Monday, February 11, 2013

Markets edge lower on euro uncertainties

Dow fell 19, decliners ahead of advancers 2-1 & NAZ lost 3.  The Financial Index rose almost 1 to 238, good enough to eke out a new multi year high.  The MLP index was up a fraction in the 426s & the REIT index was little changed in the 279s.  Junk bond fund were mixed & Treasuries hardly budged.  Oil slipped in the 95s & gold fell to the lowest in more than a month on speculation that physical demand will slow during this week’s Lunar New Year holiday in Asia, & as EU ministers prepared to meet to discuss aid to Cyprus & Greece.

AMJ (Alerian MLP Index Tracking fund)

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Treasury yiedls:

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CLH13.NYM...Crude Oil Mar 13...95.47 .....Down 0.25  (0.3%)

GCG13.CMX...Gold Feb 13......1,650.50 ...Down 15.50  (0.9%)

Euro Crisis Damage Seen in Worst Quarter Since Lehman Aftermath

Photo:   Bloomberg

Euro-area economic data due later this week will probably show the damage inflicted by the region’s sovereign debt crisis with the worst quarterly decline in output for almost 4 years.  Data may show that GDP shrank 0.4% in Q4, the biggest decline since Q1 of 2009 when GDP fell 2.8% in the wake of the collapse of Lehman Brothers.  While measures to stem the region’s debt turmoil have helped curb sovereign bond yields from Spain to Greece, at least 7 countries of the 17-nation bloc are in recession, leaving 18.7M out of work. The ECB said last week that “economic weakness” will prevail in early 2013 even as the economy shows confidence stabilizing “at low levels.”  It is hoped Q4 is the trough of the cycle.  Euro-area finance chiefs meet in Brussels today to discuss aid to Cyprus & Greece as a tightening election contest in Italy & corruption allegations in Spain threaten to reignite the region’s debt crisis.  G-20 finance chiefs & central bankers will gather in Moscow later this week.  While the euro region’s economy hasn’t grown since the Q3 of 2011, the pace of decline in GDP, driven by a continent-wide push to narrow budget deficits & exacerbated by stalling exports, may be slowing now if demand picks up in the US & China.

EU Crisis Damage Seen in Worst Quarter Since Lehman Wake

Home Prices Increase in 88% of U.S. Cities as Recovery Broadens

Photo:   Bloomberg

Prices for single-family homes climbed in 88% of US cities in Q4 as the housing recovery broadened.  The median sales price increased from a year earlier in 133 of 152 metropolitan areas measured, the National Association of Realtors.  In Q3, 120 areas had gains.  An improving job market & low interest rates are driving up prices by fueling demand for a tightening supply of listings.  Home prices rose 8.3% in Dec from a year earlier, the biggest jump since May 2006, according to CoreLogic.  At the end of Q4, 1.82M existing homes were available for sale, 22% fewer than a year earlier.  The national median price for an existing single-family home was $179K in Q4, up 10% from the same period last year.  That was the biggest year-over-year gain since 2005.  Housing is mending.

Home Prices Rise in 88% of U.S. Cities as Recovery Gains

An American Airlines plane (C) is seen between two US Airways Express planes at the Ronald Reagan Washington National Airport in Arlington County, Virginia, February 10, 2013, as negotiations continue this week between parent companies US Airways Group Inc and AMR Corp on a possible $11 billion merger, creating what would be the world's largest airline. REUTERS/Mike Theiler (UNITED STATES - Tags: TRANSPORT BUSINESS)

Photo:   Yahoo

US Airways Group & AMR (American Airlines) are nearing an $11B merger that would create the world's largest airline & could announce a deal within a week, after resolving key differences on valuation & management structure.  Under tentative terms of a deal, US Airways CEO Doug Parker would become CEO, while AMR's Tom Horton would serve as non-executive chairman of the board until spring of 2014  The deal would come more than 14 months after the parent of American Airlines filed for bankruptcy in Nov 2011, & would mark the last combination of legacy US carriers, following the Delta-Northwest & United-Continental mergers.  The all-stock merger is expected to value the combined carrier at $10.5-$11B, & would give AMR creditors 72% ownership in the new company.  US Airways shareholders would get the rest.  The board of each airline is expected to meet in the middle of the coming week to vote on the proposed deal, & an announcement would likely come in the latter part of the week.  Negotiations are continuing.  A combination would create the world's top airline by passenger traffic & help the 2 carriers better compete with rivals.  The airlines are estimating that a merger will bring about $1B in revenue & cost benefits.

US Airways’ Parker Nears AMR Prize Capping Merger Wave He Set Off in 2005

Stocks are taking it easy again but euro recession & debt worries are on the rise.  The pres will give his state of the union speech.tomorrow & it's unclear how much he will have to say bout the economy (although there could be a fair amount of talk on taxing the rich).  Chances are markets will be fairly quiet awaiting developments from the talk & the big financial meetings in Europe.

Dow Jones Industrials

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