Monday, June 20, 2011

Mixed markets awaiting news on Greek debts

Stocks began the day weaker, but buying pushed the averages into the black. Dow is up 47, advancers ahead of decliners 4-3 & NAZ edged up 1. Bank stocks also climbed into the black with the Financial Index remaining close to 200

S&P 500 Financials Sector Index

Value	200.96
Change	0.14 (0.1%)

The MLP index fell a fraction to 353 but the REIT index rose 2 to the 238s. Junk bond funds were mixed after taking a tumble last week & Treasuries were little changed even with the turmoil out of Europe. Oil fell to the lowest level in 4 months, bringing its loss from this year’s peak to more than 20%, on speculation Greece’s debt crisis & a weakening global economy will curb fuel consumption. Gold hardly moved & remains close to its record high in the 1570s.

JPMorgan Chase Capital XVI (AMJ)

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Treasury yields:

U.S. 3-month	0.025%
U.S. 2-year	0.383%
U.S. 10-year	2.945%

CLN11.NYM

....Crude Oil Jul 11

...92.46

...

0.55

(0.6%)

GCM11.CMX

...Gold Jun 11

.....1,540.50

...

1.90

(0.1%)

Photo: Bloomberg

Euro zone finance ministers applied intense pressure on Greece, saying it had to approve stricter austerity measures before a final decision is made on a further €12B in loans. Mnisters indicated that the next EU/IMF aid would be paid by mid-July allowing Greece to avoid default, but said the country had to show progress first on plans to cut spending, raise taxes & generate other revenue streams. In Greece, anti-austerity demonstrators gathered outside parliament, but there were no new clashes with security forces. Greek legislators debated the highly unpopular plans to cut spending, further increase taxes & privatize state assets, measures agreed with the European Union, International Monetary Fund & the European Central Bank to bring finances back into line. Yesterday, Prime Minister George Papandreou asked Greeks to support the austerity steps & avoid a "catastrophic" default, appealing for the nation to accept measures that certainly in the short-term will make life harder for most citizens. "The consequences of a violent bankruptcy or exit from the euro would be immediately catastrophic for households, the banks and the country's credibility," Papandreou said. Greek 10-year bond yields climbed 41 basis points to 17.35% & 2-year yields, which surpassed 30% for the first time last week, fell 48 basis points to 28.31%. The drama plays on & markets don't like that.

Europe Falters in Bid to Rescue Greece

Greek Bonds Slide on Aid Delay; Italian Debt Declines on Moody’s Warning

PNC Financial Services will buy the US retail operations of Royal Bank of Canada $3.45B, bringing its total to 2870 branches & make it the 5th biggest among US banks. RY, based in Raleigh, NC, has 424 branches & about $25B of assets. PNC CEO James Rohr said that the acquisition will give PNC access to "attractive southeast markets in a way that will create value for our shareholders." The deal will add $19B of deposits & $16B of loans but does not include Royal Bank of Canada's other US operations providing capital markets & wealth management services. PNC has the option to pay for the deal with up to $1B in common stock. The company expects to pay for the cash portion of the transaction with available cash, debt issuance & a preferred stock offering. The buyout should add to its earnings by the end of 2013 or sooner depending on if any of the purchase price is paid for with its common stock. PNC fell $1 while RY gained 21¢.

PNC Financial to Pay $3.5B for RBC U.S. Unit

PNC Financial Services Group, Inc. (The)

Royal Bank Of Canada (RY)

Given all the uncertainty in financial markets, stocks are holding fairly well. But Dow, like other averages, still has a dismal chart as it struggle to remain above 12K (800 below its highs 2 months ago). MLPs can not find friends, the index is now 2 above a 10% decline from its recent highs & 3 above the lows reached just over a month ago. Resolving the Greek debt situation is getting main attention of the markets, but raising the ceiling on US debts is not far behind. Q2 earnings are a month away, Europe will be setting the pace for stocks.