Markets drift lower

Dow was under water all day, although NAZ squeaked out a gain. Dow fell 58, decliners over advancers 3-2 & NAZ gained almost 1. Bank stocks fell during the day, but rebounded & finished pretty much even as shown by the Financial Index.


S&P 500 FINANCIALS INDEX

Value	185.83
Change	-0.43 (-0.2%)

The MLP index fell a fraction to just under 322 whilethe REIT index dropped ¾ to 199. Junk bond funds were soft & the VIX fell a fraction into the 25s. The yield on the 10-year Treasury bond rose 3 basis points to 2.61%, still extremely low. The € fell a full penny to $1.27 & down about a nickel from its recent high.

Treasury Securities

U.S. 3-month		0.15%
U.S. 2-year		0.49%
U.S. 10-year		2.61%

Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD




VIX --- YTD




10-Year Treasury Yld Index --- YTD





The biggest US petroleum stockpiles in 2 decades are leading oil bears to predict further price declines that could lead OPEC to restrict production. Inventories of crude & fuel products rose to 1.13B barrels last week, the highest level since the Energy Dept began keeping combined weekly data 20 years ago. Oil has been selling off in Aug & may be headed for the 70 floor very soon. Gold's is still in record high territory as shown in its charts.

CLU10.NYM

..Crude Oil Sep 10

..73.45

.. 0.98 ......(1.3%)

GCQ10.CMX

..Gold Aug 10

..1,228.10

.. 5.70 ......(0.5%)

***Gold Super Cycle***
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OIL (ETF) --- YTD




GLD (ETF) --- YTD

A new report from the Treasury Dept said that approximately 630K people who had tried to get their monthly mortgage payments lowered through the mortgage-relief program have been cut loose through Jul, about 48% of the 1.3M homeowners who had enrolled since Mar 2009. That is up from 40+% through Jun. The report suggests foreclosures could rise in H2 & weaken the ailing housing market. Another 422K, or 32% of those who started the program, have received permanent loan modifications & are making their payments on time. Many borrowers have complained that program is a bureaucratic nightmare, banks often lose their documents & then claim borrowers did not send back the necessary paperwork.

Nearly 50 Percent Exit Obama Mortgage-Aid Program- AP

Photo: Bloomberg

McDonald's (MCD), a Dow stock & Dividend Aristocrat, was the first foreign company to borrow money in Hong Kong & may pave the way for new global debt markets in China. MCD, opened its first 1K restaurants in China faster than any other country outside the US, sold 200M yuan ($29M) of 3% notes due in Sep 2013. Wal-Mart (WMT), another Dow stock & Dividend Aristocrat, is considering selling bonds in yuan. China, the fastest-growing major economy, changed rules in Feb to let foreign companies issue yuan-denominated bonds through Hong Kong so that it can strengthen the HK’s position as a financial center & promote the Chinese currency for global commerce. MCD was up a few pennies.

McDonald's Sets Benchmark for China With Yuan Bond Sale


McDonald's --- 2 years





There was not much happening on sluggish volume. But there is an increasing feeling beneath the surface about softness in the US economic recovery. High unemployment rates drone on & uncertainty about taxes for next year are growing worries. While Dow didn't have a bad week, it did lose almost 100. It's stuck in the mud & will need a lot of help if it wants to go higher. The technical guys said 1100 on the S&P 500 was an important line in the sand. So far, it hasn't meant much.

Dow Jones Industrials --- YTD




S&P 500 --- YTD

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