Wednesday, April 1, 2015

Markets decline on worries over Q1 GDP growth

Dow fell 77, decliners modestly ahead of advancers & NAZ was off 20.  The MLP index slid pocket change in the 428s & the REIT index was fractonally lower to the 337s.  Junk bond funds were mixed & Treasuries remained strong.  Oil vaulted, going over 50, on a smaller than expected stock build, & gold climbed over 1200 again.

AMJ (Alerian MLP Index tracking fund)

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CLK15.NYM....Crude Oil May 15....50.27 Up ...2.67 (5.6%)

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Greece & euro-area authorities pledged to press ahead with efforts to release aid payments after progress in recent days.  2 euro-area officials agreed that talks were making progress, recognizing the advances by Greece while insisting that more work needs to be done to reach a conclusion of this part of rescue.  To tap rescue funds, Greece must win approval from the negotiating trio of the IMF, the European Commission & the ECB.  If Prime Minister Tsipras can strike a deal with the creditors’ group, it will pave the way for euro-area finance ministers to consider making a payment.  Finance deputies stand ready to make recommendations to their ministers as soon as there is a deal between the Greek gov & the institutions.  The deputies used today’s conference call to take stock of the negotiations & are set to meet next week.  Tsipras has resisted demands for more austerity as he seeks to persuade the euro area to release more aid.  To keep from running out of cash in the meantime, Greece has turned to ECB loans to its banking sector to prevent a financial collapse.  The Greek gov has lobbied the central bank’s regulatory arm unsuccessfully to be allowed to sell more short-term debt to the country’s banks.  Greece also has lost its waiver that allowed the ECB to accept the country’s junk-rated debt as collateral.  ECB pres Mario Draghi said that the waiver was an “exceptional and temporary measure” granted in 2010, on the condition that Greece comply with its European & IMF rescue requirements.  Last week, he repeated that the ECB can’t help Greece with its debt load.  “The ECB cannot engage in a restructuring of sovereign debt held by the Eurosystem as this would amount to monetary financing, which is prohibited,” Draghi said.  So far Greece has sought to meet all of its intl obligations.  There is “no possibility” that Greece will miss a payment to the IMF on Apr 9, the Greek gov spokesman said.  Greece will overhaul the property tax system for 2015 as it tries to avoid blowing a hole in its budget.  The gov will cover lower revenue through spending cuts elsewhere, the official said.

Greece Said to Make Progress on Euro-Area Officials’ Call

Wal-Mart, a Dow stock & Dividend Aristocrat, is focusing on expanding its grocery business & improving the experience of its workers’, among other long-term plans, said US pres & CEO Greg Foran.  He outlined the company’s strategic plans during a meeting with analysts.  Customer feedback from customers has been “very, very positive,” Foran said.  Meanwhile, the company plans to work with its employees on improving scheduling & benefits programs, in addition to raising wages for entry-level employees, a move announced earlier this year.  The company announced in Feb that it would raise all staff wages to $9 per hour by Apr & to $10 per hour by next Feb.  “We’re investing more in our associates through better pay and improved career paths,” Foran added.  Foran said he wouldn’t discount initiating a loyalty program at WMT, something the company hasn’t done, but that the best way to retain customers is to offer the “right price” in the first place.  The stock fell 1.54.  If you would like to learn more about WMT, click on this link:

Wal-Mart Looking to Grow Grocery Unit: U.S. CEO

Wal-Mart (WMT)

Sears Holdings formed an REIT that will acquire about 254 of the retailer’s properties, generating more than $2.5B in proceeds for the money-losing department store chain.  The REIT, Seritage Growth Properties, will lease the Sears & Kmart locations back to the retailer, SHLD said.  Seritage will fund the purchase with debt & proceeds from a rights offering that’s expected to close by the end of Q2.  The deal marks one of the more dramatic moves CEO Eddie Lampert has made to reshape the company after more than 3 years of losses.  Lampert has sold & spun off assets such as the Sears Hometown & Outlet Stores chain & the Lands’ End clothing brand while working to transform Sears into a leaner retailer focused on generating sales online & from loyalty-program members.  SHLD has previously tried to squeeze more value out of its real estate holdings by selling locations, leasing space to other retailers & developing properties, & investors had long speculated that Lampert ultimately would form a REIT.  The retailer said in a separate statement that it also will form a $330M venture with General Growth Properties (GGP) & contribute 12 properties at the landlord’s malls as part of the deal.  General Growth will contribute $165M in cash to the venture.  “Sears Holdings is an asset-rich enterprise with multiple levers to generate financial flexibility, while creating shareholder value,” Lampert said.  The retailer will lease back the stores it contributed.  SHLD also is getting $165M in cash from the deal, along with its 50% stake in the venture, which it said will provide opportunities to create more value by redeveloping & re-leasing as much as half of each property.  SHLD stock slid a nickel.  If you would like to learn more about SHLD, click on this link:

Sears Forms REIT to Raise $2.5 Billion in Cash Amid Losses

Sears Holdings (SHLD)

The jobs & factory production reports this AM were too much for the bulls to overcome.  Weak economic data did not inspire buying in the new month.  Earnings are being revised downward between this negative word & effects from the harsh winter.  But on the other hand, this may give Janet more reason to extend low interest rates.  It is widely expected the first increase will come by Jun.  Dow is down 125 YTD.

Dow Jones Industrials

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