Dow dropped 41, decliners over advancers better than 2-1 & NAZ fell 44. The MLP index fell 3+ to the 457s & the REIT index was off 1+ to 268. Junk bond funds slid lower & there was selling in Treasuries. Oil lost ground & gold fell, sloshing around the mid 1200s.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Sales of new US homes dropped more than forecast in Dec as cold weather helped put a chill on an industry at the end of its best year since 2008. Purchases decreased 7% to a 414K annual pace, lower than all estimates. For all of 2013, demand jumped 16.4% to 428K. The coldest Dec in 4 years discouraged sales at the same time affordability weakened as prices & interest rates rose. While the weather has worsened this month, builders have been optimistic about the outlook for the residential market, which will need to expand to meet the needs of a growing population. A slackening shows the challenges faced by Federal Reserve (FED) officials as they trim stimulus aimed at boosting the expansion. Policy makers, who begin a 2 day meeting tomorrow, have said they’ll take measured steps in reducing monthly bond purchases. Inclement weather probably dealt a setback to some builders. The extent of snow cover in the contiguous US was the 8th-largest on record for the month & also marked the coldest Dec since 2009.
Drop in U.S. New-Home Sales Caps the Best Year Since 2008
Industrial & Commercial Bank of China said investors in a troubled high-yield trust can recoup their funds, averting a threatened default that underscored concern over the shadow-banking system & helped spur a sell-off in emerging market currencies & stocks. Rights in the 3B yuan ($496M) product issued by China Credit Trust can be sold to unidentified buyers at a price equal to the value of the principal invested. China Credit Trust earlier said it reached an agreement for a potential investment & asked clients of ICBC, China’s biggest bank, to contact their financial advisers. The accord staves off a default that threatened to roil China’s markets & stoke concerns of financial fragility in emerging economies after assets from Argentina’s peso to the Turkish lira plunged last week. The bailout may encourage risk-taking by wealthy investors in China’s $1.7T trust industry, the fastest-growing part of the shadow-banking system, even as authorities try to curtail the nation’s debt. Assets managed by China’s 67 trust companies soared 60% to $1.67T in the 12 months ended Sep, according to the China Trustee Association, even as policy makers sought to curb money flows outside the formal banking system. China’s shadow banking industry, which includes wealth management products issued by banks, is believed to have expanded to $5.95T. A bailout of the trust product would leave Chinese authorities with a growing problem of moral hazard & other potential problems in the system, S&P said last week, an opportunity for “instilling market discipline” will have been missed.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.05% | |
U.S. 2-year |
0.35% | |
U.S. 10-year |
2.76% |
| CLH14.NYM | ...Crude Oil Mar 14 | ...95.53 |  ...1.11 | (1.2%) |
Sales of new US homes dropped more than forecast in Dec as cold weather helped put a chill on an industry at the end of its best year since 2008. Purchases decreased 7% to a 414K annual pace, lower than all estimates. For all of 2013, demand jumped 16.4% to 428K. The coldest Dec in 4 years discouraged sales at the same time affordability weakened as prices & interest rates rose. While the weather has worsened this month, builders have been optimistic about the outlook for the residential market, which will need to expand to meet the needs of a growing population. A slackening shows the challenges faced by Federal Reserve (FED) officials as they trim stimulus aimed at boosting the expansion. Policy makers, who begin a 2 day meeting tomorrow, have said they’ll take measured steps in reducing monthly bond purchases. Inclement weather probably dealt a setback to some builders. The extent of snow cover in the contiguous US was the 8th-largest on record for the month & also marked the coldest Dec since 2009.
Drop in U.S. New-Home Sales Caps the Best Year Since 2008
Industrial & Commercial Bank of China said investors in a troubled high-yield trust can recoup their funds, averting a threatened default that underscored concern over the shadow-banking system & helped spur a sell-off in emerging market currencies & stocks. Rights in the 3B yuan ($496M) product issued by China Credit Trust can be sold to unidentified buyers at a price equal to the value of the principal invested. China Credit Trust earlier said it reached an agreement for a potential investment & asked clients of ICBC, China’s biggest bank, to contact their financial advisers. The accord staves off a default that threatened to roil China’s markets & stoke concerns of financial fragility in emerging economies after assets from Argentina’s peso to the Turkish lira plunged last week. The bailout may encourage risk-taking by wealthy investors in China’s $1.7T trust industry, the fastest-growing part of the shadow-banking system, even as authorities try to curtail the nation’s debt. Assets managed by China’s 67 trust companies soared 60% to $1.67T in the 12 months ended Sep, according to the China Trustee Association, even as policy makers sought to curb money flows outside the formal banking system. China’s shadow banking industry, which includes wealth management products issued by banks, is believed to have expanded to $5.95T. A bailout of the trust product would leave Chinese authorities with a growing problem of moral hazard & other potential problems in the system, S&P said last week, an opportunity for “instilling market discipline” will have been missed.
China Trust Default Averted by Bailout After Concern Hurt Emerging Markets
Treasuries fell, pushing the 10-year yield up from almost a 2 month low, before the FED begins a 2 day meeting tomorrow & the Treasury sells $111B of notes & floating-rate debt this week. The benchmark yield increased for the first time in 3 days after dropping last week amid demand from investors fleeing emerging-market losses. The Treasury will sell $15B of floating-rate 2 year notes in an inaugural sale on Wed, offering its first added security in 17 years. At its meeting this week, the FED may add cuts to its monthly $75B bond buying program. The one-month bill rate rose one basis point to 0.07%. The rate added 5 basis points last week, reaching the most in 3 months, amid concern about congressional maneuvering before a debt-limit vote. 3 month bill rates were little changed at 0.05%, the highest level in 3 weeks.
Treasuries Fall Before Fed Meeting, $111 Billion Debt Auctions
Dec is becoming an ugly month. So far Dow is down about 750, not fun for the bulls. The markets are way overbought & a retreat is needed if there is to be higher prices down the road. But current events around the globe are bringing dark clouds to the markets. Argentina, Turkey, China, not to mention Iran & Syria, are scaring off risk takers from buying more stocks. Then there's Big Ben giving his final announcement from the FOMC on Wed. In better times, the markets could take the increase in uncertainty better. But these are not the best of times & that is behind the selling in Dec.
Dow Jones Industrials
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