Tuesday, February 3, 2015

Markets soar as oil rises and strong January car sales

Dow jumped another 305 closing at the highs, advancers over decliners better than 3-1 & NAZ gained 51.  The MLP index went up 6+ to the 455s & the REIT index added 2+ to the 349s.  Junk bond funds rose & Treasuries sold off.  Oil surged to the 52s (after being in the 45s just 4 days ago) & gold slid back in the mid 1200s with risk averse no longer in favor.

AMJ (Alerian MLP Index tracking fund)

CLH15.NYM....Crude Oil Mar 15....52.67 Up ...3.10 (6.3%)

  Live 24 hours gold chart [Kitco Inc.]

Greece plans to auction €625M ($717M) of 6-month securities.  Non-competitive & 2nd-day bids would normally raise the amount sold to €1B, which would refinance €947B due in redemptions on Fri.  About €15B of Greek debt consists of short-term bills, which the country continuously rolls over.  This covers financing needs while its bailout review remains stalled, & no aid disbursements are being made from the euro area & the IMF.  Even during the region’s sovereign debt crisis, when Greece carried out the biggest-ever bond restructuring, the nation never canceled a bill auction & continued to roll over the securities.  A previous auction of 6-month bills one month ago drew an average yield of 2.30%, up from 2.15% in the prior month.  Greece’s 3-year notes rallied today, rising for the first time in 7 days, after Greek Finance Minister Yanis Varoufakis outlined plans to swap some debt owned by the ECB & the European Financial Stability Facility for new securities.  Varoufakis indicated that the move would allow Greece to avoid imposing a formal reduction in the amount owed to creditors, according to a leaker.  The ECB Supervisory Board, said the ECB has told Greek lenders that they need to be cautious in their liquidity management.  “They should not take measures that could endanger their liquidity positions, the management of their liquidity situation,” it said.  “They have to invest their treasury liquidity in highly liquid assets, in assets that can be accepted as collateral. That’s a basic recommendation from a supervisor in such circumstances.”

Greece’s Bill Sale Marks Return to Debt Market Amid Negotiations

The death toll of Ukraine’s separatist conflict jumped at end Jan, the UN said, as civilians fled a battle for a crossroad town & the gov & rebels moved to pour more weapons & men into the fight.  Germany said the EU may slap new sanctions on Russia if the crisis worsens, while the town of Debaltseve, a key railway & road crossing between the cities of Donetsk & Luhansk, remained under fire from separatists, according to an Ukrainian spokesman. The region of Donetsk is continuing efforts to evacuate people.  As attempts to reestablish a truce failed last week, a separatist leader ordered a draft to boost troop numbers by tens of thousands.  More than 5K have died & 12K wounded in the conflict since mid-Apr, including more than 200 civilians killed in the 3 weeks to Feb 1 according to the UN.  Ukraine “hopes” to conclude talks with the IMF within days on a 3-4 year aid program.  Ukraine is trying to extend a $17M IMF-led bailout, & its “additional, incremental” needs are about $15B. Russian pres Putin said Ukraine should repay a $3B loan from Russia because his gov needs the funds to fight an economic crisis.  While the bond matures in Dec, Putin’s comments shouldn’t be taken as a demand for early repayment,  a spokesman said.

Ukraine Conflict Toll Rises as Warring Parties Muster Forces

Major automakers reported their best Jan for US vehicles sales in at least 7 years led by General Motors (GM) as cheap gasoline & falling unemployment also buoyed sales at the automakers.  Demand for pickups & sport-utility vehicles surged, helping drive total sales up 18% at GM % 16% at Ford (F), whose F-Series pickup line had its best Jan since 2004.  At GM, sales jumped 29% for the GMC truck brand & 20% for the Chevrolet brand.  Job growth & falling fuel prices have improved consumer confidence.  Readily available credit & the aging vehicle fleet are projected to lead to a record 6th straight year of increases.  The top 6 automakers all increased sales by at least 12% from a year earlier, when shoppers stayed away from showrooms amid the coldest Jan in 2 decades.  The annualized selling rate, adjusted for seasonal trends, probably rose to 16.5M cars & light trucks, the fastest Jan pace in 9 years, from a 15.3M pace a year earlier.  Honda & Nissan reported their best Jan sales ever in the US, as did Daimler Mercedes-Benz & Volkswagen.  GM, the largest U.S. automaker, was projected to increase sales by 19%, while #2 Ford’s deliveries were seen rising 13%.  Toyota (TM) deliveries increased 16%, topping the estimate for a 13% gain.  Shares of the automakers rose 2-3%.  All of Fiat Chrysler’s (FCAU) brands gained led by the Jeep sport-utility line’s 23% rise.  Ram pickup & work-van sales rose 21%.  FCAU projected a selling rate of 17M, including medium- & heavy-duty trucks that typically make up at least 200K sales a year.  GM estimated that the selling rate for cars & light trucks will be 16.6M.  Nissan’s 15% increase topped estimates for an 11% rise.  Honda’s sales rose 12%, trailing estimates for a 13% increase.

Cars Are Back: Automakers Report Best January in 7 Years

Following a dreary Jan, stocks started Feb with enthusiasm.  Dow shot up more than 600 from its lows yesterday.  This rally is impressive & was propelled by the rally in oil   Car sales were excellent, although that was to be expected.  There is a ray of hope for the Greek situation getting better, although that remains far form certain considering the gov is not interested in balancing the budget.  Ukraine & the MidEast are heating up.  Fighting in Ukraine drags on & ISIS released a video shoing, what it said, was the captured Jordanian pilot brutally murdered.  That conflict is going from bad to worse, not good for the markets.  The stock market is no longer oversold & the Dow is still in the red YTD.

Dow Jones Industrials

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