Dow slipped 1, advancers over decliners 5-4 & NAZ added 6. The Financial Index was down 1 to the 197s.
The MLP index vaulted another 3+ to the 411s, a new record high. The REIT index was about even at 246, junk bond funds remain in demand as investors seek out their (loosely) high yields & Treasuries rose. Oil capped its longest rally in 2 years to almost $110 as escalating tension with Iran threatens supplies & on signs of a global economic recovery. Gold saw more profit taking although it has had a nice run this year.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Yahoo
Greece launched a bond swap offer to private holders of its bonds, setting in motion the largest-ever sovereign debt restructuring in the hope of getting its messy finances back on track. The swap is part of a 2nd, €130B rescue package to claw Greece back from the brink of a disorderly default. The complex deal was finalized this week after months of tortuous negotiations. The swap, in which investors will trade bonds for lower-value debt securities, aims to slice €100B off Greece's over €350€ debt load. The head of the International Institute of Finance (IIF), a bank lobby group that negotiated on behalf of the private sector, expressed optimism that the exchange would attract high participation from investors. "We remain quite optimistic that once investors study this proposal ... there will be high take up," Charles Dallara, IIF managing director, said. Banks, insurers & other investors holding about €206B of Greek gov bonds will take a 53.5% loss in the face value of their securities, with actual losses estimated at 73-74% (haircut). Investors will pocket longer-dated Greek bonds worth 31.5% of their holdings & short-term paper issued by the European Financial Stability Fund (EFSF) equal to 15% of their old bonds. The new bonds will carry an average coupon of 3.65% over the 30-year period & be governed by English law. Doubts remain because the Greek population does not welcome more austerity cuts.
Greece Invites Investors to Swap, Restructuring
Photo: Bloomberg
In the back from the dead category, AIG struck an optimistic tone as ir reported a profit of nearly $20B which pushed shares to their highest level in 7 months. While the outsized Q4 profit was a one-time event linked to a tax accounting change, underlying it was a long-term assumption that the company has stopped its multibillion dollar crisis-era losses. "It signifies our view that we have returned to sustainable profitability," CFO Herzog said. From the Q1 2008 - Q3 2011, AIG lost just over $106B!. Over that 15 qtr stretch it lost more than $1B in 10 different periods. But management said it no longer expects such losses to be routine. The stock rose 41¢ to $28.40. This price compares with the Treasury's $28.73 breakeven point on its 77% stake. The company did not give any forecast on when Treasury might sell shares again, though it has said previously the gov was waiting for a window where they could be sold profitably. Any "profit" doesn't even qualify as a drop in the bucket relative the massive gov losses which have become ordinary.
AIG Rises as Insurer Posts Record Profit on Tax Benefit
Iran tripled its production of enriched uranium & rejected the intl concerns about its possible pursuit of nuclear weapons that a team of UN inspectors carried to Tehran this week. Amid rising tensions about its nuclear research, Iran “dismissed the agency’s concerns,” the Intl Atomic Energy Agency said today. Iran is now making almost 31 pounds (14 kilograms) of 20% enriched uranium a month compared with almost 9 pounds in Nov. This news is bringing out buyers for oil on concerns about closing the Strait of Hormuz to oil shipments.
The average price of gas at the pump was $3.65 yesterday & headed higher!
Source: AAA
The € rose to an 11-week high against the dollar $1.346 on increasing optimism about the global economy & on the Greek debt mess be resolved quickly. Dow is up 2500 in just 6 months. This is one of its best moves in history over a short time span. The chart below shows there was only one hiccup, in Nov, otherwise it has gone straight up. Investors see a recovering economy in the US & have high hopes that European debt problems will be resolved peacefully. Getting the Greek debt mess squared away is still iffy. More disturbing is the rising price of gas. Current levels of crude will bring more price rises & crude is likely to head higher. High prices for gas at the pump have always hurt the economy.
