Dow crawled up 13, advancers over decliners 3-2 & NAZ rose all of 2. The MLP index fell 1+ to the 494s & the REIT index was up fractionally in the 301s. Junk bond funds climbed higher & Treasuries were in demand. Oil was weak but gold climbed back over 1300.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.09172790180546064)
The biggest immediate risk facing the China economy is about to get worse. A reluctance among some developers to sell units at prices lower than they could fetch just months ago threatens to cause a swelling in unsold properties. The worsening glut would extend a slide in construction that’s already put a drag on the economy, & counter policy makers’ efforts to stimulate the real-estate industry with loosened rules. In Nanjing, eastern China, 9 housing projects originally planned for sale in H1 were held for later this year. The number of homes added to the market in Jul in 21 major cities dropped 25% from Jun, according to Centaline Group, parent of China’s biggest real-estate brokerage. Jul economic data due over the next week, starting with tomorrow’s trade numbers, should give a sense of how well growth is holding up after accelerating to 7.5% in Q2 from a year earlier. China’s broadest measure of new credit rose in Jun to the highest level for the month since 2009, underscoring the role of debt in supporting expansion. Home sales slumped 9.2% in H1 from a year earlier, following a full-year 26.6% increase in 2013, while new-property construction plunged 16.4%. Developers are responding with sales delays & discounts as well as incentives including no-down-payment purchases & buyback guarantees. The inventory of unsold new homes in 20 large cities jumped to an average of more than 23 months of sales in Jun, according to Shenzhen World Union Properties Consultancy. The floor space of unsold new apartments nationwide on Jun 30 surged 25% from a year earlier. This important economy is not living up to past standards.
China Home Glut May Worsen as Developers Avoid Price Drop
Walgreen, a Dividend Aristocrat, plans to pay $15.3B for the part of Alliance Boots it doesn’t already own, & won’t use the deal to move its tax address abroad. WAG previously controlled about 45% of Boots, a Swiss company that runs pharmacy & beauty stores in Europe. It will pay about $5.29B in cash & $10B in stock for the remaining stake. WAG, which considered redomiciling in Switzerland to lower its tax rate, has come under political pressure not to do a tax inversion. The company also announced a plan to buy back as much as $3B in stock & a quarterly div of 33¾¢ per share. Senators complained about moving its address & the Treasury Dept said yesterday it is examining whether it has the authority to stop companies moving overseas while it waits on Congress to pass comprehensive tax reform. “We carefully and extensively evaluated the potential of an inversion,” including potential consumer backlash and political ramifications, before deciding against it, CEO Wasson said. He added the board “could not arrive at a structure that provided the company and our board with the requisite level of confidence that a transaction of this significance would need to withstand extensive IRS review and scrutiny.” The stock sold off 9.91 (14%). If you would like to learn more about WAG, click on this link:
Click here for a FREE analysis of WAG and be sure to notice the intermediate time frame
Walgreen Stays in U.S. With $15.3 Billion Deal for Rest of Alliance Boots
Bank of America raised its quarterly div to 5¢ & dropped plans to buy back stock after the Federal Reserve (FED) approved its resubmitted capital plan for 2014. The div will rise from a penny. Plans for the increase were postponed in Apr after BAC said it made an error in its original request to the FED. The central bank said today it didn’t object to the company’s revised plan. CEO Brian T Moynihan had to suspend the div increase & $4B of planned share repurchases after the company said it incorrectly adjusted for losses on structured notes issued by Merrill Lynch. The firm’s Tier 1 leverage ratio would drop to no lower than 4.1% in the FED’s “severely adverse” scenario after including the lowered capital-return request, the central bank said in a separate announcement. That cleared regulators’ 4% required minimum. The stock went up 20¢. If you would like to learn more about BAC, click on this link:
Click here for a FREE analysis of BAC and be sure to notice the intermediate time frame
BofA Raises Dividend, Drops Buyback as Capital Plan Approved
The most exciting event in the markets was the move into gold & Treasuries. Risk aversion has become important once again. The VIX, volatility index, was at a low 11 just 3 weeks ago. Today, after falling a fraction, it's in the 16s. There is a lot more nervousness at play. The unsettled situation in Ukraine is keeping everybody guessing as is what ISIS will do next in northern Iraq. Dow is down more than 100 YTD & there may be more selling in Aug.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| LU14.NYM | ....Crude Oil Sep 14 | ....96.85 |  ...0.53 | (0.5%) |
The biggest immediate risk facing the China economy is about to get worse. A reluctance among some developers to sell units at prices lower than they could fetch just months ago threatens to cause a swelling in unsold properties. The worsening glut would extend a slide in construction that’s already put a drag on the economy, & counter policy makers’ efforts to stimulate the real-estate industry with loosened rules. In Nanjing, eastern China, 9 housing projects originally planned for sale in H1 were held for later this year. The number of homes added to the market in Jul in 21 major cities dropped 25% from Jun, according to Centaline Group, parent of China’s biggest real-estate brokerage. Jul economic data due over the next week, starting with tomorrow’s trade numbers, should give a sense of how well growth is holding up after accelerating to 7.5% in Q2 from a year earlier. China’s broadest measure of new credit rose in Jun to the highest level for the month since 2009, underscoring the role of debt in supporting expansion. Home sales slumped 9.2% in H1 from a year earlier, following a full-year 26.6% increase in 2013, while new-property construction plunged 16.4%. Developers are responding with sales delays & discounts as well as incentives including no-down-payment purchases & buyback guarantees. The inventory of unsold new homes in 20 large cities jumped to an average of more than 23 months of sales in Jun, according to Shenzhen World Union Properties Consultancy. The floor space of unsold new apartments nationwide on Jun 30 surged 25% from a year earlier. This important economy is not living up to past standards.
China Home Glut May Worsen as Developers Avoid Price Drop
Walgreen, a Dividend Aristocrat, plans to pay $15.3B for the part of Alliance Boots it doesn’t already own, & won’t use the deal to move its tax address abroad. WAG previously controlled about 45% of Boots, a Swiss company that runs pharmacy & beauty stores in Europe. It will pay about $5.29B in cash & $10B in stock for the remaining stake. WAG, which considered redomiciling in Switzerland to lower its tax rate, has come under political pressure not to do a tax inversion. The company also announced a plan to buy back as much as $3B in stock & a quarterly div of 33¾¢ per share. Senators complained about moving its address & the Treasury Dept said yesterday it is examining whether it has the authority to stop companies moving overseas while it waits on Congress to pass comprehensive tax reform. “We carefully and extensively evaluated the potential of an inversion,” including potential consumer backlash and political ramifications, before deciding against it, CEO Wasson said. He added the board “could not arrive at a structure that provided the company and our board with the requisite level of confidence that a transaction of this significance would need to withstand extensive IRS review and scrutiny.” The stock sold off 9.91 (14%). If you would like to learn more about WAG, click on this link:
Click here for a FREE analysis of WAG and be sure to notice the intermediate time frame
Walgreen Stays in U.S. With $15.3 Billion Deal for Rest of Alliance Boots
Walgreen (WAG)
Bank of America raised its quarterly div to 5¢ & dropped plans to buy back stock after the Federal Reserve (FED) approved its resubmitted capital plan for 2014. The div will rise from a penny. Plans for the increase were postponed in Apr after BAC said it made an error in its original request to the FED. The central bank said today it didn’t object to the company’s revised plan. CEO Brian T Moynihan had to suspend the div increase & $4B of planned share repurchases after the company said it incorrectly adjusted for losses on structured notes issued by Merrill Lynch. The firm’s Tier 1 leverage ratio would drop to no lower than 4.1% in the FED’s “severely adverse” scenario after including the lowered capital-return request, the central bank said in a separate announcement. That cleared regulators’ 4% required minimum. The stock went up 20¢. If you would like to learn more about BAC, click on this link:
Click here for a FREE analysis of BAC and be sure to notice the intermediate time frame
BofA Raises Dividend, Drops Buyback as Capital Plan Approved
Bank of America (BAC)
The most exciting event in the markets was the move into gold & Treasuries. Risk aversion has become important once again. The VIX, volatility index, was at a low 11 just 3 weeks ago. Today, after falling a fraction, it's in the 16s. There is a lot more nervousness at play. The unsettled situation in Ukraine is keeping everybody guessing as is what ISIS will do next in northern Iraq. Dow is down more than 100 YTD & there may be more selling in Aug.
Dow Jones Industrials
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