Tuesday, February 10, 2015

Markets rise on hopes for another Greek bailout

Dow shot up 139, advancers over decliners a relatively modest 4-3 & NAZ gained 61.  The MLP index fell a fraction in the 449s & the REIT index was up 1+ to the 341s.  Junk bond funds fluctuated & Treasuries continued to be sold.  Oil sank 5% to just above 50 & gold saw selling again.

AMJ (Alerian MLP Index tracking fund)

3 Stocks You Should Own Right Now - Click Here!

CLH15.NYM....Crude Oil Mar 15....50.01 Down ...2.85  (5.4%)

Live 24 hours gold chart [Kitco Inc.]

Germany & Greece drew battle lines ahead of an emergency meeting of official creditors tomorrow, setting the stage for a clash.  German Finance Minister Schaeuble doused expectations of a positive outcome for Greece at the meeting, saying there are no plans to discuss a new accord or give the country more time.  His Greek counterpart Yanis Varoufakis told parliament the country wants to move away from its “disastrous bailout agreement,” adding that he was aware that that puts it at loggerheads with its euro-area partners.  “If you are not willing to even contemplate the prospect of a rupture, then you don’t really negotiate,” Varoufakis said.  The discord risks roiling Greek markets again after being buoyed by optimism that there might be room to move toward an agreement.  Speaking to reporters after a meeting of finance chiefs from the G-20, Schaeuble said “it’s over” if Greece doesn’t want the final tranche of the current aid program.  Greece’s creditors also “can’t negotiate about something new,” Schaeuble added.  Any accord would require an easing of Germany’s stance in the standoff between Greece & its creditors over conditions attached to its €240B ($272B) lifeline.  An impasse risks leaving Greece without funding as of the end of this month, when its current bailout expires, & may put Europe’s most-indebted state’s euro membership in danger.  Greece is pushing for a successor program to its current bailout, which will be focused on structural overhauls rather than fiscal measures.  Greece’s new anti-bailout gov laid out a lengthy list of policy actions, including a gradual increase in the minimum wage & a boost to the threshold of tax-exempt income.  The measures would breach the terms of the country’s emergency loans agreement with the euro area & the IMF.  Schaeuble said euro region finance ministers meeting tomorrow won’t negotiate a new program for the cash-strapped country as a program is already in place & was arrived at after “arduous” negotiations.  He also said media reports that the Commission will give Greece 6 more months to reach an aid deal “has to be wrong” because he’s not aware of such a plan & the commission isn’t in charge of making such decisions.

Germany Toughens Tone With Greece Before EU Meetings

Ukraine asked Russia last month to restructure its $3B bailout bond, a request the gov in Moscow isn’t ready to meet, according to Finance Minister Anton Siluanov.  “They said that they are turning to all creditors with a proposal on restructuring,” Siluanov said.  “On the one hand, the money is everywhere included in our plans, in the balance of payments and the budget. On the other, we aren’t in a position to give up so easily on our commitments. The return of our resources, which were once invested in another country’s bonds, is very important.”  The Eurobonds Russia bought from Ukraine were the first installment of a planned $15B rescue negotiated by Russian pres Putin & former Ukrainian pres Yanukovych in Dec 2013.  Russia halted the bailout after Yanukovych was overthrown one year ago.  Ukraine is in talks with the IMF to expand a $17B bailout & avert a default, even as its military battles with the separatists in the country’s east.  Putin has said Ukraine should repay the loan because Russia needs the money for the gov’s plan to fight an economic crisis.  While Ukraine has asked to restructure the debt, officials in Kiev have assured Russia that their budget has enough for repayment, according to Siluanov.  Ukraine plans to approach holders of its sovereign bonds to try to negotiate more favorable borrowing terms, the Finance Minister said 3 weeks ago.  The country needs $15B on top of the previous IMF bailout to stay afloat, according to the EU.  “Russia’s position is the same as it’s been in the past: We now have the right to demand early repayment, because covenants have been breached,” Siluanov said.  “We have such a right, but aren’t using it for now. On the other hand, of course, we expect and await the redemption of all these obligations by Ukraine this year in December.”

Russia Isn’t Ready to Restructure Ukraine’s $3 Billion Debt Due December

Coca-Cola, a Dow stock & Dividend Aristocrat, after years of counting on overseas markets to fuel its expansion, is once gain looking homeward for growth.  In Q4 the company’s North American sales rose 2%, the biggest domestic gain in 2 years.  That outshined the performance of intl divisions, where sluggish local economies & a strong dollar eroded sales.  KO is benefiting from a resilient US consumer who’s willing to pay higher prices than many overseas customers.  Juice & tea sales also are propelling gains in North America.  EPS was 44¢, excluding some items, topping the 42¢ estimated by analysts.  While revenue dropped 1.5% to $10.9B, that also exceeded projections of $10.8B.  CEO Muhtar Kent also has been trimming expenses & selling more premium-priced beverages.  He aims to pare $3B in annual costs as part of an effort that will eliminate jobs & boost productivity.  Meanwhile, Kent has to overcome mounting concerns over obesity & artificial sweeteners.  Still, that challenge is less daunting in the short term than overseas woes.  Like many US businesses with a global footprint, the strong dollar has hurt intl sales.  Currency fluctuations will continue to weigh on results in the first quarter & the remainder of 2015, the company said.  Currency will crimp revenue by 5 percentage points & profit by 7-8 points in the year.  Holding currency constant, earnings growth will be in the mid-single digits, similar to the rate in 2014, KO said.  In Q4, every one of the company’s regional divisions beside North America saw sales decline.  Asia posted the worst drop, at 10%, while Europe dipped 2%.  “European markets have a difficult environment that they’re operating in,” CFO Kathy Waller said.  “Emerging markets are seeing the same kind of issues with the macroeconomic environment.”  Leaving out the currency impact, the biggest revenue growth came from Latin America, with a 14% increase, followed by 5% gains in North America & Africa-Eurasia.  The Asia-Pacific region still lagged behind, with a 1% sales decline.  There remains plenty of room for growth worldwide, Kent said.  “The average household globally consumes 26 beverages per day, & of these 26 beverages, only 1.4 are Coca-Cola company brands,” he said.  The opportunity is “immense.”  The stock rose 1.17.  If you wold like to learn more about KO, click on this link:

Coca-Cola Looks Homeward Again as Domestic Sales Shine

Coca-Cola (KO)

Today's rally may be another example of buy on the rumor & sell on the news.  To me, the oucome of the meeting in Europe tomorrow looks glum.  The new gov in Greece does not want to take tough actions for it to get an extension on its loans.  But there is a chance it might get another extension although it looks like this time EU will bite the bullet & hang tough.  The Ukraine mess is in the background & that does not show signs of ending soon.  But optimists buying brought Dow barely in the black YTD.

Dow Jones Industrials

No comments: