Dow dropped 131, decliners over avancers almost 6-1 & NAZ lost 52. The Financial Index fell 2½ to 191. The Alerian MP Index fell 4+ to the 395s & the REIT index was off 3 to 261. Junk bond funds were mixed & Treasuries were strong, being very much in demand. Oil plunged on concern that Europe’s sovereign-debt crisis is deepening & as a Chinese central-bank adviser said the country’s economic expansion may slow further. Gold also saw a lot of selling.
Photo: Bloomberg
Spain’s recession deepened in Q2 as the toughest budget cuts in the country’s history pushed the economy into a 3rd consecutive qtr of contraction, according to the Bank of Spain. The economy shrank 0.4% from Q1, when GDP fell 0.3%. Domestic demand “fell more sharply than in the prior quarter,” while exports showed a “moderate recovery,” the Bank of Spain said. Prime Minister Rajoy last week announced his 4th round of tax increases & spending cuts this year as he struggles to convince investors that the nation won’t need a 2nd bailout. The planned budget cuts through 2014 now amount to more than 10% of GDP. Spain’s 10-year note yields surged above 7.5%, breaching a level that forced Ireland, Portugal & Greece to seek external aid. The yield on Spain’s 10-year benchmark bond surged 26 basis points to 7.57% today, resulting in a spread with similar German maturities widening to 6.42 percentage points. The situation is grim.
Spanish Recession Probably Deepened in Second Quarter: Econom
Photo: Bloomberg
McDonald's, a Dow stock & Dividend Aristocrat, net income slipped 4% in Q2 as a result of unfavorable foreign currency exchange rates. Revenue fell short of expectations in a slowing global economy. EPS was $1.32, below $1.35 last year. Revenue was $6.92B, barely up from $6.91B a year ago. Expectations were for EPS of $1.38 on revenue of $6.94. Sales at stores open at least 13 months in the US rose 3.6%, the slowest growth in 5 qtrs. The stock dropped 2.33.
Photo: Bloomberg
Gov bond yields in the US, UK. & Germany fell to records, while stocks dropped & the € traded below its lifetime average against the dollar on concern the region’s debt crisis is deepening. The yield on the 10-year Treasury note declined to 1.41% after reaching an all- time low of 1.40%. 2-year German yields slumped to as low as minus 0.08% while Spanish & Italian yields jumped. The € fell for a 4th day, sliding to below $1.21. Greece’s creditors meet this week amid doubts that the country will meet its bailout commitments. German Vice Chancellor Philipp Roesler said he’s “very skeptical” that European leaders will be able to rescue Greece. China's economic expansion may cool for a 7th straight qtr to 7.4% in Q3. Germany’s 2-year note yield was below zero for the 12th consecutive day. Markets are switching from nervous to scared.
Bond Yields Fall to Records as Stocks, Euro Slide on Debt
This is a glum day for all markets (except for Treasuries & bonds of other safe haven countries). The euro debt mess keeps going from bad to worse with no end in sight. The Chinese economy is slowing & that is felt worldwide. The US economy, while still growing, is stumbling. Even the thought of a QE3 may not be good enough to restore expansion needed to bring down high unemployment. Dow stalled at 12950, its next test may be the 12500 floor which is not that far away.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month | 0.086% | |
U.S. 2-year | 0.210% | |
U.S. 10-year | 1.416% |
| CLU12.NYM | ....Crude Oil Sep 12 | ...88.33 | ..... 3.50 (3.8%) |
| GCU12.CMX | ...Gold Sep 12 | ......1,571.80 | ... 12.10 (0.8%) |
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Spain’s recession deepened in Q2 as the toughest budget cuts in the country’s history pushed the economy into a 3rd consecutive qtr of contraction, according to the Bank of Spain. The economy shrank 0.4% from Q1, when GDP fell 0.3%. Domestic demand “fell more sharply than in the prior quarter,” while exports showed a “moderate recovery,” the Bank of Spain said. Prime Minister Rajoy last week announced his 4th round of tax increases & spending cuts this year as he struggles to convince investors that the nation won’t need a 2nd bailout. The planned budget cuts through 2014 now amount to more than 10% of GDP. Spain’s 10-year note yields surged above 7.5%, breaching a level that forced Ireland, Portugal & Greece to seek external aid. The yield on Spain’s 10-year benchmark bond surged 26 basis points to 7.57% today, resulting in a spread with similar German maturities widening to 6.42 percentage points. The situation is grim.
Spanish Recession Probably Deepened in Second Quarter: Econom
McDonald's, a Dow stock & Dividend Aristocrat, net income slipped 4% in Q2 as a result of unfavorable foreign currency exchange rates. Revenue fell short of expectations in a slowing global economy. EPS was $1.32, below $1.35 last year. Revenue was $6.92B, barely up from $6.91B a year ago. Expectations were for EPS of $1.38 on revenue of $6.94. Sales at stores open at least 13 months in the US rose 3.6%, the slowest growth in 5 qtrs. The stock dropped 2.33.
McDonald's (MCD)
Gov bond yields in the US, UK. & Germany fell to records, while stocks dropped & the € traded below its lifetime average against the dollar on concern the region’s debt crisis is deepening. The yield on the 10-year Treasury note declined to 1.41% after reaching an all- time low of 1.40%. 2-year German yields slumped to as low as minus 0.08% while Spanish & Italian yields jumped. The € fell for a 4th day, sliding to below $1.21. Greece’s creditors meet this week amid doubts that the country will meet its bailout commitments. German Vice Chancellor Philipp Roesler said he’s “very skeptical” that European leaders will be able to rescue Greece. China's economic expansion may cool for a 7th straight qtr to 7.4% in Q3. Germany’s 2-year note yield was below zero for the 12th consecutive day. Markets are switching from nervous to scared.
Bond Yields Fall to Records as Stocks, Euro Slide on Debt
This is a glum day for all markets (except for Treasuries & bonds of other safe haven countries). The euro debt mess keeps going from bad to worse with no end in sight. The Chinese economy is slowing & that is felt worldwide. The US economy, while still growing, is stumbling. Even the thought of a QE3 may not be good enough to restore expansion needed to bring down high unemployment. Dow stalled at 12950, its next test may be the 12500 floor which is not that far away.
Dow Jones Industrials
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