Dow tumbled 265 finishing at the lows, decliners over advancers 6-1 & NAZ fell 78. The MLP index plunged a whopper sized 8+ to 445 & the REIT index sank 6+ to 293. Junk bond funds were little changed & Treasuries gained, a limited advance given the stock market sell-off. Oil crashed thru $90 & gold was off more than $130.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
China’s longest streak of expansion below 8% in at least 20 years is sending a message to suppliers & investors around the world to get used to slower growth in the 2nd-biggest economy. The 7.7% increase in Q1 GDP from a year earlier marked the first time in data going back 2 decades that 4 periods in a row have seen growth of less than 8%. The figure was also the worst miss of estimates since Q3 2008. A sustained shift to a lower-growth gear would affect everything from iron-ore demand in Australia to the fortunes of companies including carmakers, who are counting on China to drive profits. It increases challenges for global financial leaders contending with Europe's debt turmoil & Japan's record monetary easing, with predictions saying GDP gains will moderate toward 6% later this decade. Stocks around the globe fell & 24 commodities tumbled as oil sunk to $88.05, the lowest intraday level in almost 4 months, & gold closed down over 9% (its lowest level in over 2 years). As the nation’s growth fails to pick up steam, global finance chiefs from the G-20 nations gathering in DC later this week may find little ground to criticize Japan’s efforts to stoke its economy, with Europe facing the risk of blame for overzealous fiscal cuts.
China Stuck With Sub-8% Growth as G-20 Confronts Slowdown
Photo: Yahoo
Citigroup isn't convinced the economy is back after the bank announced strong Q1 results, but executives were more cautious than celebratory. Though they didn't declare victory, they appeared to have reason to: the investment bank advised more companies on mergers & acquisitions; its retail bank wrote more mortgages; & the company set aside less money for bad loans. Profit rose 17% to $4B while revenue climbed 3%, beating expectations & the stock rose in a down market. CEO Mike Corbat said that Europe's debt problems & slowing growth
in parts of Asia can still rattle investors. New regulations, low
interest rates & legal & other costs from the financial crisis will
weigh on bank earnings. "I think the world continues to be somewhat of a fragile place," he
said, "and I expect the markets to remain
volatile." CFO John Gerspach said the bank doesn't think
consumers are confident enough to drive the economy, whose growth he
described as uneven. "We're still going to be moving somewhat sideways." Bank execs said they were not pulling "any big levers," but instead
moving slowly & steadily to cut costs & wring out more efficiency. "To use a baseball analogy, a series of singles," Gerspach said. Investment banking revenue
jumped 31% while revenue from consumer banking was flat. Citi funded more new mortgages, &, for the first time,
it released some of the reserves it had set aside to cover bad home
loans in Citi Holdings (i.e. bad bank where it has quarantined
troubled assets from the financial crisis). The stock rose only 9¢ (1.42 below the high).
Greece cleared an important hurdle in its drive to receive its next batch of bailout loans from intl creditors. But even though the deal was secured without the global market tensions that have marked earlier rescue talks, the economic reforms agreed involve laying off thousands of civil service workers. The review by delegates from the IMF, European Commission & ECB, the troika, is part of a regular process under which Greece receives installments of its bailout. In return for receiving its bailout, successive Greek govs have pledged to overhaul the Greek economy & imposed stringent spending cuts & tax hikes. The reforms have been painful. The country is mired in a 6-year recession with unemployment around 27%. Almost every troika review since the start of the bailout has been delayed due to targets being missed or disagreements with the gov. Apart from the initial installments, no rescue loans have been disbursed on time. Despite often major differences, there was less tension for this review because the threat of Greece being forced into a chaotic default was no longer there. "Greece is being stabilized and our position is being bolstered," Prime Minister Antonis Samaras said. As well as agreeing the disbursement of €2.8B ($3.6B) in bailout loans due from last month, Samaras said "the road has opened" for May's installment of €6B. In a joint statement, the 3 institutions said recent steps taken by Greece mean that the country's debt sustainability "remains on track." The eurozone & IMF board are expected to approve the review in May.
