Weak economic data drives markets lower

Stocks are recovering from earlier losses. Dow is down only 14 allowing it to barely remain above 10K, but decliners are ahead of advancers 5-2 & NAZ has a modest loss of 3. Bank stocks are also bouncing off their lows as the Financial Index is flirting with setting a new yearly low.


S&P 500 FINANCIALS INDEX

Value	180.30
Change	-1.26 (-0.6%)

The Alerian MLP Index dropped a very big 4 to the 316s & 20 below recent highs. While markets have sold off badly in the last month, MLPs have also been hurt by an absence of new funds investing in MLPs. However, REITs were flat today. Junk bond funds were about 1% lower. The VIX rose 1+ to levels not seen since early Jul & the € was flattish at $1.26½. The Treasury rally is discussed below.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




VIX --- 2 weeks




10-Year Treasury Yld Index --- 2 weeks





Another quiet day for commodities. But don't get caught off guard, gold is on the move & only needs 25 to reach a new record.

CLV10.NYM

...Crude Oil Oct 10

...71.59

... 0.04 .......(0.1%)

GCQ10.CMX

...Gold Aug 10

...1,239.50

... 7.70 .......(0.6%)

Gold Super Cycle!!! Click Here

Treasuries are continuing their enormous rally. There's no other way to describe this move. The yield on the 10-year note has fallen the lowest level in 19 months following dreary economic news about new home sales & orders for durable goods rose coming in less than forecasted. It's depressing to see yields on all Treasuries at or near record lows, money that could have been used to buy stocks! The extra yield needed to hold 30-year bonds over 2-year notes decreased to 3.02%, the narrowest level last Apr, reflecting growing concern that the economic recovery is stalling.

Treasuries Rise, 10-Year Yield Drops to 19-Month Low on Signs of Slowdown

Treasury Securities

U.S. 3-month		0.15%
U.S. 2-year		0.48%
U.S. 10-year		2.45%

Newly completed homes in Utah
Photo: Bloomberg

The sales of new homes in the US unexpectedly dropped in Jul to the lowest level on record! This is one more signal that even with cheaper prices & record low interest rates on mortgages, the housing market is hurting badly. Purchases fell 12% from Jun to an annual rate of only 276K, the lowest since data began in 1963. The median price of $204K was the lowest since in 7 years. Expectations were for new home sales to remain unchanged at a 330K pace after the gov revised down the Jun figure to 315K. The supply of homes at the current sales rate climbed to 9.1 months’ worth from 8 months in the prior month. The housing market is hurting badly, a reflection of high unemployment rates which are showing no signs of improvement.

Sales of U.S. New Homes Fall to Record Low


Purchases of new homes - 1 year




Monthly supply of new homes - 1 year





Economic news has been pretty dreary, but stocks are finding buyers in the last hour. The Dow is fighting to stay above 10K (hardly much of a victory). MLPs have been outperforming the popular averages all year, buyers have been losing enthusiasm in the last month.

Dow Jones Industrials --- 2 weeks

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