Friday, November 25, 2011

Markets had worst week in 2 months

Selling into the close brought the Dow to finish down 25, decliners ahead of advancers 4-3 & NAZ fell 18.  Bank stocks had a modest rise in their oversold condition.

S&P 500 Financials Sector Index

Value 158.13 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change    0.69    (0.4%)

The MLP & REIT indices along with junk bond funds were flattish.  Treasuries fell (sending yields higher) on fears that excessive demand may have taken yields too low.  Oil rose on speculation that euro- area leaders will do more to fight the debt crisis & on concern that tension in the Middle East will disrupt supply.  Gold continues trading sideways, below $1700.

AMZ  Alerian MLP Index

DJR  Dow Jones Equity REIT Index

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLF12.NYM...Crude Oil Jan 12...97.32 ...Up 1.15  (1.2%)

Live 24 hours gold chart [Kitco Inc.]

S&P downgraded Belgium's credit rating to AA from AA-plus, saying funding & market risk pressures are raising the chances the country's financial sector will need more support.  Difficulties in the country's banking system & the gov's inability to respond to economic pressures contributed to the downgrade.  Belgium's debt position has worsened in recent months, particularly after it bought the Belgian arm of failing French-Belgian bank Dexia earlier this year.  Borrowing costs have increased sharply in recent days. The country's benchmark 10-year yield rose one percentage point to 5.832%, up from 4.817% at the start of the week.  "We think the Belgian government's capacity to prevent an increase in general government debt, which we consider to be already at high levels, is being constrained by rapid private sector deleveraging both in Belgium and among many of Belgium's key trading partners," S&P said.  Add another country to list of countries with debt problems.  Meanwhile, Italy paid a record 6.5% to borrow for 6 months & its longer-term funding costs soared far above levels seen as sustainable for public finances, raising the pressure on the new emergency gov.

Belgium’s Long-Term Credit Rating Cut to AA by S&P on Heightened Bond Risk

Dow dropped 564 this week (all 4 trading days saw declines), the worst week in 2 months.  Dow broke thru the important 11½K floor & now may have to test the 10.4K low reached almost 2 months ago.  Fundamentals looks bad as Europe appears to be imploding.  The banking system is coming apart & the region is heading for a recession.  The US economy is stronger, but some of that strength comes from exports to Europe & Asia which is increasing looking to be "iffy."  Next Fri, the Nov jobs report will be issued & that may not be encouraging.

Dow Jones Industrial Average

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