Monday, June 23, 2014

Markets drift lower on concerns over fighting in Iraq

Dow fell 9, decliners barely ahead of advancers & NAZ was fractionally higher.  The MLP index soared 6+ to 514 (another record) & the REIT index lost 1 to 302.  Junk bond funds were mixed to higher & Treasuries moved higher, but the 10 year Treasury yield is stuck near 2.6%.  Oil fell back & gold inched higher.

AMJ (Alerian MLP Index tracking fund)

Pro-Russian rebels in Ukraine announced a cease-fire, 3 days after pres Poroshenko called a truce to end the crisis that’s left hundreds dead in the east of the former Soviet republic.  The prime minister of the self-proclaimed Donetsk People’s Republic, Alexander Borodai, said separatist fighters in the Donetsk region would halt hostilities until Fri as long as gov troops do the same.  On television, Borodai said his group was seeking talks with the Ukrainian gov before that date, when Poroshenko’s cease-fire is also due to expire.  Rebels in the other breakaway region, Luhansk, also agreed to a truce.  The announcement came after talks in Donetsk today that involved former Ukrainian pres Kuchma & Russia’s ambassador to Ukraine, Mikhail Zurabov.  The cease-fire announcement opens the way for an easing of the worst standoff between Russia & the US with European allies in decades.  The US & EU have accused Russia, which annexed Ukraine’s Crimea peninsula in Mar, of allowing weapons to flow to the separatists across the Ukrainian border & building up troops along the frontier again.  Pres Obama spoke with Russian pres Putin today to urge him to use his influence to promote peace & stability in Ukraine

Ukraine Rebels Call Cease-Fire to Match Government Truce

U.S. Secretary of State John Kerry
Photo:   Bloomberg

Sec Kerry said in Baghdad today that Obama is gathering the information he’d need if he decides to order airstrikes to counter the advance of Sunni militants in Iraq.  “The president has moved the assets into place and has been gaining each day the assurances he needs with respect to potential targeting,” Kerry said.  Obama “has reserved the right to himself, as he should, to make a decision at any time” to undertake strikes, Kerry said at a press conference at the heavily fortified US embassy in Baghdad.  “We are implementing a strategy now; we are not waiting,” he added.  Administration officials said today that some military & political obstacles still remain in the path of renewed US military action in Iraq more than 2 years after Obama withdrew the last combat forces from the country.  Iraqi Prime Minister Maliki hasn’t responded to American demands that he form a more inclusive gov or step aside, & intelligence agencies are still trying to collect reliable targeting information that would enable manned or unmanned aircraft to hit fast-moving Islamic militants without endangering innocent civilians or government forces.  While Kerry pledged “intense, sustained” support from the US, he said the Iraqi gov will win “the kind of embrace from the international community that it will need” only if it forms a unity gov quickly.  Kerry also met with Sunni & Shia politicians, & said he emphasized to everyone the need for unity to oppose the militant forces of the Islamic State in Iraq & the Levant (ISIL).  It’s “crystal clear ISIL’s rise puts more than one country at risk,” Kerry said.  “ISIL threatens the stability of the entire region, and it’s a threat also to the United States and to the West.”

Kerry in Baghdad Says Obama Gathering Data for Strikes

Oracle Corp. CEO Larry Ellison
Photo:   Bloomberg

Oracle agreed to buy Micros Systems (MCRS) for $5.3B as CEO Larry Ellsion seeks to reignite slowing growth by adding software for hotels & restaurants.  Micros stockholders will get $68 a share in cash, 18% more than the closing price last Mon, a day before Bloomberg reported the companies were near a deal.  Net of MCRS cash, the value is $4.6B.  ORCL came close to acquiring the company 6 years ago only for the deal to fall thru at the last minute. ORCL, which has acquired about 100 companies in the last decade, has seen the incremental revenue gains accrued thru those deals dry up.  After a late entry to the cloud-computing market, sales have declined or gained less than 5% in each of the past 11 qts as customers gravitate to rivals selling internet-based software.  Last week, ORCL posted profit & sales that missed estimates.  The deal, expected to close in H2, will add to EPS immediately, excluding some items, CFO Safra Catz said.  The acquisition would be its largest since the $5.7B takeover of Sun Microsystems in 2010.  ORCL has almost $39B in cash & marketable securities.  MCRS sells point-of-sale systems for hotels, restaurants & retailers.  ORCL stock has had a good run in the last year & was up pocket change today while MCRS jumped 2.21 to 67.98.  If you would like to learn more about ORCL,
Click here for a FREE analysis of ORCL and be sure to notice the intermediate time frame

Oracle to Buy Micros for $5.3 Billion to Add Hotel Software

Oracle (ORCL)

Dow was in the red all day.  Nothing serious, but the bulls were not able to bring out buyers to take the Dow to new heights.  Even with a small sense of calm in Ukraine, the mess in Iraq keeps going from bad to worse.  The bad guys are a lot more than a bunch of ragtag amateurs.  They are acting like they know what they want & are taking objectives.  The biggest immediate threat is oil & big hedge funds are wagering a lot of money on higher oil prices.  Back to the economy, Q2 is closing shortly.  US GDP should show growth, a lot better than the drab performance in Q1.  But growth may not be impressive as has been the case since the last recession.  MLPs are red hot.  The Alerian MLP index rise has taken its yields below 5.37% today.  That was the previous low yield which was followed by a significant sell-off.  Now booming energy in Texas & North Dakota can extend this run for some time.

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