The Capital Markets Index (CPMKTS) is the flagship index of Dorchester Capital Management LLC. Its symbol CPMKTS is reported on The American Stock Exchange every 15 seconds, making it the only place where total bond, equity and short-term liquidity index movements are reported in real-time. The Amex also publishes real-time sub-indexes CPMKTE, CPMKTB, CPMKTL, tracking the equity, bond and liquidity markets.

Dorchester Capital Management LLC is a Houston-based company principally focused on designing financial products for the professional investmentcommunity. Dorchester’s unique approach to processing, organizing and standardizing capital markets data from the broadest variety of sources gives it asuperior ability to help clients with the fundamental risk analysis questions of asset allocation and benchmarking.

Dorchester Data ServicesTo create and maintain the CPMKTS Index Family, Dorchester created the Dorchester Capital Securities Database (DCSD), arguably the largest single-source, integrated financial database of the U.S. capital markets. The DCSD includes stock, bond and money market data all of which is stored in a consistent format. For product providers issuing securities based on CPMKTS and for firms requiring real-time and/or historical data to research, track, analyze and maintain products and portfolios, DCSD offers a single source for such data. 12:00 AM

CPMKTB Bond Market Index Explained - - - White Paper
Dorchester’s first white paper explains our approach to creating a real-time index with fixed income securities. When designing its family of capital market indexes, Dorchester decided that it would perform real-time valuations for not only the stock market, but also for the investment grade bond markets and the under-one-year liquidity markets.

In developing a real-time fixed income pricing technology, Dorchester’s key challenge was to most closely model the actual workings of the markets in order to provide real-time tools. The result is a readily defensible real-time valuations for every fixed income security in the Capital Markets Bond and Liquidity Indexes (CPMKTB and CPMKTL). 2:52 PM

Stand-Still Returns on June 1
The "implied coupon" on Capital Market Index CPMKTS is 3.05% || 'stand-still' return
CPMKTE equity sub-index is 2.17%
CPMKTB fixed income over 1yr is 4.94%
CPMKTL liquidity is 2.49%

The investment grade U.S. capital markets grew 0.92% in May to $33.2 trillion. For scale, consider that the US GDP totalled approximately $14 trillion at the end of 2007. 8:59 AM

The Claymore U.S. Capital Markets Bond ETF - - - UBD   CPMKTB
The Claymore U.S. Capital Markets Bond ETF (the "Fund") seeks investment results that correspond generally to the performance, before the Fund’s fees and expenses, of a fixed income securities index called CPMKTB — The Capital Markets Bond IndexSM (the “CPMKTB Index” or the “Index”). The Index is designed to represent the traditional investment grade securities in the United States long-term fixed income capital markets. The Fund will normally invest at least 80% of its total assets in fixed income securities that comprise the Index. Claymore Advisors, LLC is the fund's Investment Adviser. Mellon Capital Management (the "Investment Subadviser") seeks a correlation over time of 95% or better between the Fund’s performance and the performance of the total return of the Index less any expenses or distributions. A figure of 100% would represent perfect correlation. 2:37 PM

Capital Markets Have Modest Gains In May
Modest gains in bonds and equities kept theinvestment grade U.S. capital markets growing for a second straight month. The only down point was a trickle of money out of liquidity securities.

The investment grade U.S. capital markets grew 0.92% in May to $33.2 trillion. Up for a second straight month, the $262 billion increase in equities is still overshadowed by April’s gain of nearly $1 trillion. May’s 1.64% gain brought equities up to a value of $16.2 trillion which is 48.87% of the investment grade U.S. capital markets. The strongest growth rate was in the Mining & Construction sector which saw nearly a 5% increase in market capitalization. Though only growing 3.3%, the Manufacturing & Wholesale Trade sector still added over $130 billion and was more than able to offset the nearly $130 billion decrease in the Financial, Insurance, and Real-estate sector.

Down slightly, liquidity securities saw a decrease of $42 billion, or -0.58%, to $7.2 trillion. This puts liquidities at 21.68% of the investment grade U.S.capital markets. Over $100 billion growth in certificates of deposits and Treasury Bills could not offset the movements with short term federal agency bonds and notes. Federal agencies called billions of dollars worth of debt resulting in a decrease of nearly $123 billion in the market for short term federal agency bonds and notes.

Long term investment grade bonds were up 0.84% in May to $9.8 trillion and like liquidity the movement was mostly due to changes in the market for long term federal agency debt. Mirroring almost exactly the movement of short term agency issues, the market for long term agency issues grew by nearly $124 billion, an increase of over 10%.

Bonds start June accounting for 29.45% of the investment grade U.S. capital markets. A year ago the $32.7 trillion investment grade U.S. capital markets had equity, liquidity, and bond market proportions of 55.55%, 17.40%, and 27.05% respectively. 3:19 PM

Bond Index Closed Up +0.29
The USM8 contract is 115.24, up 10.5 ticks. During May, long bond futures is down over 1 point from 116.285 on Apr 30. Today's range is 114.28+ to 115.29+. The USM8 contract high is 120.305 on Mar 20.

In the short end, EDZ8 is up 5.0 ticks to 97.140; it is up 4 ticks from 97.100 on Apr 30, but down 92.5 ticks from its record high of 98.065 on Mar 17.

The 2Y/10Y curve is steeper by 3.5bp to 154.9bp. The curve touched 137.0bp on May 2 and was +183.1bp at the 3/19 index peak.

Surprise! Bond market is down only -0.86% from its peak on March 19
The powerful rally in credit spreads has saved the day for fixed income investors. Narrowing spreads on GSE's and corporates has almost overcome losses from high yields and a flatter curve.

In May, the value of long-term investment grade bonds is down only slighty by -0.04%. In April, the long-term bond markets measured by CPMKTB had an increase of +2.02% to $9.7 trillion. 6:46 AM

T-Bills And CPMKTL Liquidity Index
In April, liquidity instruments declined for the first time in nine months, down 1.94% to $7.2 trillion and now account for 22.00% of the investment grade U.S.capital markets.

This decline was largely due to activity of short term federal agency bonds and Treasury bills. The market for short-term federal agency bonds decreased by almost 10% with nearly all of the decrease due to bonds that were called or matured in April.

The market for Treasury bills dropped by 6.5% to back below $1 trillion despite the Federal Reserve Board further decreasing its holdings of Treasury bills. The Fed now holds less than 10% of the outstanding Treasury bills. From 2003 to end of 2007, the Fed typically held 25% to 30% of Treasury bills.

Wrightson: More T-Bill Supply To Private Investors
We think the Fed needs to unload nearly $90 billion of Treasury securities by the end of the quarter, including $60 billion to $70 billion of Treasury notes that are likely to be sold in the open market. 10:29 AM

Bond Index Is Up +0.08% Today
In May, the value of long-term investment grade bonds has dropped -0.11% and is down -0.93% from its peak on March 19.

The USM8 contract is 116.12+, up 8.5 ticks today and down 16 ticks from 116.285 on Apr 30. EDZ8 is up 5.0 ticks today to 97.115 and up 1.5 ticks from 97.100 on Apr 30. The 2Y/10Y curve is steeper by 4.0bp to 147.8bp. The curve was 137.0bp on Friday.

In April, the long-term bond markets measured by CPMKTB had an increase of +2.02% to $9.7 trillion. Again, federal agency bonds were the big movers as the market for long-term federal agency bonds increased by over 10% as new debt was issued to cover the called securities in the short term sector.

At the 3/19 index peak, the 2Y/10Y yield curve was +183.1bp. For reference, the USM8 contract high is 120.305 on Mar 20 and the EDZ8 high is 98.065 on Mar 17. 8:45 AM

CPMKTE Equities Index Ended 5-Month Down Streak in Dramatic Fashion
After five straight down months, equities rebounded in April with their best month in 5 years. The nearly $1 trillion one month growth in equities, up 6.40% to $16.0 trillion, is the largest percentage gain since April of 2003. The increase brought equities to 48.52% of the investment grade U.S. capital markets.

Since its peak on Oct 9, the CPMKTE equities index is down -9.45%. 9:40 AM

CPMKTS Index of Investment Grade Securities
The Capital Markets Index CPMKTS has a total value of the $31.9 trillion as of March 31; this is approximately 80.69% of all investment grade securities.

Th following security types that are not included in CPMKTS Index have an estimated total value of $7.6 trillion; therefore, the grand total of all investment grade securiites is about $39.5 trillion.