Greece seals deal with debt inspectors AP
Stocks had their worst day in some time. Dow had risen almost 2.8K from its low at the start of Jun with barely a hiccup along the way. Such an advance would have been excellent if it had taken 3 years. The bulls were able to catch a glimpse of the real world. As gloomy as today was, this decline may drag on. There are 3 major global economic stories. China growth is slowing, PERIOD. Europe is trying to work its way out of an emormous debt mess which is not going away anytime soon. The US will have 2 consecutive qtrs of drab growth & those economic forces will continue. This background does not support stocks advancing to new record highs.
Dow Jones Industrials
el
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.053% | |
U.S. 2-year |
0.224% | |
U.S. 10-year |
1.713% |
| CLK13.NYM | ...Crude Oil May 13 | ...88.44 |  ...2.85 | (3.1%) |
China’s longest streak of expansion below 8% in at least 20 years is sending a message to suppliers & investors around the world to get used to slower growth in the 2nd-biggest economy. The 7.7% increase in Q1 GDP from a year earlier marked the first time in data going back 2 decades that 4 periods in a row have seen growth of less than 8%. The figure was also the worst miss of estimates since Q3 2008. A sustained shift to a lower-growth gear would affect everything from iron-ore demand in Australia to the fortunes of companies including carmakers, who are counting on China to drive profits. It increases challenges for global financial leaders contending with Europe's debt turmoil & Japan's record monetary easing, with predictions saying GDP gains will moderate toward 6% later this decade. Stocks around the globe fell & 24 commodities tumbled as oil sunk to $88.05, the lowest intraday level in almost 4 months, & gold closed down over 9% (its lowest level in over 2 years). As the nation’s growth fails to pick up steam, global finance chiefs from the G-20 nations gathering in DC later this week may find little ground to criticize Japan’s efforts to stoke its economy, with Europe facing the risk of blame for overzealous fiscal cuts.
China Stuck With Sub-8% Growth as G-20 Confronts Slowdown
Photo: Yahoo
Citigroup isn't convinced the economy is back after the bank announced strong Q1 results, but executives were more cautious than celebratory. Though they didn't declare victory, they appeared to have reason to: the investment bank advised more companies on mergers & acquisitions; its retail bank wrote more mortgages; & the company set aside less money for bad loans. Profit rose 17% to $4B while revenue climbed 3%, beating expectations & the stock rose in a down mark
Citigroup (C)
Greece cleared an important hurdle in its drive to receive its next batch of bailout loans from intl creditors. But even though the deal was secured without the global market tensions that have marked earlier rescue talks, the economic reforms agreed involve laying off thousands of civil service workers. The review by delegates from the IMF, European Commission & ECB, the troika, is part of a regular process under which Greece receives installments of its bailout. In return for receiving its bailout, successive Greek govs have pledged to overhaul the Greek economy & imposed stringent spending cuts & tax hikes. The reforms have been painful. The country is mired in a 6-year recession with unemployment around 27%. Almost every troika review since the start of the bailout has been delayed due to targets being missed or disagreements with the gov. Apart from the initial installments, no rescue loans have been disbursed on time. Despite often major differences, there was less tension for this review because the threat of Greece being forced into a chaotic default was no longer there. "Greece is being stabilized and our position is being bolstered," Prime Minister Antonis Samaras said. As well as agreeing the disbursement of €2.8B ($3.6B) in bailout loans due from last month, Samaras said "the road has opened" for May's installment of €6B. In a joint statement, the 3 institutions said recent steps taken by Greece mean that the country's debt sustainability "remains on track." The eurozone & IMF board are expected to approve the review in May.
Greece seals deal with debt inspectors AP
Stocks had their worst day in some time. Dow had risen almost 2.8K from its low at the start of Jun with barely a hiccup along the way. Such an advance would have been excellent if it had taken 3 years. The bulls were able to catch a glimpse of the real world. As gloomy as today was, this decline may drag on. There are 3 major global economic stories. China growth is slowing, PERIOD. Europe is trying to work its way out of an emormous debt mess which is not going away anytime soon. The US will have 2 consecutive qtrs of drab growth & those economic forces will continue. This background does not support stocks advancing to new record highs.
Dow Jones Industrials
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