Dow tumbled 294, decliners over advancers 10-1 & NAZ was off 63. Bank stocks led the decline with the Financial Index dropping 5 to the 163s, close to recent lows.
Higher yielding stocks felt the selling pressure. The MLP index dropped 7+ to the 361s & the REIT index was off 6 to the 214s. Junk bond funds also sold off, dropping 1-2%. But Treasuries are in demand with the yield on the 10 year Treasury going below 2% again. Oil dropped for a 3rd day on signs that US lawmakers won’t agree on cutting the budget deficit & on concern that Europe’s debt crisis will send the region’s economy into a recession. Gold, a safe haven investment, was also hit with selling, bringing it back to $1700, a 5 month low.
Rep. Jeb Hensarling, R-Texas, co-chair
Photo: Bloomberg
The congressional debt committee is likely to issue an admission of failure. If the bipartisan committee can somehow reach a deal, any debt reduction that committee members can agree to would likely fall short of the $1.2T required to stave off an automatic trigger for budget cuts across many parts of the federal budget starting in 2013 (note: AFTER 2012 elections!). No one will faint from shock by this failure to agree. The hope, of course, was that the super committee, given extraordinary & unprecedented powers, would tackle the tough problems facing the country's budget, such as rising health costs & an unwieldy tax code no one likes. But many said all along that the committee was set up to fail before it even held its first meeting. Congressional leaders handpicked the members, are mostly partisan defenders of the realm, including several who sat on the President's 2010 fiscal commission & voted against that panel's $4T debt reduction plan. The differences that have divided the debt committee are the same that divide all of Congress: How best to raise more tax revenue & curb spending on social entitlement programs. Reps & Demos both say they have offered proposals that demonstrate serious compromise on key points. But the response from the other side has been "not enough." Markets already had very low expectations for the group, which was born from a last-minute deal struck during the confidence-crushing debt-ceiling fight this summer. This disaster will dominate the news this week, even trumping the mish mash coming from Europe.
Photo: Yahoo
While the number who bought previously occupied homes rose slightly last month, business remains at depressed levels. Adding to the misery, more deals are being canceled at the last minute, a sign that even those who are looking to buy are worried about the housing market. Home sales rose 1.4% in Oct to an annual rate of 4.97M according to the National Association of Realtors. That's below the 6M that is consistent with a healthy housing market, & slightly ahead of last year's sales (the worst in 13 years). Many deals are falling apart before that point. One third of realtors say they've had at least one contract scuttled in Oct, up from 18% in Sep. More than 2 years after the recession officially ended, many people can't qualify for loans or meet higher down-payment requirements. Even those with excellent credit & stable jobs are holding off because they fear that home prices will keep falling. Home sales are also being hurt by a steep decline in first-time buyers, critical to reviving the housing market. At the same time, homes at risk of foreclosure made up 28% of sales last month, down from 30% in Sep. Many of the sales went to investors, who are increasingly buying homes priced under $100K. Sales in that category have increased more than 24% over the past year while sales of more expensive homes have fallen. The median sales price dropped 2% to $162K in Oct. The high rate of foreclosures has made re-sold homes much cheaper than new homes. The median price of a new home is roughly 30% higher than the price of one that's been occupied before, twice the normal markup. A recovery in housing is a key element in reducing the high unemployment rate. But both are stuck in the mud.
Sales of Existing Homes Unexpectedly Rise 1.4%
Photo: Bloomberg
Higher yielding stocks felt the selling pressure. The MLP index dropped 7+ to the 361s & the REIT index was off 6 to the 214s. Junk bond funds also sold off, dropping 1-2%. But Treasuries are in demand with the yield on the 10 year Treasury going below 2% again. Oil dropped for a 3rd day on signs that US lawmakers won’t agree on cutting the budget deficit & on concern that Europe’s debt crisis will send the region’s economy into a recession. Gold, a safe haven investment, was also hit with selling, bringing it back to $1700, a 5 month low.
AMZ Alerian MLP Index
DJR Dow Jones Equity REIT Index
Treasury yields:
U.S. 3-month | 0.000% | |
U.S. 2-year | 0.274% | |
U.S. 10-year | 1.964% |
| CLF12.NYM | ....Crude Oil Jan 12 | ...95.91 | .... 1.76 | (1.8%) |
| GCX11.CMX | ...Gold Nov 11 | ....1,704.60 | ... 20.10 | (1.2%) |
Get the latest market update below:
Photo: Bloomberg
The congressional debt committee is likely to issue an admission of failure. If the bipartisan committee can somehow reach a deal, any debt reduction that committee members can agree to would likely fall short of the $1.2T required to stave off an automatic trigger for budget cuts across many parts of the federal budget starting in 2013 (note: AFTER 2012 elections!). No one will faint from shock by this failure to agree. The hope, of course, was that the super committee, given extraordinary & unprecedented powers, would tackle the tough problems facing the country's budget, such as rising health costs & an unwieldy tax code no one likes. But many said all along that the committee was set up to fail before it even held its first meeting. Congressional leaders handpicked the members, are mostly partisan defenders of the realm, including several who sat on the President's 2010 fiscal commission & voted against that panel's $4T debt reduction plan. The differences that have divided the debt committee are the same that divide all of Congress: How best to raise more tax revenue & curb spending on social entitlement programs. Reps & Demos both say they have offered proposals that demonstrate serious compromise on key points. But the response from the other side has been "not enough." Markets already had very low expectations for the group, which was born from a last-minute deal struck during the confidence-crushing debt-ceiling fight this summer. This disaster will dominate the news this week, even trumping the mish mash coming from Europe.
While the number who bought previously occupied homes rose slightly last month, business remains at depressed levels. Adding to the misery, more deals are being canceled at the last minute, a sign that even those who are looking to buy are worried about the housing market. Home sales rose 1.4% in Oct to an annual rate of 4.97M according to the National Association of Realtors. That's below the 6M that is consistent with a healthy housing market, & slightly ahead of last year's sales (the worst in 13 years). Many deals are falling apart before that point. One third of realtors say they've had at least one contract scuttled in Oct, up from 18% in Sep. More than 2 years after the recession officially ended, many people can't qualify for loans or meet higher down-payment requirements. Even those with excellent credit & stable jobs are holding off because they fear that home prices will keep falling. Home sales are also being hurt by a steep decline in first-time buyers, critical to reviving the housing market. At the same time, homes at risk of foreclosure made up 28% of sales last month, down from 30% in Sep. Many of the sales went to investors, who are increasingly buying homes priced under $100K. Sales in that category have increased more than 24% over the past year while sales of more expensive homes have fallen. The median sales price dropped 2% to $162K in Oct. The high rate of foreclosures has made re-sold homes much cheaper than new homes. The median price of a new home is roughly 30% higher than the price of one that's been occupied before, twice the normal markup. A recovery in housing is a key element in reducing the high unemployment rate. But both are stuck in the mud.
Sales of Existing Homes Unexpectedly Rise 1.4%
Mariano Rajoy has become Spain’s prime minister after an 8-year wait. But he will have to act quickly as borrowing costs approach euro-era records & the country risks becoming the next victim of the debt crisis. Spain’s 10-year bond yield rose to 6.566% from 6.379% on Fri after the People’s Party yesterday beat the ruling Socialists & their candidate in a landslide, winning 186 seats in the 350 seat Parliament. This is another European debt mess to watch.
The day of reckoning is here & markets are not happy. Debt mess describes the situation in Europe, & now the US, with are no quick solutions. Traditionally, this is a quiet week with light trading in the markets because of the holiday. This year there should be plenty of excitement with a strong negative bias. 10.6K has been an important ceiling/floor for the Dow following the Aug sell off. It looks like it wants to test the early Oct lows around 10½K & such a test could come very quickly.
Dow Jones Industrial Average
The day of reckoning is here & markets are not happy. Debt mess describes the situation in Europe, & now the US, with are no quick solutions. Traditionally, this is a quiet week with light trading in the markets because of the holiday. This year there should be plenty of excitement with a strong negative bias. 10.6K has been an important ceiling/floor for the Dow following the Aug sell off. It looks like it wants to test the early Oct lows around 10½K & such a test could come very quickly.
Dow Jones Industrial Average
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