Adjustable Mortgages
Asset-backed securities
Convertible bonds
High Yield bonds
Non-rated bonds
Floating-rate Agency bonds
Floating-rate Corporate bonds
Short-term Mortgage-backed securities
Foreign stock issues (about $2 trillion, mostly dollar-denominated)
Pink sheets
Preferred Stock
Foreign Warrants, Units, & Rights
US Warrants, Units, & Rights

Municipal Bonds are also note included in CPMKTS> The Fed's Z.1 report puts value of the muni market at $2.6 trillion. Inclusion of municipal bonds would bring the percentage of CPMKTS down to 75.68%. However, if foreign equity total is excluded and munis are included, the CPMKTS toal is near the 80% mark.

The market value of the 2,000 securities in the CPMKTE equities index is about $14.8 trillion on 3/31/08. 1:20 PM

Cash Holdings Surge In March
The Liquidity Index CPMKTL: The markets for commercial paper and Treasury bills continued to lead the stampede into cash as they combined to account for most of the increase in the liquidity sector in March. The size of the commercial paper market increased nearly 12% to $1.7 trillion. Meanwhile, the Federal Reserve continued its dramatic reduction in T-bill holdings with its largest monthly selloff ever, reducing its holdings by nearly $76 billion and contributing to making the market for T-bills surpass $1 trillion for the first time.

The net result of activity in the liquidity markets was an increase of 3.06% to $7.38 trillion. The 23.15% portion of the total capital markets is the highest percentage for the liquidity sector since February, 1991. 12:29 PM

The Bond Index Is Up +0.26%
The Bond Market Index CPMKTB is generating an estimated gain of $25 million on its 5,663 investment securities which were valued at $9.51 trillon on March 31. The index is down -0.78% from its record high close on March 19.

The yield curve is slightly flatter. USM8 is 117.29, up 14.5 ticks, down from its peak of 120.305 on Mar 20.

In Marche, the increase in total value for investment grade fixed income securities with a maturity greater than one year was only 0.39% to $9.51 trillion. This marked the third consecutive month with a change of less than one percent either way, the fourth in the past five months. Bonds now account for 29.80% of the U.S.investment grade capital markets. A year ago the $31.4 trillion investment grade U.S. capital markets had equity, liquidity, and bond market proportions of 54.05%, 18.06%, and 27.89% respectively. 12:01 PM

Equities Down Record-tying Fifth Consecutive Month
From Dorchester's Monthly Report:

A fifth straight down month for equities matches the longest losing streak since 1980. Despite cash having another very strong month and bonds slightly up, the investment grade U.S. capital markets had their third straight losing month ending March at $31.9 trillion on a loss of 0.95%.

Equities finished March at $15.0 trillion, down 3.60%. This is 17.41% off the value at the end of October, 2007, a cumulative loss of over $3.1 trillion since that time. The equities were reduced to a 47.05% share of the investment grade U.S. capital markets, their lowest portion since April, 2003. Previously, the only five month straight negative stretch since the end of 1979 was during the months of June to October, 1990. The cumulative losses then were nearly $540 billion, but accounted for a 17.93% decline from the value at the end of May, 1990.

The markets for commercial paper and Treasury bills continued to lead the stampede into cash as they combined to account for most of the increase in the liquidity sector. The size of the commercial paper market increased nearly 12% to $1.7 trillion. Meanwhile, the Federal Reserve continued its dramatic reduction in T-bill holdings with its largest monthly selloff ever,reducing its holdings by nearly $76 billion and contributing to making them arket for T-bills surpass $1 trillion for the first time. The net result of activity in the liquidity markets was an increase of 3.06% to $7.38 trillion. The 23.15% portion of the total capital markets is the highest percentage for the liquidity sector since February, 1991.

For bonds, the change was again measured in just a few basis points as the market for investment grade fixed income securities with a maturity greater than one year increased by only 0.39% to $9.51 trillion. This marked the third consecutive month with a change of less than one percent either way, the fourth in the past five months. Bonds now account for 29.80% of the U.S.investment grade capital markets. A year ago the $31.4 trillion investment grade U.S. capital markets had equity, liquidity, and bond market proportions of 54.05%, 18.06%, and 27.89% respectively. 8:05 AM

Previous day's commentary and bullets are below the line

The Capital Market Index (CPMKTS) includes $31.9 trillion (about 80%) of the entire investment-grade US capital market. The 9,743 securities included are selected to approximate the history, mix and behavior of all assets in each class. The mix is adjusted quarterly to reflect changes in the overall market. Not included in the index are asset-backed securities, municipal bonds, junk bonds, convertibles, preferreds and floating-rate securities. 12:01 AM

The Stock Market In April Is Up +3.73%
Since the Oct 9 market peak, the equity index is down -13.26%, but viewed as a correction in a bull market, not a bear market. A bear market is conventionally defined as a slump of at least 20%.

