Monday, August 20, 2012

Lower markets on euro debt worries

Dow dropped 23, decliners over advancers 2-1 & NAZ fell 10.  The Financial Index slipped pocket change in the 203s.  The MLP index fell 1 to the 395s & the REIT index was off 2 to the 263s.  Junk bond funds were mixed & Treasuries erased a decline as the ECB said it hasn’t discussed any plan to target bond yields of euro-bloc members.  Oil fell from a 3  month high as European leaders worked to resolve the region’s debt crisis.  Gold continues to slosh along, but is keeping above $1600.

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CLU12.NYM...Crude Oil Sep 12...95.66 ...Down 0.35  (0.4%)

GCQ12.CMX...Gold Aug 12....1,611.60 ....Down 4.70  (0.3%)

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  • <p>               Pedestrians walk outside a pawn shop offering money for gold,  in Athens, on Monday, Aug. 20, 2012.  Greece's finance officials are seeking to finalize euro 11.5 billion in spending cuts necessary for it to continue receiving the international funding that is protecting it from bankruptcy. (AP Photo/Petros Giannakouris)
Photo:   Yahoo

Finance officials in Greece are seeking €11.5B ($14.2B) in spending cuts necessary for the country to continue receiving the intl funding that is protecting it from bankruptcy.  Finance Minister Yannis Stournaras met with his deputy ministers & Labor Minister Yannis Vroutsis to hammer out the measures for 2013 & 2014, ahead of a series of top-level meetings between Prime Minister Antonis Samaras & top European officials later this week.  The Finance Ministry hopes to have the "general directions" of the cuts finalized in time for a visit to Athens Wed by Luxembourg Prime Minister Jean-Claude Juncker, who chairs the eurozone finance ministers' meetings.  Samaras then heads to Berlin & Paris on Fri & Sat for talks with German Chancellor Merkel & French President Hollande.  The proposed measures will also be scrutinized by Greece's debt inspectors from the IMF, European Commission & ECB, known as the troika, which is due to return to Athens in Sep.  At the head of a fragile 3-party coalition gov, formed after 2 elections in May & Jun, Samaras & his finance chief have a delicate balancing act to pull off in deciding on how to make the spending cuts.  This will be a very busy week in Greece & nobody knows how it will turn out.

Greece seeking to find ?11.5 bln spending cuts AP

  • <p>               La canciller alemana Angela Merkel en una conferencia de prensa conjunta con el primer ministro canadiense Stephen Harper en el parlamento de Ottawa el jueves, 16 de agosto del 2012. Un aliado de Merkel insistió que no hay espacio para hacer más concesiones a Grecia en torno a las condiciones de su programa de ayuda financiera, y ve pocas posibilidades de que la coalición gobernante alemana respalde un tercer paquete de rescate al país helénico. (Foto AP/The Canadian Press,Patrick Doyle)
Photo:   Yahoo

Euro leaders are gearing up for a high-stakes week of financial diplomacy that could determine Greece's future, & the stability of the 17 countries that use the €.  The first round began today when Germany's foreign minister, Guido Westerwelle, hosted his Greek counterpart, Dimitris Avramopoulos, ahead of a meeting in Berlin on Fri between their leaders, Chancellor Merkel & new Prime Minister Samaras.  French President Hollande visits Berlin on Thurs for discussions with Merkel & then will meet Samaras in Paris on Sat. Jean-Claude Juncker, the Luxembourg prime minister who chairs the eurozone finance ministers' meetings, is due in Athens Wed.  In addition, the eurozone is awaiting a report next month on Greece's progress in implementing reforms & austerity measures demanded in exchange for 2 massive bailout packages, being compiled by  representatives of the EU, ECB & IMF.  These meetings are the highlight of the week & bear repeating.  A lot is riding on their outcomes.  The lenders want to hear that Greece is following thru on its reforms & that is unclear.

Germany: Greece must follow through with reforms AP

New home prices in China rose in the largest number of cities in 14 months in Jul after interest- rate cuts & incentives for first-time buyers, complicating the gov efforts to stimulate economic growth while curbing property speculation.  Prices climbed from a month earlier in 49 of the 70 cities tracked by the gov, the National Bureau of Statistics, the most since May last year & compared with 25 cities in Jun.  Prices fell in 9 cities & were unchanged in 12.  Buyers, buoyed by 2 interest-rate cuts since Jun, have returned to the market even as the gov pledges to maintain real estate curbs to make housing more affordable.  The risk of a rebound in the property market may deter the People’s Bank of China from reducing rates further or cutting banks’ reserve requirement ratios to boost funds in the financial system & support lending after new credit slumped in Jul.  China is an important country in the global economy & it's facing economic challenges.

China New-Home Prices Climb in More Cities After Rate Cuts

Once again, not a lot is going on in the markets.  But financial officials are back off holiday to work on the Greek debt mess which will dominate news in an otherwise quiet week.  Somewhat lost is the rising price of crude.  It's at 3 month highs & that means higher price for gas at the pump as summer season winds down & hurricane season kicks into high gear.  Gas at the pump is $3.72 (according to AAA), not too far from the high of $3.93 reached a few months ago.

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