Friday, June 12, 2015

Markets fall, it's all about Greece

Dow dropped 140 (closing near the lows), decliners over advancers 2-1 & NAZ was off 31.  The MLP index lost a fraction to the 416s & the REIT index was off fractionally to the 311s.  Junk bond funds were lower on worries of growing defaults & Treasuries slid lower.  Oil slipped lower with Saudis ready to increase production & gold was flattish.

AMJ (Alerian MLP Index tracking fund)

CLN15.NYM....Crude Oil Jul 15....60.25 Down ...0.52  (0.9%)

Live 24 hours gold chart [Kitco Inc.]

Greece's gov is ready to submit counter-proposals to bridge differences with its creditors & will restart negotiations in Brussels tomorrow, a gov official said.  The comments came after the IMF withdrew its team of experts from talks on yesterday over a failure to break a stalemate in talks for a cash-for-reforms deal.  "The Greek government believes we are closer than ever to a deal because we are only 0.25 percentage points apart on the primary surplus target," the official said.  The official called on Europe to show "political will", saying it was "unimaginable" that Europe could head for a split over "such a small difference" as well as opposition to restoring of collective pay bargaining rights for Greek workers.

Greece to Restart Talks in Brussels

In a dramatic defeat, Obama's trade agenda ran aground in the House as Democrats banded together in opposition despite a personal plea from the president.  In a 302-126 vote, the House killed a worker aid bill that was tied to his main agenda item, legislation that would give Obama "fast-track" authority to negotiate trade deals.  Without it, the trade push withers for now.  The vote marked a stunning blow for the pres at the hands of his own party, with Nancy Pelosi & labor unions helping drive the stake into the legislation in the end.   Minutes before the vote, Pelosi took to the floor to appeal for a "better deal" for American workers.  The key vote was on the Trade Adjustment Assistance (TAA) bill, a program that retrains workers displaced by trade.  The bill was originally put on the table as a sweetener to help get Dems on board & ultimately move the "fast-track" bill.  But Dems are so opposed to that legislation, they voted down the sweetener.  The biggest defection for Obama came when Pelosi joined the rebellion in opposing TAA.  Though she supports the worker aid, she said voting against it was the only way to "slow down the fast track."  She said the main trade bill would be "stuck in the station" without TAA.  House Rep leaders, who have been Obama's biggest supporters on the trade issue, said after the vote they could try again next week.  The vote came after Obama paid a rare Capitol Hill visit, meeting with Dems in a bid to ease their concerns.  Obama was trying to calm the rebellion in the ranks on an issue that has created unusual alliances, with congressional Rep leaders his biggest defenders on trade, & rank-and-file Dems his biggest foes.  The "fast-track" power he seeks would give the pres the authority to negotiate trade deals that Congress could approve or reject, but not amend.  Obama hoped to use the authority to complete a sweeping pact with 11 other Pacific Rim nations which would constitute the economic centerpiece of his 2nd term.   Obama says such a pact with Japan, Mexico, Singapore & other nations constituting 40% of the global economy would open up critical new markets for American products.

Key Trade Vote Fails in House, Deals Blow to Obama

FedEx will book a $2.2B pretax charge for the qtr that ended in May as the company changes to a mark-to-market pension accounting method.  The accounting method will allow the company to immediately recognize actuarial gains & losses, making its operating performance easier to understand and more transparent.  "Adopting the mark-to-market approach will align our accounting to provide greater transparency by removing certain legacy pension costs from segment operating results and recognizing them in a year-end adjustment," said CFO Alan B. Graf Jr.  Net of tax, the charge is valued at $1.4B, or $4.88 per share.  Before the announcement, analysts expected FDX to post $2.68 in adjusted EPS in fiscal Q4, ending in May.  FDX said the plan won't impact its employees' pension benefits or the company's cash flows.  The stock fell 1.35.  If you would like to learn more about FDX, click on this link:

FedEx will Take $2.2B Pension Accounting Charge

FedEx (FDX)

This has been another flat line week with Dow clinging to the 18K trend line.  Dow is up all of 75 YTD (up 49 for the week).  Refinancing the Greek debts is now front & center.  The outlook is grim.  More talks over the weekend will only produce a lot of hot air.  The breakout from the trend-line could be to the downside.

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1 comment:

prudent said...
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