Tuesday, April 15, 2014

Markets slide lower on rising euro tensions

Dow lost 18, decliners over advancers 3-2 & NAZ sank a very big 32.  The MLP index hardly budged in the 477s & the REIT index rose 1+ to the 286s.  Junk bond funds were mixed & Treasuries were flat.  Oil did little, but there was major selling in gold even though euro tensions are on the rise.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLK14.NYM...Crude Oil May 14...103.65 Down .....0.40  (0.4%)

GCK14.CMX...Gold May 14.......1,297.00 Down ...30.20  (2.3%)

Ukrainian Troops

Ukraine unleashed an offensive to dislodge militants from towns in its eastern Donetsk region as Russia’s prime minister said the country risks civil war.  Ukrainian units backed by armored personnel carriers blocked all approaches to the town of Slovyansk. 2 militants were wounded when an airport in Kramatorsk was stormed, forcing the protesters to retreat.  The gov started the operation after fighting between its forces & pro-Russian separatists turned deadly this week.  The US & the EU also deliberated deepening sanctions against Russia, which they blame for stoking the unrest, as Obama & Putin remain at odds over who was at fault.  “The aim of these actions is to protect people,” acting Ukrainian pres Turchynov said.  “Apart from Russian special forces and terrorists, there’s hundreds of thousands of innocent Ukrainian people deceived by Russian propaganda, and that is why we will take any needed anti-terrorist actions prudently and responsibly.”  The US & EU say Russia is behind the turmoil that has fueled this standoff, which NATO says has 40K troops massed on Ukraine’s border, denies involvement & says the gov in Kiev isn’t protecting Russian-speaking citizens.  In warnings similar to those that preceded its annexation of Crimea last month, it insists it has the right to protect them with force if needed.

Confidence among US homebuilders rose less than forecast in Apr as sales & prospective buyer traffic stagnated, showing the residential real estate market struggled to improve after a harsh winter.  The National Association of Home Builders/Wells Fargo builder sentiment gauge climbed to 47 this month from a revised 46 in Mar (weaker than initially reported).  Readings greater than 50 mean more respondents report good market conditions.  The forecast called for 49.  Tight credit for some home buyers & limited availability of lots are restraining builder sentiment months after snow storms & freezing temperatures held back construction.  At the same time, historically low mortgage rates & hiring gains helped drive an increase in the outlook for sales.  “Builder confidence has been in a holding pattern the past three months,” NAHB Chairman Kevin Kelly said.  “As the spring home-buying season gets into full swing and demand increases, builders are expecting sales prospect to improve.”  The gauge of prospective buyer traffic held at 32, while the index of current single-family home sales was unchanged at 51.  The measure of the 6-month sales outlook improved to a 3-month high of 57 in Apr from 53.

Confidence Among U.S. Homebuilders Increases Less Than Forecast

Coca-Cola, a Dow stock & Dividend Aristocrat, showed signs of a rebound in Q1, easing the concerns that arose when the company unsettled investors with surprisingly sluggish global sales in Q4.  Earnings met estimates, sales volume in North America halted its slide, & sales gains were strong in markets such as China.  After the Q4 report, CEO Muhtar Kent promised improvement & implemented a cost-cutting program that’s already showing some progress.  Global sales volume rose 2%, & an emphasis on new package sizes helped boost pricing by 2%.  EPS excluding some items was 44¢ in Q1, matching the estimate.  But net income fell 7.5% to $1.62B from $1.75B a year earlier.  Volume in North America was little changed, compared with a 1% decline in Q4.  Sales strengthened in emerging markets,including a 12% gain in China.  “The emerging markets all slowed down last year,” CFO Gary Fayard said.  “A lot of those emerging markets are starting to slowly recover.”  The results also came without a boost from Easter sales because the holiday didn’t fall in Q1 this year, Fayard said.  Evidence of Kent’s cost-cutting also started to materialize.  Selling, general & administrative expenses fell 4.6% to $3.99B.  “We’re looking under every rock,” Fayard said.  “It’s actually in every line item across the world.”  KO isn’t entirely in the clear, though.  Worldwide sales of carbonated beverages slipped 1% by volume, & while Q1 sales of $10.6B topped estimates, they still declined 4.2% from a year earlier.  The stock jumped 1.36.  If you would like to learn more about KO, click on this link:

Coca-Cola First-Quarter Results Soothe Soda Slowdown Fear

Coca-Cola (KO)

Even though earnings season is beginning, more attention is being paid to the goings on in eastern Europe which is descending into a chaotic mess.  There is only one global leader & that is Putin who is calling the shots.  The US & EU will only do some name calling & warn of serious consequences of matters worsen.  That's another way of saying, nothing is going to be done.  Early earnings returns are looking favorable, but conditions in eastern Europe will direct where markets go.  Currently that looks to be negative because Putin has become the world leader.

Dow Jones Industrials

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