Monday, March 23, 2015

Markets rise on optimism over Greak bailout

Dow climbed 34, advancers over decliners 2-1 & NAZ went up pocket change (above 5K).  The MLP index rose 1+ to the 426s (still near its 2 year lows) & the REIT index added 1+ to 349..  Junk bond funds were lower & Treasuries gained.  Oil rose as did gold.

AMJ (Alerian MLP Index tracking fund)

CLK15.NYM...Crude Oil May 15...46.04 Down ...0.53  (1.1%)

GCH15.CMX...Gold Mar 15......1,181.20 Down ...3.60  (0.3%)

3 Stocks You Should Own Right Now - Click Here!

German Chancellor Merkel is ready to address all aspects of relations with Greece when she meets with Prime Minister Tsipras, as the Greek gov braces for another payment deadline within days.  The meeting with the leader of the biggest contributor to Greece’s stalled €240B bailout is a precursor to make-or-break decisions Tsipras faces as his country’s financial predicament becomes ever more parlous.  His gov needs to spell out economic measures it plans to undertake as early as this week to unlock long-withheld aid.  Locked out of capital markets & with its coffers running dry, Greece is scraping the barrel to pay about €1.5B ($1.6B) in pensions & salaries by the end of this week.  Amid signs that Greece could run out of money by early next month, euro leaders pressed Tsipras last week to make good on a Feb accord & ‘‘present a full list of specific reforms’’ in the coming days before any further aid can be disbursed.  As Tsipras prepared for the meeting, he wrote to Merkel that it will be ‘‘impossible’’ to service imminent debt obligations without short-term financial aid.  The meeting gives both leaders a chance to tone down emotions flaring in both countries, including barbs by German politicians against Greek Finance Minister Varoufakis & calls in Greece to reopen talks on reparations for the Nazi occupation during World War II.  A Greek gov official said the terms attached to the country’s stalled bailout aren’t part of the official agenda of the talks today.  The talks ‘‘will not take place under the pressure of negotiations” Tsipras said.  Merkel says her “political goal” is to keep the euro area intact & urged Tsipras to do his part, saying she won’t negotiate with him on her own.

Greece Faces Decisive Week With Tsipras Visiting Merkel

Sales of previously owned homes fell short of a 5M annual rate in Feb for a 2nd month, showing an industry struggling to gain traction amid rising prices & a lack of inventory.  Closings, which usually take place a month or 2 after a contract is signed, rose 1.2% to a 4.88M annual rate, the National Association of Realtors reported.  The median value of a house climbed 7.5% from the same month last year while the number of properties on the market was little changed.  Prices that are rising faster than incomes, still-tight borrowing standards & a lack of properties from which to choose are preventing Americans from taking advantage of mortgage rates that remain near historical lows.  Further labor-market gains & a loosening of credit rules might help offset these hurdles as the busiest time of year for real-estate agents approaches.  The median price of an existing home rose to $202K from $188K in Feb 2014.  Price gains of this size at this point of the housing rebound “are unhealthy for the market,” Lawrence Yun, NAR chief economist, said.  Housing starts plummeted in Feb by the most since 2011 as plunging temperatures & snow limited construction.  Work began on 897K houses (annualized rate), down 17% from Jan & the fewest in a year, slower than the most pessimistic projection.  The average 30-year, fixed-rate mortgage dropped to 3.78% last week, close to the 3.31% rate in Nov 2012 that was the lowest in data back to 1971.  Existing home sales, which are tallied when purchase contracts close, account for more than 90% of the residential market.  A timelier barometer is new-home purchases, because they are tabulated earlier in the process, when deals are signed.  They constitute about 7% of the market.

Sales of Existing U.S. Homes Fall Short of 5 Million Pace

IBM, a Dow stock, will share technology with Chinese firms & will actively help build China's industry, CEO Virginia Rometty said as she set out a strategy for one of the foreign firms hardest hit by China's shifting technology policies.  IBM must help China build its IT industry rather than viewing the country solely as a sales destination or manufacturing base, Rometty said at the China Development Forum.  "If you're a country, as China is, of 1.3 billion people you would want an IT industry as well," she said.  "I think some firms find that perhaps frightening. We, though, at IBM ... find that to be a great opportunity."  Rometty's remarks were among the clearest acknowledgements to date by a high-ranking foreign technology executive that companies must adopt a different tack if they are to continue in China amid growing political pressure.  A number of US technology companies operating in China are forming alliances with domestic operators, hoping a local partner will make it easier to operate in the increasingly tough environment for foreign businesses.  China has been pushing for the use of more Chinese & less foreign-made technology, to grow its own tech sector.  IBM's sales in China have stabilized after a sharp drop that began in Q3-2013.  The company reported a 1% slide in revenue in China during Q4-2014, compared with the prior year.  IBM's new approach allows Chinese companies to build everything from semiconductor chips & servers based on IBM architecture, to the software that runs on those machines.  It had already announced a series of partnerships with Chinese vendors & now packages its database software with products from Inspur & has also struck agreements with Youyou, software firm.  The stock rose 1.58.  If you would like to learn more about IBM, click on this link:

Strategy Shift: IBM to Share Technology with China

International Business Machines (IBM)

Stocks are advancing as the popular averages are hovering near record highs.  There is no dramatic new news to support a rising market, but hopes are high for another Greek bailout.  Tough talk about Greece needing reforms will be followed by approval for the bailout.  Dow is up about 350 YTD, short of spectacular although a nice gain following the market slide in Jan.

Dow Jones Industrials

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