In March, the equities market was down -0.57%, completing its fifth consecutive monthly decline. The downtrend ties the 5-month span from June to October of 1990 as the longest one in decades. In 1990, the CPMKTE lost -16.44% of its value compared with -14.19% for the present slump. 4:49 PM

Notional Guarantees By Fannie and Freddie
“The ability of Fannie Mae and Freddie Mac to sustain their top AAA ratings is ‘open to question’ amid rising delinquencies on their loans and guarantees, CreditSights Inc. strategists said… The notional debt and guarantees of the government-sponsored enterprises total $5.7 trillion, CreditSights said.

Junk bonds have fallen an average 3.9% this year
Bloomberg on Mar 27: The loss is about $35 billion, according to data from Merrill Lynch & Co. indexes. KR: That puts the total value of junk near $1.155 trillion.

Americans owe a staggering $1.1 trillion on home equity loans
and banks are increasingly worried they may not get some of that money back. While homeownership climbed to record heights in recent years, home equity… has fallen below 50% for the first time, according to the Federal Reserve. -- NTY on Mar 27 10:50 AM

The Bond Market Index Closes Near Its Peak
The Bond Index CPMKTB is down -0.54% from 16,932.12 on March 19, its all-time best close. The index includes 5,769 investment grade securities with maturities over one year which, on Feb 29, represented $9.5 trillion market value and 29.41% of the entire capital securities market.&&&CPMKTB Components

One-month Treasury bill rates jumped 89 bps this past week to 1.275%, and 3-month yields rose 64 bps to 1.34%. Two-year government yields gained 5 bps to 1.65%. Five-year T-note yields jumped 14 bps to 2.51%, and ten-year yields increased 10 bps to 3.44%. Long-bond yields advanced 15 bps to 4.32%.

The 2yr/10yr spread ended the week at 179 bps. The implied yield on 3-month December ’08 Eurodollars rose 5.5 bps to 2.22%.

Benchmark Fannie MBS yields jumped 16 bps to 5.26%. The spread between benchmark MBS and Treasuries widened 6 to 182 bps. The spread on Fannie’s 5% 2017 note narrowed 2 to 68 bps and the spread on Freddie’s 5% 2017 note narrowed 2 to 67 bps. The 10-year dollar swap spread widened 5.8 to 67.8. Corporate bond spreads were mostly narrower. An index of investment grade bond spreads narrowed 13 to 144 bps. Meanwhile, an index of junk bond spreads narrowed 12 to 648 bps. -- Nolan of Prudent Bear 10:30 AM

The Equities Index (CPMKTE) includes 1,986 stocks with a market value of $15.6 trillion on Feb 29. This is 48.3% of the total investment grade capital markets. The equity index value is $51,600 per capita and the flagship index value is $107,000 per capita. In comparison, the net worth of American households is estimated to be $57.72 trillion which is $192,000 per capita. This wealth includes real estate holdings of $22.48 trillion or $75,000 per capita. (Based on Fed's Q4 "flow of funds" report).

Previous day's commentary and bullets are below the line 12:00 AM

Stocks Tarnished By 'Lost Decade'
U.S. Shares in Longest Funk Since 1970s -- Credit Crunch Could Prolong Weakness
WSJ: March 26, 2008, By E.S. BROWNING,

The stock market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the nine-year period, trounced even by lowly Treasury bonds.

The Standard & Poor's 500-stock index, the basis for about half of the $1 trillion invested in U.S. index funds, finished at 1352.99 on Tuesday, below the 1362.80 it hit in April 1999. When dividends and inflation are factored into returns, the S&P 500 has risen an average of just 1.3% a year over the past 10 years, well below the historical norm, according to Morningstar Inc. For the past nine years, it has fallen 0.37% a year, and for the past eight, it is off 1.4% a year. In light of the current wobbly market, some economists and market analysts worry that the era of disappointing returns may not be over.

