Friday, June 15, 2012

Markets rise on more bailout hopes

Dow gained 65, advancers ahead of decliners 3-2 & NAZ rose 17.  The Financial Index was up a fraction to the 191s, a one month high (barely).  The MLP index fell 1 to the 362s while the REIT index was even in the 251s.  Junk bond funds eased back & Treasuries found strength, bringing the yield on the 10 year Treasury under 1.6%.  Oil & gold hardly budged.

AMJ (Alerian MLP index tracking fund)

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Treasury Yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLN12.NYM....Crude Oil Jul 12...83.90 ....Down 0.01  (0.0%)

GCM12.CMX...Gold Jun 12.....1,625.90 ...Up 7.50  (0.5%)

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EU Leaders to Call for ‘Further Urgent Measures’ to Aid Growth

EU parliament building
Photo:   Bloomberg

EU leaders will press for new efforts to boost economic growth & improve lending conditions when they meet later in Jun.  I think that means "we'll try harder."  The 27-nation bloc will pursue growth measures at a time when, in the words of ECB President Draghi, “there is no inflation risk in any European country” & the ECB will continue to provide liquidity to the banking system.  Draghi is working with EU leaders on a blueprint for further integration of the 17-nation euro region.  This report will set out building blocks for strengthening the euro area & economic coordination in the broader EU.  “Recent developments” have shown the need to take monetary union “to a further stage,” according to the draft dated Jun 12.  Leaders will call for “more specific building blocks” to link budget & banking policies among the 17 nations that use the €, along with stronger governance of the €.  The heads of state  “will call for further urgent measures aimed at boosting growth and jobs in Europe and enhancing the financing of the economy in the short to medium term.”  These steps include introducing so-called project bonds, making better use of EU infrastructure funds & increasing the capital, & therefore lending power, of the European Investment Bank.  Good luck!

EU Leaders to Call for ‘Further Urgent Measures’ on Growth

  • <p>               German Chancellor Angela Merkel stands behind a window with a reflection of the European flag as she waits for the President of Peru Ollanta Humala at the chancellery in Berlin, Germany, Tuesday, June 12, 2012. Merkel will hold a speech with the title "Germany in Europe - Input for European Cohesion" at an economic council of her ruling Christian Democratic Party Tuesday afternoon. (AP Photo/Markus Schreiber)
Photo:   Yahoo

German Chancellor Merkel has underlined her determination to reject pressure for quick solutions at the G-20 summit, saying Europe must tackle its problems "at the roots" by lowering debt & increasing economic competitiveness.  She said that fueling growth thru more gov spending "will rather increase the problems than decrease them."  She acknowledged that Germany, Europe's biggest economy, will be a focus of attention at next week's G-20 summit in Mexico.  Merkel said: "Germany will not be convinced by all the quick solutions," such as jointly issued eurobonds — favored by French President Francois Hollande & insisted "you can only resolve a crisis of confidence if you tackle things at the roots."  Tough words from a tough & important leader.

Merkel: Germany Won't be Swayed by Quick Fixes

Industrial Production in U.S. Probably Expanded at Slower Pace

Photo:   Bloomberg

US factories produced less in May than Apr, as automakers cut back on output for the first time in 6 months. The report indicates that manufacturing, a key driver of the economic growth, is slowing.  The Federal Reserve said that factory output declined 0.4% last month, after increasing 0.7% in Apr.  Auto production fell 1.5%, the first drop since Nov.  Overall industrial production, which includes mines and utilities, dipped 0.1%, after a solid 1% rise in Apr.  Both mines & utilities increased production.  The production of computers, machinery & aircraft all declined.  The output of appliances also fell, while home electronics was unchanged from Apr.  Automakers ramped up output over the winter, boosting overall factory production when production jumped at an annual rate of 41% in Q1.  Manufacturing, meanwhile, rose nearly 10% on an annual basis in the same period.  Car sales rose sharply earlier this year but slowed in May.  The European financial crisis & slower growth in China, India & other emerging markets is hurting US exports of factory goods.

Industrial Production in U.S. Unexpectedly Dropped in May

The Greek election is the next big event coming out of Europe & nobody has any idea of what will be the result.  But there is a fair chance Greece may take itself out of the Eurozone group of nations.  Meanwhile, all indications are that the US economy will report drab numbers for Q2.  There should be growth, but if the that figure is less than a 2½% annual rate, that will be a big disappointment for the markets.  Dow has recovered 600 from the lows at the start of Jun, making the bulls happy.  But I'm not sure how many more body blows it can absorb.

Dow Jones Industrials

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