Dow dropped 213 (near its lows), decliners over advancers 6-1 & NAZ fell 38. Banks are leading the way lower from growing uncertainty over European debts.
Thje MLP index had a mild 1+ drop to the 348s (again, it can't break far away from 350) while the REIT index fell 5 to 222. Junk bond funds edged lower but Treasuries were strong with the yield on the 10 year Treasury going back below 2% & the 2 year Treasury at a meager record low of 0.15% (pretty much no interest for 2 years). Oil fell to a one-week low on speculation fuel demand will falter as economic growth in the US weakens & the debt crisis in Europe worsens. Gold was higher with a modest gain under the growing chaos over European debts.
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Photo: Bloomberg
The EU & IMF inspectors will hold a teleconference at 7PM (Athen's time) with Finance Minister Evangelos Venizelos, to judge whether the gov is eligible for an aid payment next month & on track for a 2nd rescue package. “We can’t move along without real implementation of fiscal reforms and we are late,” Venizelos said today. “We must reach the end of December with a cash balance result that’s within fiscal targets.” European leaders are squabbling over the terms of the Jul agreement & the prospect that they will be forced to channel more money to keep Greece in the EU. IMF & EU monitors suspended their review earlier this month after discovering an unexpected hole in the budget. Venizelos said his state has to become “smaller and smarter” & the focus on the 2012 budget will be on spending cuts. New taxes can’t be “incessantly” imposed because of the inefficiency of the tax collection system, he said. Greece keeps going form bad to worse & then even worse.
Greece Under Scrutiny for Next Aid Payment
Figures released showed that the ECB bond purchases dropped to €9.79B last week, down from €14B invested a week earlier. The ECB restarted its controversial bond-buying program in Aug as investors, worried about the debt of Italy & Spain, drove up the 2 countries' borrowing costs. The purchases are designed to prop up bond prices & keep down interest rates. ECB President Trichet made it clear that the bank's bond purchases are only a temporary measure until eurozone govs have implemented changes to their bailout fund that would allow it to take over that role. However, the implementation process is proving slow, with several national parliaments voicing opposition to the fund's new powers. Economists & a growing number of politicians have also warned that the fund is not big enough to effectively take over from the Frankfurt-based ECB. In contrast to the much smaller economies of Greece, Ireland & Portugal, which have already received rescue loans from the eurozone & the IMF, Italy & Spain are regarded as too big to be bailed out, making the bond purchases an important preventive tool. This is another depressing story on European finances.
Photo: Yahoo
The President will propose $1.5T in new taxes as part of a plan to identify more than $3T in long-term deficit reduction & slow the escalating national debt. This plan is aimed predominantly at the wealthy & draws sharp contrasts with the Reps. It comes after House Speaker Boehner ruled out tax increases to lower deficits. It also is amid a clamor by the Dems to take a tougher stance against Reps. The core of the plan totals $2T in deficit reduction over 10 years by combining the new taxes with $580B in cuts to mandatory benefit programs, including $248B from Medicare. The plan also counts savings of $1T over 10 years from the withdrawal of troops from Iraq & Afghanistan. In a defiant note, officials made clear that Obama would veto any Medicare benefit cuts that aren't paired with tax increases on upper-income people. Officials cast the plan as his vision for deficit reduction, & distinguished it from the negotiations to avoid a gov default in Jul. As a result, it includes no changes in Social Security & no increase in the Medicare eligibility age. This is just the beginning of a major fight about how to end massive budget deficits.
I thought the rally last week was way overdone, the Greek debt mess didn't just appear today. Dow is down more than 300 in Sep & momentum can carry it much lower. A less followed story was that Bank of America (BAC) might have its Countrywide mortgage business file for chapter 11 to end its debt mess. While the bank would continue, the perception about its ability to carry on could be called into question, casting a shadow over all banks. And then there's DC. The fighting words are starting to heat up about how to end massive gov deficits. These are not good times for the markets which reminds me off all those upward revisions for 2011 made last Dec.
