Tuesday, February 17, 2015

Lower markets on Greek debt worries

Dow dropped 45, decliners over advancers 3-2 & NAZ lost 6.  The MLP index fell 2+ to the 448s & the REIT index went up 2+ to the 344s.  Junk bond funds drifted lower & Treasuries lost ground.  Oil pulled back to the 51s & gold sold off.

AMJ (Alerian MLP Index tracking fund)

CLH15.NYM...Crude Oil Mar 15...51.41 Down .....1.37  (2.6%)

GCH15.CMX...Gold Mar 15.....1,205.70 Down ...20.80  (1.7%)

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Greek lenders are urging central bank Governor Yannis Stournaras to seek additional emergency cash as deposit outflows accelerate.  Deposit withdrawals picked up after talks between Greece & its euro-area creditors on extending its bailout ended in acrimony, according to leakers.  Stournaras meets the ECB Governing Council colleagues tomorrow as Greek banks exhaust their current allocation of emergency funds. The lenders, unable to tap investors for funds, are bleeding deposits amid uncertainty over their country’s future in the euro area & concern capital controls might be used to stem outflows.  Banks are being kept afloat thru Emergency Liquidity Assistance (ELA) lifeline extended by the Bank of Greece, subject to approval by the ECB.  The ELA pool, which currently stands at €65B ($74B), is extended to solvent lenders as a temporary measure to cover liquidity shortages.  The Greek daily reported last week that deposit withdrawals in Jan & the beginning of Feb totaled €15B, indicating total deposits have dropped to €145B from €160B at the end of 2014.  It is believed that the ECB will likely provide ELA to Greek banks as long as there is a chance of an agreement between Greece & its creditors to extend the current bailout.  If Greek authorities don’t take up euro area finance ministers’ offer this week, ELA funds to Greek banks are likely to be shut down.  Greek lenders have limited holdings of investment-grade assets eligible as collateral for normal ECB financing operations.

Greek Banks Need More Emergency Funds

Rebels in eastern Ukraine said they took control of most of the strategic crossroad town Debaltseve in fighting that’s threatening to undermine a fragile truce.  The self-proclaimed Donetsk People’s Republic said 300 gov troops had surrendered as it took control of 4/5 of the rail & highway junction, which links the breakaway regions Donetsk & Luhansk & where thousands of Ukrainian forces are holed up.  Ukraine’s military denied soldiers had surrendered & said heavy fighting was taking place in the town’s outskirts.  Its troops were holding their positions & repelling separatist attacks with artillery, a spokesman said.  “The army took 80 percent of the town,” an official with the separatist ministry said.  “It’s only the private residential sector that is left and Debaltseve will be under our control.”  The combat is eroding the latest effort to end 10 months of fighting that’s killed 6K.  The truce, struck after the leaders of Ukraine, Russia, Germany & France negotiated for 18 hours overnight in the Belarusian capital of Minsk, envisages a withdrawal of heavy weaponry starting Tues.  Data released late Mon laid bare the economic toll of the conflict, which has ravaged the nation’s industrial base.  GDP plunged 15% from a year earlier, the most in 5 years.

Ukraine Truce Marred by Battle in Key Town

Confidence among US homebuilders decreased in Feb to the lowest level in 4 months as winter weather prevented some prospective buyers from touring new developments.  The National Association of Home Builders/Wells Fargo sentiment gauge fell to 55 from 57 in Jan.  The forecast called for 58.  The decline was led by a slump in customer traffic.  Frigid temperatures & snow that have blanketed swaths of the Midwest & Northeast have restrained the number of people visiting model homes.  Wage growth & a strengthening job market may spur demand for residential real estate as mortgage rates persist near historically low levels.  A reading greater than 50 indicates a majority of respondents said market conditions are good.  The gauge of current single-family home sales decreased to 61 this month from 62.  The reading on prospective buyer traffic dropped to 39, the lowest since Jul, from 44, while the 6-month sales outlook index was unchanged at 60.  The confidence readings remain “consistent with a modest, ongoing recovery,” David Crowe, NAHB chief economist, said.  “Solid job growth, affordable home prices and historically low mortgage rates should help unleash growing pent-up demand and keep the housing market moving forward in the year ahead.”  The decrease in confidence this month was centered among builders in the Midwest, where the index dropped to 49, the lowest since Jun, from 59 in Jan.

Four-Month Low Confidence Among U.S. Homebuilders Declines

The news is not pretty.  Greece looks like it will have a debt crisis & that will bring ripple effects throughout Europe,  Fighting in Ukraine has not let up, no great surprise.  The MidEast conflicts are escalating & drama is on the rise.  And home builders are nervous about what the future may bring.  These are troubling times & there are no favorable winds on the horizon.  Bull will have a tough time attracting buyers for stocks.

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