The MLP index vaulted another 3+ to the 411s, a new record high. The REIT index was about even at 246, junk bond funds remain in demand as investors seek out their (loosely) high yields & Treasuries rose. Oil capped its longest rally in 2 years to almost $110 as escalating tension with Iran threatens supplies & on signs of a global economic recovery. Gold saw more profit taking although it has had a nice run this year.
JPMorgan Chase Capital XVI (AMJ)
Treasury yields:
U.S. 3-month | 0.092% | |
U.S. 2-year | 0.309% | |
U.S. 10-year | 1.977% |
| CLJ12.NYM | ...Crude Oil Apr 12 | ...109.57 | ... 1.74 | (1.6%) |
Greece launched a bond swap offer to private holders of its bonds, setting in motion the largest-ever sovereign debt restructuring in the hope of getting its messy finances back on track. The swap is part of a 2nd, €130B rescue package to claw Greece back from the brink of a disorderly default. The complex deal was finalized this week after months of tortuous negotiations. The swap, in which investors will trade bonds for lower-value debt securities, aims to slice €100B off Greece's over €350€ debt load. The head of the International Institute of Finance (IIF), a bank lobby group that negotiated on behalf of the private sector, expressed optimism that the exchange would attract high participation from investors. "We remain quite optimistic that once investors study this proposal ... there will be high take up," Charles Dallara, IIF managing director, said. Banks, insurers & other investors holding about €206B of Greek gov bonds will take a 53.5% loss in the face value of their securities, with actual losses estimated at 73-74% (haircut). Investors will pocket longer-dated Greek bonds worth 31.5% of their holdings & short-term paper issued by the European Financial Stability Fund (EFSF) equal to 15% of their old bonds. The new bonds will carry an average coupon of 3.65% over the 30-year period & be governed by English law. Doubts remain because the Greek population does not welcome more austerity cuts.
Greece Invites Investors to Swap, Restructuring
In the back from the dead category, AIG struck an optimistic tone as ir reported a profit of nearly $20B which pushed shares to their highest level in 7 months. While the outsized Q4 profit was a one-time event linked to a tax accounting change, underlying it was a long-term assumption that the company has stopped its multibillion dollar crisis-era losses. "It signifies our view that we have returned to sustainable profitability," CFO Herzog said. From the Q1 2008 - Q3 2011, AIG lost just over $106B!. Over that 15 qtr stretch it lost more than $1B in 10 different periods. But management said it no longer expects such losses to be routine. The stock rose 41¢ to $28.40. This price compares with the Treasury's $28.73 breakeven point on its 77% stake. The company did not give any forecast on when Treasury might sell shares again, though it has said previously the gov was waiting for a window where they could be sold profitably. Any "profit" doesn't even qualify as a drop in the bucket relative the massive gov losses which have become ordinary.
AIG Rises as Insurer Posts Record Profit on Tax Benefit
American International Group, Inc. (AIG)
Iran tripled its production of enriched uranium & rejected the intl concerns about its possible pursuit of nuclear weapons that a team of UN inspectors carried to Tehran this week. Amid rising tensions about its nuclear research, Iran “dismissed the agency’s concerns,” the Intl Atomic Energy Agency said today. Iran is now making almost 31 pounds (14 kilograms) of 20% enriched uranium a month compared with almost 9 pounds in Nov. This news is bringing out buyers for oil on concerns about closing the Strait of Hormuz to oil shipments.
The average price of gas at the pump was $3.65 yesterday & headed higher!
The € rose to an 11-week high against the dollar $1.346 on increasing optimism about the global economy & on the Greek debt mess be resolved quickly. Dow is up 2500 in just 6 months. This is one of its best moves in history over a short time span. The chart below shows there was only one hiccup, in Nov, otherwise it has gone straight up. Investors see a recovering economy in the US & have high hopes that European debt problems will be resolved peacefully. Getting the Greek debt mess squared away is still iffy. More disturbing is the rising price of gas. Current levels of crude will bring more price rises & crude is likely to head higher. High prices for gas at the pump have always hurt the economy.
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