Dow sank 28 (buying at the close reduced losses), decliners over advancers 2-1 & NAZ fell 9. Oversold banks rebounded, slightly, taking the Financial Index up a fraction to 204. The MLP index was off 6½ to the 259s (not seen in over 4 months) & the REIT index fell 1½ to 250. Junk bond funds continue very weak & Treasuries were flattish with yields near 3 month lows. Oil retreated for the 3rd time in 4 days as data showed weaker US economic growth & crude
inventories rose to a 3-month high. Oil dropped $16 on a tough day in the markets.
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The cost of living rose in Oct at the slowest pace in 3 months, another sign US inflation is in check. The 0.1 % increase in the consumer-price index followed a 0.6% gain the prior month, according to the Labor Dept & matched the estimate. Core measure climbed 0.2%, a little more than projected, reflected rising rents clothing costs. In the 12 months ended in Oct, the CPI rose 2.2%. The core CPI reading showed the biggest increase since Jun & compared with a 0.1% forecast. Core prices were up 2% for the year thru Oct, the same as in the 12 months thru Sep.
Photo: Yahoo
Big Ben said that banks' overly tight lending standards may be holding back the US economy by preventing creditworthy borrowers from buying homes. Some tightening of credit standards was needed after the 2008 financial crisis, but "the pendulum has swung too far the other way," Bernanke said. Qualified borrowers are being prevented from getting home loans, he added. These comments came on a day when mortgage buyer Freddie Mac said the average rate on the 30-year fixed mortgage fell to a record low of 3.34%. Rates have been low all year but have fallen further since the Federal Reserve started buying mortgage bonds in Sep to encourage more borrowing & spending. The rates have helped boost home sales & led more people to refinance existing loans. Yet many have been unable to take advantage of the low rates because banks now require higher credit scores, stricter income documentation & larger down payments before approving loans. He said the housing has shown signs of recovery this year. But construction activity, sales & prices remain much lower than they were before the crisis. About 20% of mortgage borrowers remain underwater, meaning that they owe more on their mortgage than their home is worth, he noted.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.076% | |
U.S. 2-year |
0.242% | |
U.S. 10-year |
1.588% |
| CLZ12.NYM | ...Crude Oil Dec 12 | ....85.33 | ... 0.99 | (1.2%) |
The cost of living rose in Oct at the slowest pace in 3 months, another sign US inflation is in check. The 0.1 % increase in the consumer-price index followed a 0.6% gain the prior month, according to the Labor Dept & matched the estimate. Core measure climbed 0.2%, a little more than projected, reflected rising rents clothing costs. In the 12 months ended in Oct, the CPI rose 2.2%. The core CPI reading showed the biggest increase since Jun & compared with a 0.1% forecast. Core prices were up 2% for the year thru Oct, the same as in the 12 months thru Sep.
Photo: Yahoo
Big Ben said that banks' overly tight lending standards may be holding back the US economy by preventing creditworthy borrowers from buying homes. Some tightening of credit standards was needed after the 2008 financial crisis, but "the pendulum has swung too far the other way," Bernanke said. Qualified borrowers are being prevented from getting home loans, he added. These comments came on a day when mortgage buyer Freddie Mac said the average rate on the 30-year fixed mortgage fell to a record low of 3.34%. Rates have been low all year but have fallen further since the Federal Reserve started buying mortgage bonds in Sep to encourage more borrowing & spending. The rates have helped boost home sales & led more people to refinance existing loans. Yet many have been unable to take advantage of the low rates because banks now require higher credit scores, stricter income documentation & larger down payments before approving loans. He said the housing has shown signs of recovery this year. But construction activity, sales & prices remain much lower than they were before the crisis. About 20% of mortgage borrowers remain underwater, meaning that they owe more on their mortgage than their home is worth, he noted.
Bernanke: Banks' Tight Standards Hurting Economy AP
Photo: Bloomberg
McDonald’s, a Dow stock & Dividend Aristocrat, said Jeff Stratton will succeed Jan Fields as president of McDonald’s USA after sales in the chain’s home market declined. He will take over responsibility for 14K locations in 2 weeks. MCD saw a 2.2% sales decline at US locations last month, driving the first monthly worldwide drop in 9 years. Its US restaurants have struggled to attract more diners, which accounts for almost 1/3 of global sales, as competitors increase promotions & introduce new menu items. Stratton’s career at MCD spans more than 40 years. He started as a restaurant crew member in Detroit & became president of the company’s west division in 2001. The stock fell 51¢ in a tough market & is down $10 in the last month.
McDonald’s Says Jeff Stratton to Succeed Fields as Head of U.S. Operations
McDonald's (MCD)
A few bargain hunters returned in the last ½ hour to reduce the loss for the Dow. But it still was a bad day. There is an abundance of negative thinking led by the approaching fiscal cliff which shows no, I repeat NO, sign of resolution. This will drone on until the day before Xmas, 5 weeks away. The MLP index has dropped 10% from its record high a month ago. And junk bonds are getting hammered, falling 20% in the last 2 months & almost 10% just this week. Junk bonds are stocks with high yields & they are being thrown out the window, a very bad sign for the markets.
Dow Jones Industrials
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