S&P 500 FINANCIALS INDEX
| Value | 190.88 | |
| Change | -7.12 (-3.6%) |
The Alerian MLP Index fell 8 to 317½, a very big daily swing. With its fantastic rise in the last 1½ years, bigger daily swings have become more common. MLPs are darlings of many fund managers who can dump securities as fast as they accumulated them. The REIT index dropped 5½ to 203, another very large swing. Junk bond funds were down 1%, torn between demand for yields but are also viewed as just stocks with high yields. The VIX shot up 3 to the 25s, near its highest level in a month. The € plunged 3¢ (a very big move by its standards) to under $1.29. Treasury yields are soooo low. The 10 year Treasury reached a new 18 month low after the 10 year auction was completed at midday.
| U.S. 3-month | 0.15% | |
| U.S. 2-year | 0.51% | |
| U.S. 10-year | 2.68% |
Alerian MLP Index --- YTD
Dow Jones REIT Index --- YTD
VIX --- YTD
10-Year Treasury Yld Index --- YTD
Oil dropped further in the PM, returning it back to its 70-80 trading range it has been in for much of the last 18 months. Gold lost some of the earlier gains. Given the flight to safety menatality that has taken over investment thinking, it should have done better today.
| CLU10.NYM | ..Crude Oil Sep 10 | ..77.78 | .. 2.47 ......(3.1%) |
| GCQ10.CMX | ..Gold Aug 10 | ..1,199.90 | .. 3.70 ......(0.3%) |
With 2 months to go in the budget year, the federal deficit is running slightly below the all-time record set a year ago. Swell!! The Treasury reported that the deficit for July totaled $165B, pushing the imbalance for the year to $1.17 T. That's down 7.7% from the deficit through the first 10 months of last year reflecting lower spending on emergency programs to combat the recession & a stabilized financial system. However, the administration is still predicting that this year's deficit will surpass last year's record imbalance of $1.42T. Its new forecast released in late Jul projected that the deficit this year will climb to $1.47T. At today's auction of 10-year notes, the securities drew a yield of 2.73%, compared with the average forecast of 2.747 %. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 3.04X, compared with an average of 3.06X for the previous 10 sales. At that level, demand for those Treasuries is considered very strong.
July U.S. Budget Deficit Narrowed to $165 Billion
Treasury 10-Year Yield Drops to 16-Month Low on View U.S. Recovery Slowing
Apple (AAPL), one of the hottest stocks in the last year, was hit with profit taking today. It fell 9¼ (3½%) to 250. There were no unusual new stories, AAPL is just a high flier that is subject to wide swings. The stock has held up well in the last 3 months, while general averages have been struggling. However minor problems keep cropping up with the iPhone. Maybe this is the start of payback time for the stock.
Apple --- YTD
Selling comes in the aftermath of the Federal Reserve (FED) meeting yesterday giving a gloomier outlook about economic recovery in the US. Data on a widening trade gap for the US gave more reasons for selling. The Bank of England cut its outlook for economic growth to only 3% from an earlier forecast of 3.6%. Cisco (CSCO), a Dow stock, fell in after hours trading based on the gut reaction to its Q4 revenues coming in below expectations. This was one very bad day & may be the start of a period with more bad day. Asian markets can be expected to continue lower, following the US markets.
Dow Jones Industrials --- YTD
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