Until last fall, many investors had viewed the bursting of the tech-stock bubble as a nasty but short-term setback. The market had resumed its upward march, reaching new highs in October. Then the credit crisis began weighing on stocks, as did the possibility of a recession. By March 10, the S&P 500 was down 18.6% from its Oct. 9 record close, nearing the 20% decline that signals a bear market. It has rebounded since then amid the Federal Reserve's efforts to stabilize the financial system, but it remains 13.3% below its October record.

Over the past nine years, the S&P 500 is the worst-performing of nine different investment vehicles tracked by Morningstar, including commodities, real-estate investment trusts, gold and foreign stocks. Big U.S. stocks were outrun even by Treasury bonds, which historically perform much less well than stocks. Adjusted for inflation, Treasurys are up 4.7% a year over the past nine years, and up 5.8% a year since the March 2000 stock peak. An index of commodities has shown about twice the annual gains of bonds, as have real-estate investment trusts.
The S&P 500 rose 26% in 2003, amid hopes for a quick victory in Iraq. In 2004, the S&P 500 rose only 9%. It was up 3% in 2005, 14% in 2006 and 3.5% in 2007. The index is down 7.9% so far this year. Those numbers are not adjusted for inflation, which would lower annual returns by a few percentage points.

The Dow Jones Industrial Average, which had fewer technology stocks than the S&P 500 and suffered less in the bear market from 2000 to 2002, has held up better, but not a lot better. It has risen less than 1% a year since January 2000. 12:32 PM

Key Links:
Management Team    FAQ    9,673 Components    Family of Indexes

Disclaimers and Disclosures - - - Disclaimer - - - - About Kidder Reports
Kidder Reports, Inc. is the author of this article. William Kidder, President of Kidder Reports has an ownership interest in Dorchester Capital Management LLC.

Previous day's commentary and bullets are below the line 12:01 AM

Previous day's commentary and bullets are below the line

The Bond Market Index CPMKTB
covers investment grade securities with maturities over one year. As of Feb 29, the index represented $9.5 trillion market value and accounted for 29.41% of the capital securities market. The Bond Index peaked on Mar 19 at 16,932.12 and is down -0.90% at the Mar 27 close. CPMKTB Components 12:01 AM

Equities Market Downtrend Since Oct 9 Peak
On 3/24/2000, the equities index CPMKTE reached a high at 10,684.07 that was passed again until 10/4/2006 when it reached 10,758.06. Subsequently, the equities index eventually moved to a high of 12,838.55 on 10/9/07, the recent peak and the beginning of the present downtrend which is viewed as a correction in a bull market.

Dow Bear Markets - - - Street Smart
Sy Harding of Street Smart says there have been 24 bear markets in the Dow over the last 100 years, one on average of every 4.2 years, with an average decline of 35.7%. The ten largest had declines averaging 48%. These are the last four using a -20% decline as the definition of a bear market:

DJIA down -38.7%; CPMKTE -42.61; CPMKTS -18.35% from top on 1/14/2000 to 10/10/2002
DJIA down -21.2%; CPMKTE -20.36; CPMKTS - 7.10% from top on 7/16/1990 to 10/11/1990
DJIA down -36.1%; CPMKTE -29.69; CPMKTS -14.62% from top on 8/25/1987 to 10/19/1987
DJIA down -24.1%; CPMKTE -19.59; CPMKTS + 2.62% from top on 4/27/1981 to 8/12/1982 2:12 PM

For more about stocks, bond and currencies, go to Live Commentary and Live Commentaryat the Kidder Reports website.

Key Links:     Management Team    FAQ    9,673 Components    Family of Indexes

Disclaimers and Disclosures
Kidder Reports, Inc. is the author of this article. William Kidder, President of Kidder Reports has a small ownership interest in Dorchester Capital Management LLC.

Disclaimer - - - - About Kidder Reports 1:07 PM

Index Universe: The World of Indexing - - - Article About CPMKTS
The firm has put up a Web site where anyone can freely stick in a date going back to 1979 and get a host of information on the entire stock, bond and money market in the U.S. Or, they can search by any of those submarkets. - - - CPMKTS Home

For example, setting the site's search to run from Dec. 31, 1979 through Jan. 31, 2008, it shows that the entire index produced average annual returns of 10%. Just the equities portion generated 12.51%, and bonds gained 9.13%. At the same time, money markets and other liquid investments would've made 6.72%.

