Markets tried to extend gains, but sellers came in. Dow sank 179 (closing at its lows & just barely holding above 11K), decliners over advancers 4-1 & NAZ dropped 55. After reaching 165 yesterday, the Financial Index may be heading back down to test the 151 lows from last week on increased recognition that solving European debt problems could hurt bank results. I hate to keep bringing it up, the the Financial Index chart looks awful.
The MLP index tumbled in the lower end of its 5 month trading range & the REIT index fell 6 to the 205s. Junk bond funds fell more than 1%, & Treasuries were weaker taking the yield on the 10 year Treasury back over 2%. Oil traded near its highs in 4 days, paring an earlier decline & loss for Q3. Gold had another bad day, difficult to understand when the flight to safety is not directed to gold.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Yahoo
Jose Manuel Barroso, the president of the EU's executive arm, proposed taxing financial trades which could raise €57B ($77B) a year in Europe to help combat the European debt crisis that is threatening the euro currency. "In the last three years, member states have granted aid and provided guarantees of euro4.6 trillion to the financial sector," Barroso said. "It is time for the financial sector to make a contribution back to society." The tax would be a tiny percentage of the value of a trade (i.e. stocks & bonds). The European Commission has formally backed the tax to take effect from Jan 2014. Though the tax could dent growth & employment, it has won a fair degree of support across the 17-country eurozone, including France & Germany, the EU's 2 biggest economies. Britain, however, has been adamantly against it unless it is used on a global basis. This may sound far away, in distance & time, but traders do not like to hear this kind of talk!
EU Proposes $78 Billion-a-Year Financial Transaction Tax to Start in 2014
Chancellor Merkel hinted that the 2nd Greek bailout package might have to be renegotiated amid increasing market speculation that European leaders want to force private holders (i.e. banks) of Greek bonds to take bigger losses. She didn't rule out altering the terms to the €109B ($148B) package, saying the decision must be based on how Greece's debt inspectors judge Athens' recent austerity efforts. "So we must now wait for what the troika finds out and what it tells us: do we have to renegotiate or do we not have to renegotiate?" she said. Merkel added that she "cannot anticipate the result of the troika." Many maintain that Greece must have its total debt reduced by as much as 50% if it is to have a chance of recovering. This is not good news for lending banks, &, in turn, the stock market.
Merkel says Greek bailout terms may be changed AP
The VIX, volatility index, has been quite volatile in the last month. It had been lumbering along in the teens for a couple of years when stocks had their glorious run. Then the markets sank & the index shot up to the 40s, reflecting increased nervousness by investors. Today it was up 3, to 41.
The rally in the markets seemed way overdone. European debt problems are not close to being resolved with unrest in the streets of Greece & uncertain terms about taking haircuts (losses) on Greek debts by banks & other holders. Attention on the European debt crisis makes it easy to forget the US has whopper sized financial problems. Sat, a new fiscal year begins & it will bring another huge deficit. Congress has to make tough decisions about reducing the debt & there is no agreement about how to make budget cuts. The super committee has less than 2 months to come up with recommendations or automatic budget cuts will be put into place. Additionally, end of the month/qtr decisions will influence trading thru Fri.
S&P 500 Financials Sector Index
| Value | 160.30 | |
| Change | -4.80 (-2.9%) |
The MLP index tumbled in the lower end of its 5 month trading range & the REIT index fell 6 to the 205s. Junk bond funds fell more than 1%, & Treasuries were weaker taking the yield on the 10 year Treasury back over 2%. Oil traded near its highs in 4 days, paring an earlier decline & loss for Q3. Gold had another bad day, difficult to understand when the flight to safety is not directed to gold.
Alerian MLP Index
| Value | 341.57 | |
| Change | -6.67 (-1.9%) |
DJ REIT INDEXDJR (^DJR)
Click below for the latest market update:
Treasury yields:
U.S. 3-month | 0.005% | |
U.S. 2-year | 0.250% | |
U.S. 10-year | 2.004% |
| CLX11.NYM | ...Crude Oil Nov 11 | ...81.42 | ... 3.03 | (3.6%) |
Photo: Yahoo
Jose Manuel Barroso, the president of the EU's executive arm, proposed taxing financial trades which could raise €57B ($77B) a year in Europe to help combat the European debt crisis that is threatening the euro currency. "In the last three years, member states have granted aid and provided guarantees of euro4.6 trillion to the financial sector," Barroso said. "It is time for the financial sector to make a contribution back to society." The tax would be a tiny percentage of the value of a trade (i.e. stocks & bonds). The European Commission has formally backed the tax to take effect from Jan 2014. Though the tax could dent growth & employment, it has won a fair degree of support across the 17-country eurozone, including France & Germany, the EU's 2 biggest economies. Britain, however, has been adamantly against it unless it is used on a global basis. This may sound far away, in distance & time, but traders do not like to hear this kind of talk!
EU Proposes $78 Billion-a-Year Financial Transaction Tax to Start in 2014
Chancellor Merkel hinted that the 2nd Greek bailout package might have to be renegotiated amid increasing market speculation that European leaders want to force private holders (i.e. banks) of Greek bonds to take bigger losses. She didn't rule out altering the terms to the €109B ($148B) package, saying the decision must be based on how Greece's debt inspectors judge Athens' recent austerity efforts. "So we must now wait for what the troika finds out and what it tells us: do we have to renegotiate or do we not have to renegotiate?" she said. Merkel added that she "cannot anticipate the result of the troika." Many maintain that Greece must have its total debt reduced by as much as 50% if it is to have a chance of recovering. This is not good news for lending banks, &, in turn, the stock market.
Merkel says Greek bailout terms may be changed AP
The VIX, volatility index, has been quite volatile in the last month. It had been lumbering along in the teens for a couple of years when stocks had their glorious run. Then the markets sank & the index shot up to the 40s, reflecting increased nervousness by investors. Today it was up 3, to 41.
SPX Volatility Index (^VIX)
The rally in the markets seemed way overdone. European debt problems are not close to being resolved with unrest in the streets of Greece & uncertain terms about taking haircuts (losses) on Greek debts by banks & other holders. Attention on the European debt crisis makes it easy to forget the US has whopper sized financial problems. Sat, a new fiscal year begins & it will bring another huge deficit. Congress has to make tough decisions about reducing the debt & there is no agreement about how to make budget cuts. The super committee has less than 2 months to come up with recommendations or automatic budget cuts will be put into place. Additionally, end of the month/qtr decisions will influence trading thru Fri.
Dow Industrials (INDU)
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