Dow fell 5, decliners ahead of advancers 5-2 & NAZ sank 28 (hurt by Apple - see below). The Financial Index was off 1+ to the 243s. The MLP index inched higher in the 454s to a new record high & the REIT index was up pocket change to the 287s. Junk bond funds were mixed to higher & Treasuries edged higher. Oil lost ground & gold had a tiny gain, heading towards 1600.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloombergg
Intl investors bought more Treasuries in Q1 than any other start to a year since 2009, with holdings approaching $3T, as a new crisis in Europe weighs on the € & Japan debases the ¥. Federal Reserve holdings of US gov debt on behalf of foreign central banks rose $63.5B, or 2.4%, to a massive $2.95T as of last Wed. China, the largest foreign lender, has been buying Treasuries at the fastest pace since 2011. Rather than slowing purchases as US lawmakers struggled to avoid $600B in automatic spending cuts & tax increases, intl investors are again seeking Treasuries, underscoring their role as a store of value. The demand is helping Big Ben keep yields low, increasing investor appetite for dollars even after the central bank poured more than $2.5T into the financial system since 2008. Overseas demand isn’t just coming from central banks. Total foreign holdings rose 0.8% in Jan to a record $5.6T after rising 0.9% in Nov - Dec, according to Treasury Dept data.
Treasuries’ Lure Abroad Grows in $3 Trillion Fed Account
Apple issued an apology to Chinese consumers after gov media attacked its repair policies for 2 weeks in a campaign that reeked of economic nationalism. A statement AAPL posted to its website said the complaints had prompted "deep reflection" & persuaded the company of the need to revamp its repair policies, boost communication with Chinese consumers & strengthen oversight of authorized resellers. State broadcaster CCTV & the ruling party's flagship newspaper, People's Daily, had led the charge against the company. They accused AAPL of arrogance, greed & "throwing its weight around" & portrayed it as just the latest Western company to exploit the Chinese consumer. The attacks started backfiring almost as soon as they began & were mocked by the increasingly sophisticated Chinese consumers who revere AAPL & its products. State-run media also inadvertently revived complaints over shoddy service by Chinese companies. Nonetheless, AAPL responded with an apology from CEO Tim Cook. "We've come to understand through this process that because of our poor communication, some have come to feel that Apple's attitude is arrogant and that we don't care about or value feedback from the consumer," Cook's Chinese statement said. "For the concerns and misunderstandings passed on to the consumer, we express our sincere apologies." The stock sank 13+ to 429, near its 6 month lows.
Cyprus has been granted an extra year, until 2017, to achieve a targeted budget surplus of 4% as part of bailout negotiations with intl lenders, the gov said. The change is designed to prepare for what could be a deeper than expected economic slowdown as the country is forced to drastically shrink its banking & financial industry. Under a preliminary agreement for $B in rescue money, Cyprus had until 2016 to generate the budget surplus target through spending cuts & tax hikes. But that deal was based on an earlier forecast that the economy would shrink this year 3.5% of GDP. An anonymous gov person said the economy is now projected to contract by 9% of GDP. For that reason, negotiators are now hoping to extend the deadline to achieve a 4% budget surplus even further, to 2018. Cyprus agreed last week to make bank depositors with accounts over €100K ($129K) contribute to the financial rescue in order to secure €10B ($12.9B) in loans. Under the terms of the bailout deal, the 2nd largest bank, Laiki, is to be split up, with its nonperforming loans & toxic assets going into a "bad bank." The healthy side will be absorbed into the Bank of Cyprus. Big Laiki depositors could lose as much as 80% of their money. Cyprus has long attracted many large Russian depositors, but a senior Cabinet member in Moscow said that his gov won't protect individual Russian victims of the Cypriot economic crisis. The situation remains very fuzzy.
