Monday, February 9, 2015

Markets decline as Tsipras maintains spending plans for Greece

Dow dropped 68, decliners slightly ahead of advancers & NAZ lost 16.  The MLP index rose pocket change in the 456s & the REIT index was off fractionally in the 341s.  Junk bond funds were mixed & Treasuries inched higher.  Oil rose again, going over 53, & gold also gained.

AMJ (Alerian MLP Index tracking fund)

CLH15.NYM...Crude Oil Mar 15...52.74 Up ....1.05 (2.0%)

GCH15.CMX...Gold Mar 15.....1,237.30 Up ...3.20 (0.3%)

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European leaders urged Greek Prime Minister Tsipras to pare back his ambitions for easing the financial pressure on his people as stocks & bonds tumbled.  Officials spoke out after Tsipras once again vowed to reverse the austerity imposed by the previous gov as a condition for Greece’s bailout.  That sets up a clash with the rest of the euro area when finance ministers meet to discuss the country’s financing needs on Wed. 
“Greece shouldn’t assume that the overall mood in Europe has changed to the point that the euro zone would endorse Mr. Tsipras’s entire government agenda without limitations,” European Commission pres Jean-Claude Juncker said.  While Greece is pushing the troika of official creditors to drop the austerity demands that have helped wipe out a qtr of GDP since the start of the crisis, the gov also needs help to meet its obligations.  Without concessions, the gov may run out of money before the end of Mar, forcing Tsipras either to cave in to European demands or abandon the single currency.  Behind the public rhetoric, the Greek gov has shifted to a more cooperative tone in recent conversations with the troika, according to a leaker.  Greece has been told it needs to ask for a formal extension of its existing bailout deal in order to receive financing.  Other officials said Greece may be given more time to present its complete proposals for a permanent arrangement if Tsipras accepts he needs a new program & commits not to reverse the most important overhauls of the bailout agreement.  Tsipras said he aims to reach an agreement with the country’s creditors within 15 days on a “bridge program,” which will ensure the country’s financing until Jun.  “Greece wants to service its debt, which is now over 180 percent of GDP,” Tsipras said.  “It’s impossible to service as long as our partners insist on austerity.”  The country’s public debt stands at more than €320B ($362B) & the debt-to-GDP ratio is the highest in the EU.

EU Urges Tsipras to Rein In His Ambitions for Rollback

Ukraine’s almost yearlong conflict enters a pivotal week, with the outcome of more talks on a peace agreement potentially determining whether a wider war can be avoided as violence escalates.  Discussions resume today aimed at preparing a summit for the leaders of Germany, France, Russia & Ukraine on Wed.  Putin said all sides must first agree on their positions before talks can take place.  The diplomatic effort comes as the US & some European allies consider supplying arms to Ukrainian forces, while German Chancellor Merkel warned of a deepening conflict that can’t be won militarily.  A breakdown of negotiations would also strain transatlantic unity in dealing with Russia, as Europe’s consensus on economic sanctions shows signs of fraying.  Merkel & French pres Hollande stepped up peace efforts over the past week after fighting between Ukrainian forces & pro-Russian separatists escalated.  Looming over the negotiations is the prospect of deeper sanctions on Russia, an economic collapse in Ukraine & the risk that the conflict descends into a proxy war.  The confrontation in Ukraine was “not caused by the Russian Federation” and an “immediate” cease-fire is needed, Putin said.  The crisis “emerged in response to the attempts of the US & its Western allies who considered themselves ‘winners’ of the Cold War to impose their will everywhere,” he added.  “We have seen how NATO’s infrastructure was moving closer and closer toward Russian borders and how Russian interests were being ignored,” Putin said.  More than 5K have died in the fighting since Apr.  9 gov troops were killed & 26 wounded during 100 attacks by rebel forces in the past 24 hours, a Ukrainian military spokesman said.  The Ukrainian economy meanwhile is being brought to its knees, making the prospect of reviving the country even tougher should a peace agreement ever emerge.

Ukraine Conflict Is on Knife-Edge

McDonald’s, a Dow stock & Dividend Aristocrat, is replacing its CEO in a bid to reignite growth, posted a worse-than-projected decline in global sales for Jan, dragged down by a slump at its Asian restaurants.  The sales fell 1.8% & analysts had estimated a 1.2% decline.  While US sales narrowly increased, the region that includes Asia, the Middle East & Africa plunged almost 13%.  The results underscore the challenges facing incoming CEO Steve Easterbrook as he charts a new course for the world’s largest fast-food chain.  The sales slowdown led to the resignation the current leader after less than 3 years in the job.  In Asia, MCD has suffered a series of setbacks, including the rationing of french fries in Japan & a scandal involving a meat supplier.  The vendor, Shanghai Husi Food was accused of repackaging old meat in Jul, prompting MCD to take products off its menus in the region.  The woes have taken a heavy toll in Japan, where the company lost $186M in 2014 as sales plunged 39% in Jan, marking the 12th straight month of declines.  In Dec, MCD was forced to ration fries in the country after a labor dispute at US ports crimped supplies of potatoes.  The Asian challenges have overshadowed a modest recovery in the company’s home country.  US same-store sales climbed 0.4% last month, the 2nd consecutive gain.  Easterbrook joined the company in 1993 & was known as a “feisty advocate” for the brand during that time & invested in new ordering technology, which MCD hopes to expand in the US.  The stock fell 1.18.  If you would like to learn more about MCD,click on this link:

McDonald’s Slump Lingers With Drop in Global January Sales

McDonald's (MCD)

Markets are mushy today as intl stories are making traders nervous.  Greece will probably dominate news this week.  Plans by the new gov indicate the future for Greece is for more financial problems.  Ukraine fighting is ongoing which is leading to more sanctions on Russia.  The MidEast situation looks bad.  Northern Iraq, Syria, Yemen, Libya, etc are having major problems with terrorists.  New earnings reports are still due in the US.

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