S&P 500 FINANCIALS INDEX
The Alerian MLP Index dropped 4½ to the 206s & the REIT index was down 4 to the 193s. Junk bond funds were off 1-2% while the VIX, volatility index soared 4 to 33. Nervousness is on the rise. Money flowed into Treasuries as the yield onn the 10-year Treasury bond fell 5 basis points to below 3% (2.98%). The chart below shows the yield has plunged about 30 basis points in less than 2 weeks!
Alerian MLP index --- 2 weeks
Dow Jones REIT Index -- 2 weeks
VIX --- 2 weeks
10-Year Treasury Yield Index -- 2 weeks
Selling is spreading to commodities, even gold.
|CLQ10.NYM||...Crude Oil Aug 10||...75.57 ||... 2.68 |
|GCN10.CMX||...Gold Jul 10||...1,230.40 ||... 7.80 |
Gold Super Cycle!!
Strikes in Greece & Spain highlighted resistance to Europe-wide austerity measures as the € tumbled a penny to under $1.22 ahead of a deadline for banks to repay a giant European Central Bank cash injection. The 5th major strike this year by Greek unions disrupted tourism & public transport in protest at planned pension cuts & later retirement, while Spanish workers shut down Madrid's metro system in anger at a 5% public sector pay cut. The risk premium on southern European gov bonds over benchmark German bonds widened & the cost of insuring their debt against default rose as investors adjusted to the wider repercussions of the Greek debt crisis on the financial system at the end of the quarter, a traditional stress point. Euro zone policymakers had little success trying to reassure markets.
Home prices in Apr rose for the first time in 7 months as tax credits bolstered the housing market. But the rebound may be short-lived now that the incentives have expired. The Standard & Poor's/Case-Shiller 20-city home price index posted an 0.8% gain after falling in each of the past 6 months. 18 of 20 cities showed price increases in Apr from Mar. 11 cities reversed their declines from the month before. Nationally, prices have risen 3.8% from their Apr 2009 bottom but remain 30% below the Jul 2006 peak.
Home Prices in U.S. Cities Up 3.8% From Year Earlier
Chaos & confusion are on the rise which is responsible for today's sharp decline in the markets. Frightened money would rather own 10 year Treasuries yielding a measly 3% than stocks, some of which yield much more. Stock markets are looking ugly. Dow will test its 2010 lows of 9.8K, maybe even today! It went thru that level on its upward drive last Oct.
Dow Jones Industrials -- 2 weeks
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