Dow sank 184, decliners over advancers 13-1 & NAZ was off 44. The MLP index plunged a whopping 18 (worst day in history) to the 422s. while the REIT index was off "4+" to the 263s (down more than 50 from the recent peak). Junk bond funds sank more than 2% (big by their standards) & Treasuries dropped again, bringing the yield on the 10 year Treasury over 2.6% (1% higher than in early May). Oil fell
to almost a 3-week low on speculation that a cash crunch may
restrain economic growth in China, the biggest energy-
consuming country. Gold joined in on the sell off.
AMJ Alerian MLP Index tracking fund)
Photo: Yahoo
World stocks fall amid China credit concerns Associated Press
Photo: Bloomberg
Hedge funds cut bets on a gold rally by the most since Feb after the Federal Reserve laid out plans for reducing stimulus and this year’s drop in the value of exchange-traded products extended to $55B. Speculators reduced their net-long position 29% to 39K futures & options by Jun 18, according to US Commodity Futures Trading Commission. Holdings of short contracts jumped 14%, the most in 8 weeks. Big Ben said last week that the central bank may slow its bond-buying program if the US economy continues to improve, driving bullion to its lowest price since 2010. Gold has already tumbled into a bear market in Apr. Investors cut their holdings thru ETPs by 20% this year, on pace for the first annual drop since the products were introduced in 2003. Gold holdings in global ETPs dropped 533 tons this year & investors may sell a further 285 tons in 2013. Assets in the SPDR Gold Trust (GLD), the biggest bullion ETP, slumped below 1000 tons for the first time since Feb 2009 last week. You know its bad when gold sells off along with stocks.
Gold Wagers Slump as $55 Billion Erased From Funds: Commodities
Photo: Bloomberg
This week EU leaders will attempt to stave off a resurgence of market tremors following a breakdown in talks on setting up unified banking rules. Euro-area bonds fell after negotiations among the 27-member bloc’s finance ministers stalled over the weekend in Luxembourg. They failed to agree on assigning losses at failing banks as part of proposed rules on bank resolution and recovery. They will regroup Wed, before EU leaders gather the next day for a summit in Brussels. “We shouldn’t be lulled by the current calm in the markets,” the German Finance Minister said. “Rather, we should quickly ensure that we’re prepared for every eventuality.” A failure to forge ahead with a banking union that was agreed on almost a year ago has underscored the frustrations in overcoming a crisis now in its 4th year. With global markets jolted last week on concern over the possible tapering of US stimulus, euro-area leaders who have relied on market calm over the past year may have less leeway. A potential snag also emerged in Greece, where one of Antonis Samaras’s coalition partners abandoned the gov following a dispute over the closing of state broadcaster ERT, narrowing the premier’s majority in parliament to only 3 seats. More uncertainty in confusing times around the globe.
EU Leaders Will Attempt to Stave Off Market Turmoil After Bank Talks Fail
Sellers have taken control of the stock market. In a short amount of time, news has turned from all news is good to all news is bad. The dramatic rise in the yield on the 10 year Treasury in the last 2 months says it all. Higher rates are coming, sooner rather than later, & markets can't handle the change. Markets have been vastly overbought so for some time. But when looking at rising portfolio values, it was hard to appreciate that simple thought. The sellers have taken control of the stock market.
Dow Jones Industrials
AMJ Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.05% | |
U.S. 2-year |
0.40% | |
U.S. 10-year |
2.61% |
| CLQ13.NYM | ...Crude Oil Aug 13 | ...93.35 |  ...0.34 | (0.4%) |
| GCN13.CMX | ...Gold Jul 13 | .......1,286.30 | ...5.40 | (0.4%) |
Photo: Yahoo
Global stock markets reeled amid concerns that credit conditions will tighten in the US &
China, the world's 2 largest economies. Shanghai's stock index endured its biggest loss in 4 years after
the country's central bank allowed commercial rates to spike higher.
Analysts say the move was part of an effort to curb the high level of
off-balance-sheet lending in China that could threaten the country's
financial stability. But the higher lending rates could also hurt economic growth. The
impact for stocks would be all the greater if the US Federal
Reserve tightens its own loose monetary policy over the coming
months, as it has signaled. The Shanghai Composite Index plummeted 5% to
1968 while the smaller Shenzhen Composite Index plunged 6.1%
to 881. In Europe, Britain's FTSE 100 fell 1.2% to 6040 &
France's CAC-40 slid 1.6% to 3599. Germany's DAX was down 0.9% to 7717 even though a key business sentiment index rose
slightly, suggesting the recovery in Europe's largest economy continues,
though at a slow pace. Moody's said it saw the Chinese
central bank's action to allow lending rates to rise as "a conscious
decision" to curb credit growth. It added that a prolonged credit crunch
could threaten Chinese companies, "especially those in the private
sector with weak credit quality, because it heightens the risk that
banks will scale back lending to those companies." Moody's says that China's
central gov finances remain strong, but that rapid credit growth & liabilities at the local level pose a threat to growth.
World stocks fall amid China credit concerns Associated Press
Photo: Bloomberg
Hedge funds cut bets on a gold rally by the most since Feb after the Federal Reserve laid out plans for reducing stimulus and this year’s drop in the value of exchange-traded products extended to $55B. Speculators reduced their net-long position 29% to 39K futures & options by Jun 18, according to US Commodity Futures Trading Commission. Holdings of short contracts jumped 14%, the most in 8 weeks. Big Ben said last week that the central bank may slow its bond-buying program if the US economy continues to improve, driving bullion to its lowest price since 2010. Gold has already tumbled into a bear market in Apr. Investors cut their holdings thru ETPs by 20% this year, on pace for the first annual drop since the products were introduced in 2003. Gold holdings in global ETPs dropped 533 tons this year & investors may sell a further 285 tons in 2013. Assets in the SPDR Gold Trust (GLD), the biggest bullion ETP, slumped below 1000 tons for the first time since Feb 2009 last week. You know its bad when gold sells off along with stocks.
Gold Wagers Slump as $55 Billion Erased From Funds: Commodities
Photo: Bloomberg
This week EU leaders will attempt to stave off a resurgence of market tremors following a breakdown in talks on setting up unified banking rules. Euro-area bonds fell after negotiations among the 27-member bloc’s finance ministers stalled over the weekend in Luxembourg. They failed to agree on assigning losses at failing banks as part of proposed rules on bank resolution and recovery. They will regroup Wed, before EU leaders gather the next day for a summit in Brussels. “We shouldn’t be lulled by the current calm in the markets,” the German Finance Minister said. “Rather, we should quickly ensure that we’re prepared for every eventuality.” A failure to forge ahead with a banking union that was agreed on almost a year ago has underscored the frustrations in overcoming a crisis now in its 4th year. With global markets jolted last week on concern over the possible tapering of US stimulus, euro-area leaders who have relied on market calm over the past year may have less leeway. A potential snag also emerged in Greece, where one of Antonis Samaras’s coalition partners abandoned the gov following a dispute over the closing of state broadcaster ERT, narrowing the premier’s majority in parliament to only 3 seats. More uncertainty in confusing times around the globe.
EU Leaders Will Attempt to Stave Off Market Turmoil After Bank Talks Fail
Sellers have taken control of the stock market. In a short amount of time, news has turned from all news is good to all news is bad. The dramatic rise in the yield on the 10 year Treasury in the last 2 months says it all. Higher rates are coming, sooner rather than later, & markets can't handle the change. Markets have been vastly overbought so for some time. But when looking at rising portfolio values, it was hard to appreciate that simple thought. The sellers have taken control of the stock market.
Dow Jones Industrials
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