Mortgage worries sink markets

After recent gains, this was a profit taking day with some buying into the close that limited the damage.  Dow dropped 165 taking it below 11K, decliners ahead of advancers 5-1 & NAZ was off 43 hurt by Apple's (AAPL) drop of almost 10 following earnings last night.  Banks led the way down with the Financial Index dropping almost 3. 

S&P 500 FINANCIALS INDEX

Value	194.66
Change	-2.77  (-1.4%)

The MLP index took a tumble, a rarity in recent months, dropping 3+ to 347s.  Considering its run shown in the chart, such a pullback has to be expected.  The REIT index fell 3 off its yearly high to 219.  Junk bond funds were also hit by selling & Treasuries had small gains.  The yield on the 10 year Treasury bond was down more than 1 basis point to 2.47%.

Treasury yields:

U.S. 3-month		0.13%
U.S. 2-year		0.35%
U.S. 10-year		2.47%

Alerian MLP Index   ---   2 months




Dow Jones REIT Index   ---   2 months




10 Year Treasury Yield Index   ---   2 months





A higher dollar brought down oil & gold.  The € had been over $1.41 last week but  now is just above $1.37. 

CLX10.NYM

...Crude Oil Nov 10

...79.54

....... 3.54

(4.3%)

GCV10.CMX

...Gold Oct 10

.......1,335.10

..... 36.10

(2.6%)

$$ Gold Super Cycle $$ 

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Commercial property prices in the US sank for a 3rd straight month in Aug to the lowest level in 8 years, pulled down by declining values for distressed real estate.  The Moody’s/REAL Commercial Property Price Index fell 3.3% from Jul to below the post-crash low in Oc 2009 & the measure is 45% below its Oct 2007 peak.  This is its lowest since Jun 2002 as prices for distressed buildings, defined as those in default or foreclosure or whose owner is in bankruptcy, are “falling sharply,” while values of the best assets jump & smaller properties are flat. Over 25% of sales in Aug involved distressed real estate.  Commercial real estate prices should remain “choppy” in the next few months because of the relatively small number of sales & concern that the economy may slow. Buyers & lenders are seeking only the most secure investments amid uncertainty about the outcome of next month’s midterm elections, unemployment near 10% & falling US housing prices.

Commercial Property Prices in U.S. Decline to Eight-Year Low, Moody's Says


National Property Price Index - 1 year











Photo:  Yahoo


Coca-Cola (KO), a Dow stock & Dividend Aristocrat, sales extended their rebound in the US during Q3, coupling with strong performance abroad to push net income up 8.4%.  A 2nd consecutive qtr of improvements in its North American drinks business comes after 4 years of declines. KO also increased the value of shares it expects to buy back this year to $2B from $1½B.  It had EPS of 88¢ in Q3, up from 81¢ last year. Excluding one-time items related to restructuring, EPS was 92¢, above forecasts of 89¢.  Revenue rose 4.7% to $8.43B.  Beverage volume in North America rose 2% & worldwide volume rose 5%. Coca-Cola Zero posted double-digit volume growth while Sprite & Fanta were also top performers.  Sales of juices & teas rose again, 8% above last year. Powerade's sales volume rose 32% & Simply juices rose 23%.  KO has been investing to expand its presence in emerging markets, the company's fastest-growing markets. China's volume grew 12% while Brazil's volume grew 13% & Russia's grew 30%.  The Coca-Cola brand's volume rose 4% around the world, making it the fastest-growing among the company's brands globally.  The stock gained 34¢ to its highest level in 3 years.

Coca-Cola 3Q net income rises 8.4 percentAP

Coca-Cola   ---   3 years






Today's sell-off could be called routine after the 10% rise in the last 2 months.  But it comes in the middle of earnings season, so there might be more behind the selling.  It's intersting that rising stock markets have been joined by gold (a safe haven investment) which reached new records.  Then both were hit with substantial selling.  MLPs have also been in their own world reaching new record levels but were also hit with a big selling day (almost 1% decline for the index).  The market's cool reception for AAPL earnings after Steve Jobs make an emotional presentation about the company's future may be sending an ominous signal.


Dow Jones Industrials   ---   2 months

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