Overseas markets had a tough day yesterday & Asian markets sold off last night (Tues their time). Dow dropped 228 (but off the lows), decliners over advancers 7-1 & NAZ is off 44. Banks are leading the way lower & the Financial Index is near its recent 160 low at levels not seen since Apr 2009.
The MLP index fell 7½ to the 242s & the REIT index fell 3 to the 217s. Junk bond funds were lower, but Treasuries rose on strong demand. The chart below shows the 10 year Treasury yield now has a 1 handle, its lowest ever with prospects of going lower. Oil fell to the lowest level in more than a week on deepening concern about the European debt crisis. But gold is rocketing ahead. It was just a few months ago when $2000 for gold seemed like a distant dream. Not today!
Photo: Bloomberg
Service firms (that employ 90% of the work force) expanded at a slightly faster pace in Aug but remain too weak to help an economy that is struggling to create jobs. The Institute for Supply Management said its index for service companies rose to 53.3 in Aug, up from 52.7 in Jul. (above 50 indicates expansion). The service sector has grown in all but one month during the past 2 years. The index reached a 5-year high of 59.7 in Feb & growth among service businesses has declined in 4 of the past 6 months as high gas prices & scant wage gains have left consumers with less money to spend on services. This qualifies as good but not great news.
Service Industry in U.S. Expands at Faster Pace as ISM Index Rises to 53.3
Photo: Bloomberg
The Swiss central bank imposed a ceiling on the franc for the first time in more than 30 years & pledged to defend the target with the “utmost determination,” prompting a record drop in the currency. The Swiss National Bank (SNB) is “aiming for a substantial and sustained weakening of the franc,” the Zurich-based bank said in an e-mail. “With immediate effect, it will no longer tolerate a euro-franc exchange rate below the minimum rate of 1.20 francs” and “is prepared to buy foreign currency in unlimited quantities.” The franc plunged against the € after the SNB announced the measure last introduced in 1978 to stem gains versus the Deutsche mark. Flight to safety is important for investments, this is one reflection. This action could stimulate even more demand for Treasuries & gold.
This is a dreary day in the markets in what is shaping up as a dreary month. Problems with European debts are dragging down stocks along with worries about where the US economy is going. The post office is forecasting a $10B loss this year & needs a lot of help, one more of the many problems which need to be fixed. The pres is giving a speech to outline his plan for a recovery, but chances are that will be more of the same with more gov spending & higher taxes for the wealthy. DC will remain divided while the economic recovery is going nowhere. Treasuries & gold remain the 2 hot investment products because there is plenty of demand for them.
S&P 500 Financials Sector Index
| Value | 163.83 | |
| Change | -4.70 (-2.8%) |
The MLP index fell 7½ to the 242s & the REIT index fell 3 to the 217s. Junk bond funds were lower, but Treasuries rose on strong demand. The chart below shows the 10 year Treasury yield now has a 1 handle, its lowest ever with prospects of going lower. Oil fell to the lowest level in more than a week on deepening concern about the European debt crisis. But gold is rocketing ahead. It was just a few months ago when $2000 for gold seemed like a distant dream. Not today!
Ten Year Treasury (^TNX)
ALERIAN MLP Index (^AMZ)
Treasury yields:
U.S. 3-month | 0.020% | |
U.S. 2-year | 0.196% | |
U.S. 10-year | 1.932% |
| CLV11.NYM | ....Crude Oil Oct 11 | ...84.64 | ... 1.81 (2.1%) |
| GCU11.CMX | ...Gold Sep 11 | ...1,901.60 | ... 28.00 | (1.5%) |
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Service firms (that employ 90% of the work force) expanded at a slightly faster pace in Aug but remain too weak to help an economy that is struggling to create jobs. The Institute for Supply Management said its index for service companies rose to 53.3 in Aug, up from 52.7 in Jul. (above 50 indicates expansion). The service sector has grown in all but one month during the past 2 years. The index reached a 5-year high of 59.7 in Feb & growth among service businesses has declined in 4 of the past 6 months as high gas prices & scant wage gains have left consumers with less money to spend on services. This qualifies as good but not great news.
Service Industry in U.S. Expands at Faster Pace as ISM Index Rises to 53.3
The Swiss central bank imposed a ceiling on the franc for the first time in more than 30 years & pledged to defend the target with the “utmost determination,” prompting a record drop in the currency. The Swiss National Bank (SNB) is “aiming for a substantial and sustained weakening of the franc,” the Zurich-based bank said in an e-mail. “With immediate effect, it will no longer tolerate a euro-franc exchange rate below the minimum rate of 1.20 francs” and “is prepared to buy foreign currency in unlimited quantities.” The franc plunged against the € after the SNB announced the measure last introduced in 1978 to stem gains versus the Deutsche mark. Flight to safety is important for investments, this is one reflection. This action could stimulate even more demand for Treasuries & gold.
This is a dreary day in the markets in what is shaping up as a dreary month. Problems with European debts are dragging down stocks along with worries about where the US economy is going. The post office is forecasting a $10B loss this year & needs a lot of help, one more of the many problems which need to be fixed. The pres is giving a speech to outline his plan for a recovery, but chances are that will be more of the same with more gov spending & higher taxes for the wealthy. DC will remain divided while the economic recovery is going nowhere. Treasuries & gold remain the 2 hot investment products because there is plenty of demand for them.
Dow Industrials (INDU)
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