Cyprus gains more time to achieve surplus AP
This was another day when little happened in the markets, with a downward bias. However, the manufacturing data was sobering & may indicate more negative stories to come. AAPL, with the largest market cap in the world, problems are also disturbing. The stock is down almost 40% from its peak last Sep. That shouldn't happen in a bull market. Auto sales for Mar should come out tomorrow & they will probably look good after reports in recent months. There was buying into the close, but Dow continues in a overbought state.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.068% | |
U.S. 2-year |
0.240% | |
U.S. 10-year |
1.838% |
| CLN13.NYM | ...Crude Oil Jul 13 | ....97.36 |  ....0.28 | (0.3%) |
Photo: Bloombergg
Intl investors bought more Treasuries in Q1 than any other start to a year since 2009, with holdings approaching $3T, as a new crisis in Europe weighs on the € & Japan debases the ¥. Federal Reserve holdings of US gov debt on behalf of foreign central banks rose $63.5B, or 2.4%, to a massive $2.95T as of last Wed. China, the largest foreign lender, has been buying Treasuries at the fastest pace since 2011. Rather than slowing purchases as US lawmakers struggled to avoid $600B in automatic spending cuts & tax increases, intl investors are again seeking Treasuries, underscoring their role as a store of value. The demand is helping Big Ben keep yields low, increasing investor appetite for dollars even after the central bank poured more than $2.5T into the financial system since 2008. Overseas demand isn’t just coming from central banks. Total foreign holdings rose 0.8% in Jan to a record $5.6T after rising 0.9% in Nov - Dec, according to Treasury Dept data.
Treasuries’ Lure Abroad Grows in $3 Trillion Fed Account
Apple issued an apology to Chinese consumers after gov media attacked its repair policies for 2 weeks in a campaign that reeked of economic nationalism. A statement AAPL posted to its website said the complaints had prompted "deep reflection" & persuaded the company of the need to revamp its repair policies, boost communication with Chinese consumers & strengthen oversight of authorized resellers. State broadcaster CCTV & the ruling party's flagship newspaper, People's Daily, had led the charge against the company. They accused AAPL of arrogance, greed & "throwing its weight around" & portrayed it as just the latest Western company to exploit the Chinese consumer. The attacks started backfiring almost as soon as they began & were mocked by the increasingly sophisticated Chinese consumers who revere AAPL & its products. State-run media also inadvertently revived complaints over shoddy service by Chinese companies. Nonetheless, AAPL responded with an apology from CEO Tim Cook. "We've come to understand through this process that because of our poor communication, some have come to feel that Apple's attitude is arrogant and that we don't care about or value feedback from the consumer," Cook's Chinese statement said. "For the concerns and misunderstandings passed on to the consumer, we express our sincere apologies." The stock sank 13+ to 429, near its 6 month lows.
Apple (AAPL)
Cyprus has been granted an extra year, until 2017, to achieve a targeted budget surplus of 4% as part of bailout negotiations with intl lenders, the gov said. The change is designed to prepare for what could be a deeper than expected economic slowdown as the country is forced to drastically shrink its banking & financial industry. Under a preliminary agreement for $B in rescue money, Cyprus had until 2016 to generate the budget surplus target through spending cuts & tax hikes. But that deal was based on an earlier forecast that the economy would shrink this year 3.5% of GDP. An anonymous gov person said the economy is now projected to contract by 9% of GDP. For that reason, negotiators are now hoping to extend the deadline to achieve a 4% budget surplus even further, to 2018. Cyprus agreed last week to make bank depositors with accounts over €100K ($129K) contribute to the financial rescue in order to secure €10B ($12.9B) in loans. Under the terms of the bailout deal, the 2nd largest bank, Laiki, is to be split up, with its nonperforming loans & toxic assets going into a "bad bank." The healthy side will be absorbed into the Bank of Cyprus. Big Laiki depositors could lose as much as 80% of their money. Cyprus has long attracted many large Russian depositors, but a senior Cabinet member in Moscow said that his gov won't protect individual Russian victims of the Cypriot economic crisis. The situation remains very fuzzy.
Cyprus gains more time to achieve surplus AP
This was another day when little happened in the markets, with a downward bias. However, the manufacturing data was sobering & may indicate more negative stories to come. AAPL, with the largest market cap in the world, problems are also disturbing. The stock is down almost 40% from its peak last Sep. That shouldn't happen in a bull market. Auto sales for Mar should come out tomorrow & they will probably look good after reports in recent months. There was buying into the close, but Dow continues in a overbought state.
Dow Jones Industrials
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