Returns are just some of the numbers provided. During that same time frame, stocks in the index displayed standard deviation (a measure of volatility) of 15.10%. That compared to 5.90% for bonds and 1.11% for money market instruments.

They're able to download roughly 530 million different pieces of market data a day. Those figures are dispersed to four separate computer systems in Chicago and Houston. A total of about 3.5 billion different pieces of market information is crunched a day. And that's just the historical data. Dorchester's crew also designed real-time calculators. 1:20 AM

How's The Stock Market?

The Equities Market Index (CPMKTE) is up 2.33% (close)
The S&P 500 is up 2.39%
DJIA is up 2.16% or 261.32 points

The major indices surged more than 2% in heavy trading, and finished near their best levels of the session. Financials led the way higher, thanks to a pair of upgrades and news that the Fed is expanding its previously announced plan to increase liquidity. - Briefing

Recap: Week Ended Mar 20 and 2008 YTD
CPMKTS   The Capital Markets Index  WTD  +1.54%    YTD   -3.85%
CPMKTE   The Equities Index              WTD  +2.77%    YTD -9.45

For the week, the Dow gained 3.3% (down 6.8%) and the S&P500 3.1% (down 9.5%). The NYSE Financial Index declined 2.1% Monday, jumped 6.8% Tuesday, fell 2.3% Wednesday and then surged 5.0% Thursday. The Bank Index jumped 10.2% in this extraordinary four-day trading week (down 3.1% y-t-d). Morgan Stanley gained 20.4%, Lehman Brothers 19.3%, and Goldman Sachs 12.7%. Even with the collapse of Bear Stearns, the Broker/Dealer index gained 3.3% (down 21.7%). With Bullion sinking $92.50, the HUI Gold index was smacked for 17.3% (up 7.2%). -- From The Prudent Bear

CPMKTS and CPMKTE are two of a family of indexes of Dorchester Capital Management LLC. and are reported on The American Stock Exchange every 15 seconds. Real-Time Prices. 8:00 PM

Previous day's commentary and bullets are below the line 12:00 AM

The Capital Markets Indexes: Performances on March 19

Briefing.com Highlights:
Commodities and gold sell off sharply, triggering concerns about margin calls
Regulators allowing Fannie Mae & Freddie Mac to buy more home loans
Morgan Stanley tops earnings estimates

Participants looking for a follow-through move to Tuesday's huge advance were sorely disappointed by the end of Wednesday's trading. Heavy selling of the commodities evoked fears that it was more than simple profit taking after some big gains. Rather, the drop in prices, combined with a rush of buying interest in the Treasury market that was concentrated on the 3-month Treasury bill, engendered a sense of angst that it might be some forced selling by hedge funds looking to de-leverage or needing to meet margin calls; hence, the flight-to-quality into Treasuries.

CPMKTS The Capital Market Index is down -0.95% for a loss of $306 million at close
CPMKTE The Equities Market Index is down -2.44% for a loss of -$405 million
CPMKTB The Bond Market Index is up +0.75 for a gain of $71 million.

S&P 500 is down -2.43%
DJIA is down -2.36% for a loss -293.00 points

How's The Bond Market? The standard answer is to say 'up' or 'down' referring to price of the Chicago long-bond futures contract. This shorthand works well enough, but begs the question of all other maturities as well as changes in GSE's and other credit spreads.

The Bond Market Index Has Record High Close
The Bond Index is up 17,085.14, up 0.75% today with the 10Y at 3.348% and the 2Y/10Y is flatter by 3.0bp to 183.50bp. The intraday high today is 17,089.89.

The previous high close for CPMKTB was March 17 when it settled at 17,054.42 and the 10Y was 3.276%. Yesterday the Bond Index closed down at 16,958.09 with the 10Y yield at 3.470% and the 2Y/10Y yield spread at 186.4bp (flatter by 11.3bp).

The Bond Index is comprehensive: it includes 5,769 investment grade securities , not just long-term Treasuries, which had a market value of $9.5 trillion on Feb 29 or 29.41% of the capital securities markets.

