Tuesday, February 10, 2015

Mixed markets, awaiting Greek debt refinancing

Dow rose 33, decliners over advancers 3-2 & NAZ added 20.  The MLP index dropped 4+ to the 445s & the REIT index was of 1+ to the 338s.  Junk bond funds hardly budged & Treasuries were about even following recent selling.  Oil retreated on a forecast for higher inventories & gold slid lower in the 1200s.

AMJ (Alerian MLP Index tracking fund)

CLH15.NYM...Crude Oil Mar 15...51.91 Down ....0.95  (1.8%)

GCG15.CMX...Gold Feb 15......1,232.10 Down ...8.70  (0.7%)

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Greece offered compromises ahead of an emergency meeting with its official creditors tomorrow as German Chancellor Merkel remained unyielding over terms of the country’s bailout conditions.  Greek Finance Minister Varoufakis told lawmakers that the gov intends to neither tear up the existing bailout agreement, nor allow the budget to be derailed.  He said Greece will implement about 70% of reforms already included in the current bailout accord.  Greek gov bonds rose for the first time in 5 days on optimism there might be room to move toward an agreement that will help ensure the nation isn’t left short of funds.  Any accord, however, would require an easing of Germany’s stance in the standoff between Greece & its creditors over conditions attached to its €240B lifeline.  The European Commission denied reports it will present a compromise proposal at the meeting tomorrow, saying “very intense contacts are ongoing between” Commission pres Juncker, Prime Minister Tsipras & others, & that the plan being worked on is to keep Greece in the euro area.  Expectations are “low” for a final pact this week, the commission said.  Greece sought to drum up support for a €10B ($11.3B) bridge plan ahead of the euro-area finance ministers’ meeting tomorrow.  The country is seeking to stave off a funding crunch, while also buying time to push creditors to ease some austerity demands.  Varoufakis’s proposal will ask for an €8B increase in the stock of Treasury Bills the country is allowed.  He will also seek the disbursement of €1.9B of profits that euro area-central banks made on their Greek bonds holdings.  German political leaders have said they will not extend more assistance to Greece without strings attached.  Merkel said on Mon that the existing aid programs are the basis for Greek talks.

Greece Offers Debt-Talks Compromise

Job openings in the US rose to the highest level since 2001 as employers faced improving demand for their goods & services.  The number of positions waiting to be filled increased by 181K to 5.03M in Dec from a revised 4.85M the month before, according to the Labor Dept.  The pace of hiring increased.  Employment has accelerated in the past year, helping drive confidence & fueling sales.  Continued strength in hiring will probably help spur a pickup in wage growth, which has been slow to materialize throughout the recovery.  The forecast projected there would be 4.98M openings, little changed from a previously reported 4.97M the month before.  The Job Openings & Labor Turnover Survey, or JOLTS, adds context to monthly payrolls figures by measuring dynamics such as resignations, help-wanted ads & the pace of hiring.  Although it lags the Labor Dept’s other jobs data by a month, the FOMC follows the report as a measure of labor-market tightness & worker confidence.

There Are Now More Than Five Million Job Openings in America

The big question is when will the Federal; Reserve  raise rates. Those guessing games have caused wild gyrations in the market, particularly as the employment situation has been improving & savers are clearly suffering with interest rates below the rate of inflation.  Dallas Federal Reserve Bank (FED) pres Richard Fisher said the central bank had gone "too far" in its stimulus efforts.  He was straight forward in criticizing the FED for taking too long to exit the extraordinary period of zero interest rates & multi trillion dollar portfolios, & predicted that the FED will raise rates this year.  He wouldn’t get more specific than that, but his prediction flies in the face of suggestions by others who have said it would be a mistake for the US to raise rates while the dollar was so strong; a rate hike would boost the dollar even higher.  While Fisher recognized that a strong dollar was hurting exports, he suggested that getting interest rates back to normal was of critical importance right now in our economic recovery. 

Fed's Fisher: Central Bank Went Too Far

The stock averages are a little higher but the breadth is negative.  The euro meeting tomorrow which will decide what to do about Greek debt is weighing on the markets.  Dow remains in the red YTD while traders twiddle their thumbs.  The decline in oil prices could bring an end to its almost 2 week rally.  The current price remains unsatisfactory for those in the business.

Dow Jones Industrials

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