimism for the U.S. economy. Can rising rates be both good and bad? All I know is that if you listen to government long enough, anything and everything is possible.

Financials AXP, JPM, WFC, C All Lose Steam in Trading

Russia is grumbling. Seems they are not happy that rising debt, slow growth and record Treasury bond sales are dragging the U.S. dollar down. In fact, Russian president Medvedev is calling for some kind of global currency to replace the U.S dollar as the world’s reserve currency. (Sound familiar? Like he’s taking a page from the Chinese?) 
In an interview with CNBC on Monday he said, "We need some kind of universal means of payment, which could create the basis of a future international financial system…"

Travelers (TRV) replaces Citigroup (C) on Dow

Perhaps you’ve heard the phrase "the sins of the father shall be visited on the son." Well, here’s a case where that’s definitely not true:  
Yesterday, The Travelers (NYSE:TRV) insurance took the place of its parent Citigroup (NYSE:C) on the Dow Industrials Average.  
Reuters reports that in 2002, when Citigroup spun off The Travelers, former Citigroup CEO and founder Sandy Weil said he wanted to focus on "…important opportunities to invest our capital really on a global basis, in much more high-growth businesses."

DJIA, Nasdaq, S&P 500 Up in Morning Trading

Both the Nasdaq and the S&P 500 are hitting new recovery rally highs today. Part of the reason for today’s strength is the better than expected construction numbers released this morning. 
The 0.8% gain in construction spending for April was the biggest gain in nearly a year. And it was far better than economists’ expectations of a 1.5% drop.