The Capital Markets Index, Longer-Term Performance Through March 19
Downtrend Performances Since Oct 9
CPMKTS   The Capital Markets Index  Oct 9 Peak  13,433.81 vs 12,507.61 on Mar 19, trend   -6.89%
CPMKTE   The Equities Index              Oct 9 Peak  12,838.55 vs 10,692.32 on Mar 19, trend -16.72%

Performances March-to-Date and 2008 Performances
CPMKTS   The Capital Markets Index  MTD  -1.07%    YTD   -4.88%
CPMKTE   The Equities Index              MTD  -2.72%    YTD -11.51%
CPMKTB   The Bond Index                  MTD  +0.63%    YTD  +2.74%
CPMKTL   The Liquidity Index             MTD  +0.22%    YTD  +1.11% 7:01 PM

The Bond Index Aims For Record High The 5,769 Bonds
The Bond Index is up 17,007.61, up 0.29% today. On Monday, the index closed at 17,054.42, its record high. Yesterday the Bond Index lost ground and closed down -0.56% at 16,958.09. Yesterday, the 10Y yield closed at 3.470% vs 3.276% on Mar 17 and the 2Y/10Y yield spread was 186.4bp, flatter by 11.3bp.

The bond index covers all maturities and includes 5,769 investment grade securities which represented $9.5 trillion market value on Feb 29 or 29.41% of the capital securities markets. 9:54 AM

Previous day's commentary and bullets are below the line 12:00 AM

The Capital Markets Indexes on March 18

CPMKTS The Capital Market Index up +1.81%, a gain of +$583 million
CPMKTE The Equities Market Index up +4.21%, a gain of +$699 million
CPMKTB The Bond Market Index down -0.56, a loss of -$53 million
S&P 500 is +4.24%; DJIA up +3.51%, a gain +420.41 points

Highlights
Briefing.com notes the broad-based nature of the stock market rally led to gains for all ten economic sectors and the S&P 500 has its biggest one-day percentage move since October 2002.

FOMC cuts the fed funds and discount rates by 75 basis points
Fed funds rate now at 2.25% and the discount rate now at 2.50%
Goldman Sachs tops earnings expectations; Lehman Brothers tops earnings estimates
PPI inflation reading less then expected, however, core PPI is higher than expected

For more about stocks, bond and currencies, go to Live Commentary at the Kidder Reports website.

The Bond Market Index Drops From Record High The 5,769 Bonds
CPMKTB    The Bond Index closes down -0.56% to 16,958.09 with the 10Y yield higher by 12.4bp from 3.470% vs 3.276% at yesterday's close. The 2Y/10Y yield spread is 186.4bp, flatter by 11.3bp.

The Capital Markets Index, Longer-Term Performance Through March 18

Downtrend Performances Since Oct 9
CPMKTS   The Capital Markets Index  Oct 9 Peak  13,433.81 vs 12,627.73 on Mar 18, trend   -6.00%
CPMKTE   The Equities Index              Oct 9 Peak  12,838.55 vs 10,959.58 on Mar 18, trend -14.64%

Performances March-to-Date and 2008 Performances
CPMKTS   The Capital Markets Index  MTD  -0.12%    YTD   -3.96%
CPMKTE   The Equities Index              MTD  -0.28%    YTD -9.29%
CPMKTB   The Bond Index                  MTD  -0.12%    YTD  +1.97%
CPMKTL   The Liquidity Index             MTD  +0.19%    YTD  +1.09%

Peaks and Valleys
On 3/24/2000, the equities index reached a high at 10,684.07 that was passed again until 10/4/2006 when it reached 10,758.06. The equities index eventually moved to a high of 12,838.55 on 10/9/07, the recent peak and the beginning of the present downtrend. 6:22 PM

Previous day's commentary and bullets are below the line 12:00 AM

Last Week's Highlights From Nolan of The Prudent Bear
Three-month Treasury bill rates sank 30 bps this past week to 1.17%. Two-year government yields declined 3 bps to 1.49%. Five-year T-note yields fell 3 bps to 2.40%, and ten-year yields dropped 9 bps to 3.45%. Long-bond yields sank 18 bps to 4.36%.

Benchmark Fannie MBS yields dropped 27 bps to 5.45%. The spread between MBS and Treasuries narrowed 18 to a still extraordinary 200 bps. Widening further, the spread on Fannie’s 5% 2017 note jumped 11 to 99 bps and the spread on Freddie’s 5% 2017 note surged 10 to 98 bps.

Corporate bond spreads were volatile and ended wider. An index of investment grade bonds spreads widened to record levels this week, ending up 11 to 190. An index of junk bond spreads widened 13 to 636 bps.

