Markets advance after the G20 pledge

Stocks rose on the weaker dollar.  The Dow went over its yearly high of 11.2K but pulled back to up 59 (just below setting a new yearly high), advancers over decliners 3-1 & NAZ added 15.  There is a sense of relief that there will be no currency wars.  Banks started higher but selling took the Financial Index barely into the red. 


S&P 500 FINANCIALS INDEX

Value	196.52
Change	-0.09  (-0.0%)

The Alerian MLP Index is up 1½ to the 351s, flirting with a new record at 352 (actually it just inched over last week's record for a few minutes).  The REIT index gained a fraction to 224, near its yearly highs.  Junk bond funds were marginally higher while Treasuries were strong.  The yield on the 10 year Treasury bond fell 5 basis points to 2.51% mostly from the weaker dollar.

Treasury Yields:

U.S. 3-month		0.12%
U.S. 2-year		0.35%
U.S. 10-year		2.51%

Alerian MLP Index   ---   2 weeks



Dow Jones REIT Index   ---   2 week



10-Year Treasury Yield Index   ---   2 week





Nothing like a weak dollar to bring out buyers for commodities.  It used to take 100 ¥ to buy a dollar, then that dropped to the lows 90s.  Now it's just 80, a 15 year low!  Oil gained for a 2nd day from a weakening dollar & Hurricane Richard headed for the Gulf of Mexico, home to 31% of US crude production. Gold rose the most in more than a week as the dollar fell, boosting demand for the precious metal.

CLZ10.NYM

...Crude Oil Dec 10

....83.14

..... 1.45

(1.8%)

GCV10.CMX

...Gold Oct 10

.......1,336.00

.... 11.60

(0.9%)

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Photo:  Bloomberg


Sales of previously occupied homes rose in Sep after a dismal summer but remain well short of healthy levels.  The National Association of Realtors reported sales grew 10% last month to an annual rate of 4.53M but they were still down 19% from last year. The Aug results were revised downward slightly.  High unemployment, tight credit & the prospect of future declines in home prices have kept people from buying homes. Plus, the prospect of lawsuits from former homeowners claiming that banks made errors when seizing their homes is making some consumers fearful about buying foreclosed properties.  The median sale price was $172K, down 2.4 % from last year.  The number of previously owned homes on the market fell 1.9% to 4.04M. At the current sales pace, it would take 10.7 months to sell those houses, compared with 12 months in Aug. Housing remains stuck in the mud.

U.S. Existing Home Sales Rose 10% to 4.53 Million Rate


Median Home Price - 1 year






Global finance ministers met over the weekend & agreed to avoid competitive devaluations of their currencies, but they didn't lay out specific guidelines. There has been growing concerns that countries would artificially drive the value of their currencies lower. Weakening a national currency can help a country boost exports because goods become cheaper overseas.  While that can lift a country's economic growth, it also creates imbalances in global trade leading to protectionist responses from other countries, threatening to slow or halt a broader economic recovery.  Short term, stocks liked the news but longer term implications are not clear.

G-20 to Avoid `Competitive Devaluation,' Prod China


Bank of America (BAC), a Dow stock, has had tough going in the last 2 weeks with the foreclosure mess.  The stock is down a few pennies, still stuck under 11½.  A bright spot is home refinancing is up as owners want to save money on interest & monthly mortgage payments. 

Refinancing Surge Lifts Banks Amid Foreclosure Scrutiny


Bank of America   ---   2 months





Housing data was grim as expected.  But all markets are higher from a weak dollar.  Major changes in foreign exchange rates can get complicated.  Among other problems, a strong dollar is helpful in getting foreign countries (like China) to buy massive amounts of new gov debt.  But Dow is flirting with its yearly high & a breakthrough to new highs will be bullish for stocks.  Meanwhile, MLPs, REITs & junk bonds are hot (as is gold).


Dow Jones Industrials   ---   2 week

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