Thursday, August 23, 2012

Markets decline on growing euro debt woes

Dow dropped 115, decliners ahead of advancers 2-1 & NAZ fell 20.  The Financial Index lost 2 to the 202s.  The MLP index fell 1+ to the 391s & the REIT index was fractionally lower to the 263s.  Junk bond funds were mixed to lower & Treasuries rallied on lower stock prices.  The yield on the 10 year bond fell 15 basis points in just 2 days as risk averse is coming back to investment thinking.  Oil fell from a 3-month high as Angela Merkel said she expects Greece to fulfill the terms of its bailout & on skepticism central banks will ease monetary policy further.  Gold advanced to the highest in more than 4 months amid speculation that the US will take additional steps to spur economic growth, boosting the appeal of bullion as an inflation hedge.

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CLV12.NYM...Crude Oil Oct 12....96.48 ...Down 0.78  (0.8%)

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  • <p>               Germany's Chancellor Angela Merkel, left, and France’s President Francois Hollande brief the media prior to a meeting at the chancellery in Berlin, Thursday, Aug. 23, 2012 .The leaders of Germany and France are stressing that it's up to Greece to keep pursuing painful reforms as it strives to keep its place in the euro. Chancellor Angela Merkel and President Francois Hollande were meeting Thursday before both hold talks over the next two days with Greece's new prime minister, Antonis Samaras. (AP Photo/Markus Schreiber)
Photo:   Yahoo

The German & French leaders put the pressure firmly on Greece to keep pursuing painful reforms, suggesting they are hesitant to accept the new Greek prime minister's demand for more time to fix his country's battered economy & public finances.  Chancellor Merkel & President Hollande met to discuss how to deal with Greece before Prime Minister Antonis Samaras visits both of them over the next 2 days.  Earlier, Germany's finance minister set the stage for tough negotiations by claiming that giving Greece more time to make reforms would achieve little.  Merkel's gov is reluctant to offer significant concessions, but Hollande has generally taken a softer line in the debt crisis afflicting Greece & other countries.  In a charm offensive this week, Samaras has been arguing that his nation should have more time to complete reforms that are a condition of it continuing to receive bailout loans.  Without the help, Greece would be forced into a chaotic default on its debts and could be forced out of the eurozone.  Greece has faltered in the speed & effectiveness of implementing the reforms, irritating its creditors, notably Germany, which is the single largest contributor.  Greece's continued access to the bailout packages hinges on a favorable report next month from the EU, ECB & the IMF.  If Greece is found to have failed on key economic reforms that are conditions of the bailout loan, vital funds could be halted. "For me, it's important that we all stand by our commitments, and in particular await the (publication of) the troika report, to then see what the result is," Merkel said. "But I will encourage Greece to follow the path of reform, which demands a lot of the Greek people."  Hollande stressed: "I want Greece to remain in the eurozone. That's my wish. That's our wish."  But he added that "of course Greece must make the necessary efforts for this to happen."  The Greek drama plays on!

Merkel, Hollande press Greece to pursue reforms A

Hewlett-Packard Sales Slump Shows CEO Whitman’s Challenge

Photo:  Bloomberg

Hewlet-Packard, a Dow stock, posted a record quarterly loss & reported slumping sales for PCs & services aimed at businesses, underscoring the turnaround challenge facing CEO Meg Whitman.  The fiscal Q34 loss of $8.86B includes a writedown for the enterprise-services unit & reflects a 10% decline in PC revenue.  The company pared the high end of its full-year forecast for profit excluding some items to $4.07 a share, from $4.10, missing the average $4.08 estimate.  The PC market remains weak, & the company is in the “early stages of a turnaround,” Whitman said.  To help revive the PC division, HPQ plans to release a tablet computer running Microsoft Corp.’s (MSFT), another Dow stock, Windows 8 software later this year.  The device will be aimed mainly at businesses rather than consumers.  The company decided to design a tablet that’s “desirable” to workers while including security and durability features, rather than trying to take on Apple’s iPad directly, she said.  “Make no mistake about it, the consumer tablet market today is an Apple market,” Whitman said. “Our decision was not to just go straight at Apple with a me-too product.”  The tablet will be shipped after the Oct introduction of Windows 8, though it may land on store shelves until next year, Whitman said.  Sales in Hewlett-Packard’s PC division declined 10% to $8.6B, adding to evidence of a slump that showed up in results this week from Dell (DELL).  The stock fell $1.56 (8%) & has a very weak chart.

Hewlett-Packard’s Record Quarterly Loss Shows Challenge Facing CEO Whitman

Hewlett-Packard (HPQ)

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House Prices Rose Most Since 2005 in Second Quarter, FHFA Says

Photo:   Bloomberg

US house prices jumped 1.8% in Q2 from Q1, fueled by record-low mortgage rates & tight inventory, according to the Federal Housing Finance Agency.  The increase was the biggest since Q4 of 2005 (before the housing market crashed).  But prices climbed only 3% from a year earlier.  Job gains, low borrowing costs & a limited supply of properties for sale are providing a foundation for price gains & helping homeowners gain equity.  The number of Americans who owed more than their homes were worth fell 400K in Q2.  House prices in Jun increased 0.7% from May, according to the FHFA, based on single-family houses with mortgages backed by Fannie Mae or Freddie Mac.  The FHFA report doesn’t provide a specific price for homes.  But the median price of an existing home, as measured by the National Association of Realtors, was $188K in Jun, up from $180K in May.

House Prices Rose Most Since 2005 in Second Quarter, FHFA Says

Euro leaders are meeting this week, trying to solve their debt problems & the Dow lost 225.  That's a major decline & sharp reversal from the upward momentum it had.  Of course, more talk about the US having a fiscal cliff to get over is adding to negative thinking in the markets.  Gold is up almost $100 in less than 2 weeks & Treasuries reversed their recent decline.  Money seeking safety from selling stocks is going into these contrary investments.  Dow has been struggling to get over 13K for a long time & use that for a launching pad for more gains, without luck.  This traditionally quiet time in the markets is proving to have a fair amount of excitement.

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1 comment:

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