Tuesday, April 21, 2015

Markets fluctuate on earnings and acquisition activity

Dow fell 85 (closing near the lows), advancers barely ahead of decliners & NAZ added 19 (but off the highs) on acquisition news (see below).  The MLP index lost 1+ to the 442s & the REIT index was up fractionally in the 329s.  Junk bond funds rose & Treasuries sold off.  Oil pulled back to the 56s (still up more than 10 from recent lows) & gold inched over 1200.

AMJ (Alerian MLP Index tracking fund)

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CLK15.NYM....Crude Oil May 15....55.28 Down ...1.10  (2.0%)

Live 24 hours gold chart [Kitco Inc.]

Greek officials expect an order that local govs transfer funds to the central bank will keep the country afloat until the end of May as European policy makers turn up the heat.  Municipalities’ reserves are estimated at about €1½ ($1.6B).  Greek officials ruled out also seizing pension funds & the cash reserves of state companies because there wasn’t a need & the move would unnecessarily fuel anxiety.  With bailout talks stalled, access to cash is becoming increasingly critical.  Resistance at the ECB to further aiding the country’s stricken lenders is growing & the ECB is studying measures to rein in emergency funding for Greek banks.  “A bigger effort by the Greek side is needed so that we can close the topic in the interest of both sides,” European Commission President Jean-Claude Juncker said.  “The intensity of the talks has increased in the past 4-5 days but not to the extent that they are ripe enough to come to a quick conclusion.”  Although a final accord is unlikely at a meeting of euro-area finance ministers on Fri, another extraordinary meeting could be called at the end of Apr if needed.  Greek bank bonds continue to fall.  Credit-default swaps signal an 87% probability of default, up from 84% yesterday.  The country is facing about €1B in IMF loan repayments in the first 2 weeks of May & while it hasn’t drawn any funds from its bailout loan since Aug 2014, the gov said it won’t miss any of those payments.

Greece Buys Six Weeks’ Space With Transfer of City Funds

Payrolls dropped in 31 states in Mar, led by a slump in energy producers such as Texas & Oklahoma.  The unemployment rate fell in 23.  Payrolls in Texas decreased 25K, its first decline since Sep 2010 & the biggest since 2009, according to the Labor Dept.  Oklahoma followed with 13K fewer jobs & employment in Pennsylvania fell 12K.  The plunge in fuel prices has caused oil drillers & miners to cut workforces, prompting reductions among industries in the region.  Rough winter weather at the start of the month could have led to job losses in other parts of the country.  The number of states showing a drop in employment last month was the highest since Sep 2010.  The decrease in payrolls in Oklahoma was its worst performance since Apr 2009.  Pennsylvania, which is the 2nd-largest producer of natural gas in the US, had its biggest decline in almost 3 years.  Among the 18 states showing gains, California led with a 39K increase & Florida followed with a 30K advance.  A string of disappointing data in recent weeks is among reasons economists forecast Fed policy makers will be in no rush to raise their benchmark interest rate.  Most analysts project the central bank will increase the rate in Sep rather than in Jun.  The strength of the job market & the economy remain on the radar screen of Fed officials.

March U.S. Job Losses Widespread, Led by Slump in Energy

Harley-Davidson fell the most in more than 2 years after trimming its annual shipment outlook because the company doesn’t plan to match competitors’ steep discounts.  The forecast for motorcycle shipments worldwide is 276-281K, down from its earlier projection of 282-287K, according to the company.  Its retail sales in this year’s initial 3 months fell 1.3% from a year earlier.  “Given the first-quarter retail results and ongoing, increased levels of aggressive competitive discounting in the U.S. which we expect will continue, we are taking the precautionary step of lowering our estimated growth rate for full-year motorcycle shipments in order to manage supply in line with demand and protect the premium nature of our brand,” CEO Keith Wandell said.  Rivals from outside the US cut into US sales in its home market, capitalizing on a strong dollar to slash prices without hurting margins.  The company’s US market share fell to 51.3% from 56% a year earlier, CFO John Olin said.  Retail sales volume in the qtr was down 0.7% in the US, 1.1% in the Asia-Pacific region & 5.6% in Europe & the Middle East.  Those sales rose 0.3% in Latin America & 5.7% in Canada.  Q1 EPS was $1.27 versus $1.21 last year & topping the $1.23 estimate.  Revenue from motorcycles & related products declined 3.9% to $1.51B, trailing the $1.58B estimate.  The stock slumped 6.05 (10%).  If you would like to learn more about HOG, click on this link:

Harley-Davidson Falls After Cutting Annual Shipment Forecast

Harley-Davidson (HOG)

Generic drug giant Teva (TEVA) offered to buy fellow drugmaker Mylan (MYGN) for $40B in cash & stock despite getting a cold shoulder from MYGN & the threat of scrutiny by antitrust regulators.  MYGN slid 3% & while TEVA gained 1.  This news brought buyers to NAZ stocks while Dow stocks languished.  Earnings are bland at best & a looming default by Greece is hanging over the stock market.  Dow is back under 18K & it first closed above 18K almost 4 months ago.

Dow Jones Industrials


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