Thursday, February 19, 2015

Mixed markets on Greek debt concerns

Dow dropped 42, decliners barely ahead of advancers & NAZ gained 11.  The MLP index sank 6 to the 444s & the REIT index fell 4 to the 339s.  Junk bond funds slid lower & Treasuries inched higher.  There was more selling in oil while gold crawled higher.

AMJ (Alerian MLP Index tracking fund)

CLH15.NYM...Crude Oil Mar 15...49.50 Down ...2.64  (5.1%)

GCH15.CMX...Gold Mar 15.....1,209.70 Up ....9.90 (0.8%)

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Germany rebuffed Greece’s request for an extension of its aid program, saying the Greek offer doesn’t meet the euro region’s conditions for continuing aid.  The Greek gov is trying to obtain bridge-financing without meeting the conditions of its existing rescue program, a German Finance Ministry Spokesman said.  The European Commission Spokesman moments earlier had said the Greek letter could be the basis for a “reasonable compromise.”  “The letter doesn’t meet the criteria agreed upon in the euro group on Monday,” he said.  “In truth, it aims at bridge financing without meeting the requirements of the program.”  With the Greek state & its banks shut out of financial markets & dependent on emergency aid to stay afloat, Prime Minister Tsipras is retreating from his pledges to end austerity as the country’s creditors tighten the financial vise.  In a letter to fellow euro member states Greek Finance Minister Varoufakis offered to work for the “successful conclusion and review” of the current financing agreement with creditors in a bid to avert a cash crunch.   Varoufakis said he wants the ECB to re-introduce a waiver allowing its debt to be used as collateral in refinancing operations as a result of the extension.  That would ease the financial restrictions that have helped wring concessions from Tsipras.

Germany Rejects Loan Request Saying Greece Must Meet Conditions

Fewer Americans than forecast filed applications for unemployment benefits last week, showing the labor market is making progress.  Jobless claims fell 21K to 283K from 304K in the prior period, according to the Labor Dept.  The forecast called for 290K.  Employers are holding on to workers amid gains in household purchases, the biggest part of the economy.  The improvement in the job market, coming off its best year for hiring since 1999, was noted by Federal Reserve policy makers at the Jan meeting as they debated when to begin raising interest rates.  The 4-week moving average dropped to 283K last week, a 3-month low, from 289K.  The 4-week average is down from the 307K in the comparable Jan period.  The number continuing to receive jobless benefits climbed 58K to 2.43M.  The unemployment rate among people eligible for benefits held at 1.8%.

Jobless Claims in U.S. Declined More Than Forecast Last Week

Wal-Mart, a Dow stock & Dividend Aristocrat, said it would spend more than $1B to increase pay for ½M US employees this year.  The increase will cover about 40% of its US workforce, but falls far short of what some labor groups have been agitating for.  It said hourly full-time & part-time workers who will earn at least $9/hour ($1.75 above the federal minimum wage) starting in Apr & current employees will earn at least $10/hour by Feb 2016.  The retailer also reported a better-than- expected Q4 profit as shoppers spent more of their savings from lower US gas prices at company's stores.  Same-store sales in the US rose 1.5%, the 2nd straight qtr of growth after 6 qtrs of flat or declining sales.  Analysts had forecast an increase of 0.7%.  However, the company cut its sales forecast for the year ending Jan 2016, citing a strong dollar.  WMT now expects sales to increase 1-2%, below its previous forecast of 2-4%.  It also forecast EPS of $4.70-$5.05 per share, below the estimate of $5.19.  EPS attributable to WMT rose to $1.53 for the qtr ended Jan 31.  Excluding items, the company had EPS of $1.58.  Total revenue rose 1.4% to $131B. Analysts had expected EPS of $1.53 on revenue of $132B.  WMT also raised its annual div to $1.96 from $1.92.  The stock fell 2.10.  If you would like to learn more about WMT, click on this link:

Walmart to Increase Wages in U.S. Stores

Wal-Mart Stores (WMT)

Stocks are not sure what to do, but the underlying news is less than favorable.  The Greek debt drama plays on.  If Germany wants to hardball with Greece, the financial markets could get ugly.  However it is likely that the ECB will work out some compromise to extend the deadline.  That has to come quickly since Greece needs bailout money by the end of next week.  WMT reported less than inspiring earnings & the next financial reports from retailers may also be drab.  But the stock market is not greatly disturbed, so far.

Dow Jones Industrials

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