S&P 500 Financials Sector Index
| Value | 168.50 | |
| Change | -5.50 (-3.2%) |
Thje MLP index had a mild 1+ drop to the 348s (again, it can't break far away from 350) while the REIT index fell 5 to 222. Junk bond funds edged lower but Treasuries were strong with the yield on the 10 year Treasury going back below 2% & the 2 year Treasury at a meager record low of 0.15% (pretty much no interest for 2 years). Oil fell to a one-week low on speculation fuel demand will falter as economic growth in the US weakens & the debt crisis in Europe worsens. Gold was higher with a modest gain under the growing chaos over European debts.
ALERIAN MLP Index (^AMZ)
Treasury yields:
U.S. 3-month | 0.000% | |
U.S. 2-year | 0.149% | |
U.S. 10-year | 1.954% |
| CLV11.NYM | ....Crude Oil Oct 11... | 85.24 | ... 2.72 | (3.1%) |
| GCU11.CMX | ...Gold Sep 11 | .....1,818.90 | ... 6.80 | (0.4%) |
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The EU & IMF inspectors will hold a teleconference at 7PM (Athen's time) with Finance Minister Evangelos Venizelos, to judge whether the gov is eligible for an aid payment next month & on track for a 2nd rescue package. “We can’t move along without real implementation of fiscal reforms and we are late,” Venizelos said today. “We must reach the end of December with a cash balance result that’s within fiscal targets.” European leaders are squabbling over the terms of the Jul agreement & the prospect that they will be forced to channel more money to keep Greece in the EU. IMF & EU monitors suspended their review earlier this month after discovering an unexpected hole in the budget. Venizelos said his state has to become “smaller and smarter” & the focus on the 2012 budget will be on spending cuts. New taxes can’t be “incessantly” imposed because of the inefficiency of the tax collection system, he said. Greece keeps going form bad to worse & then even worse.
Greece Under Scrutiny for Next Aid Payment
Figures released showed that the ECB bond purchases dropped to €9.79B last week, down from €14B invested a week earlier. The ECB restarted its controversial bond-buying program in Aug as investors, worried about the debt of Italy & Spain, drove up the 2 countries' borrowing costs. The purchases are designed to prop up bond prices & keep down interest rates. ECB President Trichet made it clear that the bank's bond purchases are only a temporary measure until eurozone govs have implemented changes to their bailout fund that would allow it to take over that role. However, the implementation process is proving slow, with several national parliaments voicing opposition to the fund's new powers. Economists & a growing number of politicians have also warned that the fund is not big enough to effectively take over from the Frankfurt-based ECB. In contrast to the much smaller economies of Greece, Ireland & Portugal, which have already received rescue loans from the eurozone & the IMF, Italy & Spain are regarded as too big to be bailed out, making the bond purchases an important preventive tool. This is another depressing story on European finances.
Photo: Yahoo
The President will propose $1.5T in new taxes as part of a plan to identify more than $3T in long-term deficit reduction & slow the escalating national debt. This plan is aimed predominantly at the wealthy & draws sharp contrasts with the Reps. It comes after House Speaker Boehner ruled out tax increases to lower deficits. It also is amid a clamor by the Dems to take a tougher stance against Reps. The core of the plan totals $2T in deficit reduction over 10 years by combining the new taxes with $580B in cuts to mandatory benefit programs, including $248B from Medicare. The plan also counts savings of $1T over 10 years from the withdrawal of troops from Iraq & Afghanistan. In a defiant note, officials made clear that Obama would veto any Medicare benefit cuts that aren't paired with tax increases on upper-income people. Officials cast the plan as his vision for deficit reduction, & distinguished it from the negotiations to avoid a gov default in Jul. As a result, it includes no changes in Social Security & no increase in the Medicare eligibility age. This is just the beginning of a major fight about how to end massive budget deficits.
I thought the rally last week was way overdone, the Greek debt mess didn't just appear today. Dow is down more than 300 in Sep & momentum can carry it much lower. A less followed story was that Bank of America (BAC) might have its Countrywide mortgage business file for chapter 11 to end its debt mess. While the bank would continue, the perception about its ability to carry on could be called into question, casting a shadow over all banks. And then there's DC. The fighting words are starting to heat up about how to end massive gov deficits. These are not good times for the markets which reminds me off all those upward revisions for 2011 made last Dec.
Dow Industrials (INDU)
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