For the week, the Dow was up 0.5%, while the S&P500 declined 0.4%. Stating the obvious, these minor index changes don't do justice to daily wild volatility. The NYSE Financial Index declined 2.2% Monday,surged 6.1% Tuesday, declined 1.1% Wednesday, was little changed Thursday, and was hit for 3.5% today.

Highlights: The Capital Markets Family of Indexes

The Bond Market Index Peaked on January 22
CPMKTB    The Bond Index is down -0.54% from its 17,043.54 high value on 1/22/08.

Capital Market and Equities Indexes Are Trending Down Since Oct 9
CPMKTS   The Capital Markets Index  Oct 9 Peak  13,433.81 vs 12,451.00 on Mar 14, trend   -7.32%
CPMKTE   The Equities Index              Oct 9 Peak  12,838.55 vs 10,646.44 on Mar 14, trend -17.07%

MTD and YTD Performances
CPMKTS   The Capital Markets Index  MTD  -1.52%    YTD   -5.31%    Peak    -7.32%
CPMKTE   The Equities Index              MTD  -3.13%    YTD -11.89%    Peak  -17.07%
CPMKTB   The Bond Index                  MTD  -0.15%    YTD  +1.94%    Peak   +5.29%
CPMKTL   The Liquidity Index             MTD  +0.15%    YTD  +1.05%    Peak   +2.39% 9:00 AM

Ouch! The CPMKTS negative cumulative return of -3.84% for Jan and Feb
amounts to a staggering $1.3 trillion loss of wealth in the first two months of 2008 in the investment grade sector alone. When another $500 million loss (our guess) is added to take into account the various for subprime slime, ABS and other 'mystery paper,' the nation's loss in the financial sector must be at least $1.8 trillion this year.

Since Oct 31, the loss is more like $4 trillion in only 4 months
No wonder the Fed is sounding scared today. 5:59 PM

CPMKTS Annual Returns - - - Index Universe -- Background
1y annual rate to Jan 31:  CPMKTS: +2.45%     Equities:   -2.15%     Bonds: +8.28%    Liquidity: +5.61%
5y annual rate to Jan 31:  CPMKTS: +7.99%     Equities: +11.79%    Bonds: +4.75%    Liquidity: +3.30%
10 annual rate to Jan 31:  CPMKTS: +5.40%     Equities:   +5.64%    Bonds: +6.03%    Liquidity: +4.02%

The Capital Markets Index covers the 2,000 largest U.S. stocks and roughly 2,131 short-term fixed-income instruments as well as 5,600 investment-grade bonds. It has a $31 trillion market cap and covers 80% of U.S. capital markets. Not included are asset-backed securities, municipal bonds, junk bonds, convertibles, preferreds and floating-rate securities. 3:08 PM

FTN: Investment Grade Sector Returns
The returns listings are in order of market size.
Returns
Total .24%
Intermediate .30%
Mortgages .02%
Treasuries 1.13%
Corporates .18%
Agencies .40% 2:41 AM

The Capital Markets Index - - - Average Annual Returns
CPMKTS 1yr to Dec 31, 2007:   +6.31%
CPMKTS 1yr to Jan 31, 2008:   +1.45%
CPMKTS 1yr to Feb 29, 2008:   +1.42%

Equities 1yr to Dec 31, 2007:   +6.02%
Equities 1yr to Jan 31, 2008:   -4.30%
Equities 1yr to Feb 29, 2008:   -3.94%

Bonds 1yr to Dec 31, 2007:   +7.15%
Bonds 1yr to Jan 31, 2008:   +9.01%
Bonds 1yr to Feb 29, 2008:   +7.81%

Liquidity 1yr to Dec 31, 2007:   +5.50%
Liquidity 1yr to Jan 31, 2008:   +5.64%
Liquitity 1yr to Feb 29, 2008:   +5.52%

CPMKTS 5yr to Feb 29, 2008:   +8.34%
Equities 5yr to Feb 29, 2008:   +12.66%
Bonds 5yr to Feb 29, 2008:   +4.60%
Liqidity 5yr to Feb 29, 2008:   +3.36%

CPMKTS 10y to Feb 29, 2008:   +4.95%
Equities 10y to Feb 29, 2008:   +4.76%
Bonds 10y to Feb 29, 2008:   +6.10
Liqidity 10y to Feb 29, 2008:   +4.01% 11:33 AM

Living Yield Curve- - - Smart Money 3:57 PM