Thursday, March 8, 2012

Markets rally as concerns about the European debt crisis ease

Dow gained 70, advancers 4-1 over decliners & NAZ was up 34.  The Financial Index rose 2 to the 198s on optimism the Greek debt bond swap will be completed.

The MLP index fell a fraction in the 403s & the REIT index was down 1 to 243.  The 6 month chart below for an ETN that tracks the MLP index shows its run from 320.  Junk bond funds rose while Treasuries sold off as the stock market rallied.  Oil climbed after German industrial production increased more than forecast & Greece moved closer to completing its debt swap, bolstering optimism that Europe’s economy & fuel demand will rebound.  Gold jumped the most in 2 weeks as the improved prospects for a debt swap in Greece sent the € higher, boosting the appeal of the precious metal as an alternative investment.

JPMorgan Chase Capital XVI (AMJ)

stock chart run from 320.  

Click below for the latest market update:

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLJ12.NYM...Crude Oil Apr 12...106.87 ...Up 0.71 (0.7%)

Live 24 hours gold chart [Kitco Inc.]

Private Investors With 60% of Greek Bonds to Join Debt Swap

Photo:   Bloomberg

A deadline has passed for private investors to participate in a major Greek debt reduction deal, with gov officials & world markets appearing confident of high participation.  Nobody knows what the participation rate is because numbers are being tossed around & any numbers from the gov will be favorable to get marginal investors to go along.  A senior gov official said that no extension was being planned.  The landmark agreement is aimed at slashing the country's national debt by €107B ($140B), with private bond holders accepting a face-value loss of 53.5%, in exchange for new bonds with more favorable repayment terms.  Initial results of participation in the exchange are due to be announced tomorrow.

Greece Closes In on Swap as Investors Agree

Exxon, a Dow stock & Dividend Aristocrat, will spend $150B over the next 5 years to find more oil & natural gas to satisfy the world's growing energy appetite.  It expects global energy demand to increase 30% by 2040, compared with 2010 levels.  As demand grows, XOM will plow more money into a global search for new resources, including in its refining & chemicals business.  The capital budget for 2012-2016 will total $185B, up 29% from the prior 5-year period.  Potential fields lie deep under the seabed, or in shale rock formations that require expensive technology to crack open.  CEO Tillerson said its production could fall another 3% this year from 2011 levels.  He also reduced the company's long-term expectation for average annual production growth to 2-3%, from a previous forecast of 4-5%.  Its focus recently has been on developing more natural gas, which the company believes will replace coal as the 2nd-most popular fuel by 2025.  Natural gas has made up more than half of Exxon's proven reserves since 2009, & in 2010 it spent $30B to acquire XTO Energy & became the largest natural gas producer in the US.  The natural gas bet so far hasn't paid off as prices have plummeted this year following a production boom in North America & weak winter heating demand.  Natural gas futures hit a 10-year low of $2.30 per 1000 cubic feet yesterday.  The stock fell $1.00.

Exxon pegs spending at $185B over next 5 years AP

Exxon Mobil Corporation (XOM)

stock chart

Simon Property, the largest mall operator in the US, is buying a minority stake in Paris-based real estate company Klépierre from BNP Paribas for about $2B to expand its geographic reach.  It's also purchasing joint venture partner Farallon Capital Management's interest in 26 US shopping malls for $1.5B.  Both deals are expected to immediately add to funds from operations (FFO).  Klépierre focuses on owning, managing & developing shopping centers, retail properties & offices in Europe.  "The Mills transaction is a compelling opportunity for Simon Property to expand our investment in a portfolio of assets we know well and already manage, which are well-located in key metropolitan markets, have considerable consumer brand equity and large trade areas, and generate significant cash flow and total sales volumes," CEO Simon said.  Including these transactions, SPG raised its 2012 FFO outlook above expectations to $7.35-$7.50 per share, up from a previous forecast of $7.20-$7.30.  Analysts are predicting $7.31.  Last month SPG reported that Q4 FFO climbed as higher rents helped revenue & occupancy rates improved.  It also plans to offer 7M shares of common stock & a majority-owned operating partnership subsidiary, plans to offer $1.5B of senior unsecured notes.  The stock was up a penny. 

Simon Property Widens Overseas Reach With Klepierre Transaction in Europe

Simon Property Group, Inc. (SPG)

stock chart

Tomorrow will be a doubly important day for the markets.  In addition to the jobs report for Feb, Greece announces results of the debt swap.  Both should be beneficial to the markets although there is plenty of room for bond swap results to be a bit fuzzy since nobody really knows what they are doing.  Like the MLP index, the Dow has had an enviable run in the last 5 months & it looks to be toppy.  Maybe not, but 13K has been holding.  Tomorrow will be the time for the bulls to show if they are in command & how serious they are about taking the markets higher.

Dow Industrials

stock chart

Get your favorite symbols' Trend Analysis TODAY!  

No comments: