Tuesday, February 24, 2015

Markets rise after Greece bailout is approved

Dow gaiued 61, advancers ahead of decliners 3-2 & NAZ slid 1.  The MLP index lost pennies & the REIT index dropped 5 to the 337s.  Junk bond funds inched higher & Treasuries were flattish.  Oil has a modest gain & gold is about even.

AMJ (Alerian MLP Index tracking fund)

CLJ15.NYM....Crude Oil Apr 15...50.02 Up ....0.57 (1.2%)

GCG15.CMX...Gold Feb 15.....1,196.00 Down ....4.30  (0.4%)

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Greece secured a 4-month extension of its financial rescue when the euro zone partners approved a reform plan that backed down on key leftist measures & promised that spending to alleviate social distress would not derail its budget.  Finance ministers sealed the decision in a telephone conference after the new gov sent a detailed list of reforms it plans to implement by Jul.  "Following Eurogroup teleconference decision, national procedures for extension of the Greek program can begin," Valdis Dombrovskis, the European Commission VP said.  The ministers reviewed a 6-page document that watered down campaign promises to halt privatizations, boost welfare spending & raise the minimum wage, vowing to consult partners before key reforms & to keep them budget-neutral.  Both the European Commission & IMF called the Greek letter "sufficiently comprehensive to be a valid starting point for a successful conclusion of the review."  The 19-nation Eurogroup urged Greece to develop & broaden the list of reform measures, based on "the current arrangement" - a euphemism for the bailout agreement which Prime Minister Alexis Tsipras had vowed to scrap.  In a foretaste of tough negotiations to come, IMF Managing Director Christine Lagarde said the reform plan was "not very specific" & much clearer assurances would be needed on key reforms of pensions, taxation & privatization.  And the Slovak Finance Minister, reflecting deep skepticism among northern European fiscal hawks, said:  "Greeks have lots of heavy lifting to do until end-April. We all want to see numbers now."

EU Ministers OK Greek Deal

Single-family home prices in the US rose in Dec, led by strong increases in the western half of the US.  The S&P/Case Shiller composite index of 20 metropolitan areas gained 4.5% from the prior year.  This was better than the forecast that called for a rise of 4.3%, as well as the 4.3% growth rate in Nov.  "While prices and sales of existing homes are close to normal, construction and new home sales remain weak," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said .  "The softness in housing is despite favorable conditions elsewhere in the economy: strong job growth, a declining unemployment rate, continued low interest rates and positive consumer confidence."

U.S. Home Rrices Rise in December

Ukraine said a cease-fire with pro-Russian separatists isn’t working as it disputed an announcement by rebel groups that they are withdrawing heavy weapons from the conflict zone.  The self-proclaimed Donetsk & Luhansk republics began a pullback of heavy weapons in line with the peace agreement signed according to the separatist-run DAN news service.  The withdrawal will be “absolutely transparent,” it said.  “The cease-fire has not happened,” a Ukrainian military spokesman said.  “The militants are just relocating and re-grouping using the cover of a heavy-weapons pullback. The information from militants on withdrawing heavy weapons is not true.”  The latest tensions in the fragile peace deal emerged as the foreign ministers of France, Germany, Russia & Ukraine meet in Paris to try to ensure implementation of the agreement.  The Minsk accord requires both sides in the 10-month conflict to withdraw heavy weaponry behind buffer zones within 14 days of a cease-fire that came into effect Feb 15 & which was breached when rebels took the strategic town of Debaltseve last week.  Gov troops at Shyrokyne came under rifle & mortar fire overnight & rebels are concentrating vehicles in the area, a Ukrainian military said.

Diplomats Clash on Ukraine Truce Amid Arms Pullback Row

Janet is testifying before congress, giving the same soothing message that the markets have gotten used to.   Make no mistake, this time higher rates are on  their way in a few months.  Oil may have found an equilibrium level, around 50, bringing a limited sense of calm to the stock market.  However, at this level, the oil business is tough on prodcucers & even midstream  MLPs.  The MLP index has been stuck in a rut near 450 for 2 months.

Dow Jones Industrials


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