Tuesday, June 9, 2015

Lower markets on rate fears and the Greek debt mess

Dow lost 3, decliners over advancers almost 2-1 & NAZ sank 27.  The MLP idex was up fractionally in the 419s & the REIT index fell 2+ to the 308s.  Junk bond funds were mixed & Treasuries dropped, raising yields further to new multi month highs.  Oil climbed higher on expectations for increased demand as the driving season approaches & gold rose.

AMJ (Alerian MLP Index tracking fund)

CLN15.NYM...Crude Oil Jul 15...59.70 Up ...1.56 (2.7%)

GC.CMX..........Gold Jun 15....1,179.70 Up ....6.50 (0.6%)

3 Stocks You Should Own Right Now - Click Here!

The Greek gov has provided its creditors with 2 new, 3-page proposals outlining its fiscal goals & another one calling again for debt relief.  The creditors, unimpressed, say the new documents merely rehashed previous Greek proposals.  The submissions apparently weren’t really meant to advance the talks.  “The Greek government will continue this exchange of view with the institutions on a political level and awaits with interest their formal response,” the gov said.  Greece appears to have stopped negotiating in earnest, probably expecting the creditors to cave at the last moment.  It’s hard to say how justified those expectations are.  Austrian Finance Minister Hans Joerg Schelling said today they aren’t, because the institutions have already made so many concessions that further ones are unimaginable.  Greek bonds fell as traders failed to find a straw to grasp.

Greece Pretends to Negotiate

General Electric, a Dow stock, is about to get a more cash to spend on takeovers.  The $274B maker of jet engines & locomotives said it agreed to sell its US private-equity lending business & a chunk of bank loans to Canada Pension Plan Investment Board for about $12B.  That’s only the beginning: GE is shedding about $200B of assets under CEO Jeff Immelt’s plan to divest the bulk of GE Capital.  Immelt has said that maintaining a AA credit rating will be less important once GE is focused on its industrial businesses.  That could free up $20B in borrowing capacity.  The company could have as much as $40B available for takeovers after share repurchases & divs.  Currently, Immelt is still trying to complete the $14B purchase of most of Alstom's energy business while selling off GE Capital.  “We are going to do some acquisitions as time goes on,” the CEO said.  “These are going to be core bolt-on deals, good returns, mixture of growth and cost and take it from there.”  GE could announce $30B in financial-asset sales by the end of Jun because of heavy interest from buyers, Immelt said.  A large portion of the proceeds will go toward buybacks & an increased div.  The stock is up pennies.  If you would like to learn more about GE, click on this link:

GE’s Finance Exit Means Billions More for Takeovers

General Electric (GE)

Campbell Soup is expanding its reach in the fresh-food aisle with a deal to acquire Garden Fresh Gourmet, a maker of salsa & hummus with about $100M in annual sales.  CPB, which has been contending with stagnant sales growth for core brands like its iconic canned soups & V8 juices, will pay $231M for Garden Fresh & expects to complete the acquisition in a few weeks.  CEO Denise Morrison said that the deal is part of a broader strategy to increase the company's stake in fresh, natural & organic foods, a strategy that may involve additional acquisitions.  "We follow consumer trends which are pointing us in the direction of fresh food, organic food," Morrison said.  "We have earmarked some other areas in the [fresh-foods section] of the store that are interesting," she added.  She has emphasized the importance of consumers' growing preference for foods they deem fresher, healthier or less processed than traditional packaged foods like Campbell's canned soups & Pepperidge Farm snacks.  CPB initially jumped into packaged, fresh food in 2012 with the $1.55B acquisition of Bolthouse Farms.  Garden Fresh, founded in 1998, has expanded from niche grocery stores to a mainstream audience, & is now the best-selling brand of refrigerated salsa in the US (largely concentrated near its home in the Great Lakes region).  The company made clear that it expected the fresh division to drive sales growth, setting it up for further acquisitions, while elsewhere it would focus on cutting costs & increasing operating profit margins.  "Declaring that C-Fresh will be full-force growth implies that we will be investing in talent and resources to build that business," Morrison said.  The stock also advanced pennies.  If you would like to learn more about CPG, click on this link:

Campbell Soup to Buy Garden Fresh for $231M

Campbell Soup (CPB)

Nothing special going on in the markets.  But the Greek debt mess has everybody's attention with a dread of what lies ahead.  The next FOMC meeting is near, & interest rate hikes may come as soon as this month.  Dow remains in the red YTD with a dreary outlook going forward.

Dow Jones Industrials

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