Thursday, June 11, 2015

Markets pare gains after growing Greek debt concerns

Dow went up 38 (well off the highs), advancers over decliners 3-2 & NAZ gained 5.  The MLP index lost a fraction in the 417s, near its multi year low, & the REIT index added 1+ to the 312s.  Junk bond funds were mixed to higher & Treasuries advanced, taking the yield on the 10 year Treasury below 2.4%.  Oil slipped below 61 & gold also sold off.

AMJ (Alerian MLP Index trackin fund)

CLN15.NYM....Crude Oil Jul 15....60.83 Down ...0.60  (1.0%)

Live 24 hours gold chart [Kitco Inc.]

US household wealth climbed in Q1 as home values increased & stock prices continued to advance.  Net worth for households & non-profit groups increased by $1.63T, or 2% from the prior qtr, to $84.9T, the Federal Reserve said.  Gains in stock portfolios & higher property values helped fortify household balance sheets during Q1 even as the broader economy stumbled.  Sustained progress in the labor market that is starting to spark faster wage growth will give American consumers the wherewithal to boost spending.  The value of financial assets owned by American households & non-profit groups, including stocks & pension-fund holdings, increased $1.07T.  The S&P 500 Index climbed 0.4% in Q1 & is up 1.8% in Q2 thru yesterday.  Household real-estate assets climbed $472.5B.  Owners’ equity as a share of total household real-estate holdings increased to 55.6% from 54.6% in the previous qtr.  The rise in household balance sheets may be starting to translate to stronger consumer spending.  Retail purchases climbed 1.2% in May with a broad-based gain, 11 of 13 major categories showed increases.  Household debt increased at a 2.2% annual rate.  Mortgage borrowing rose at a 0.4% pace.  Other forms of consumer credit, including auto & student loans, climbed at a 7% pace.  Persistent job gains might help Americans feel wealthy enough to spend more.  Wage growth also has begun to show signs of life.  Average pay for all civilian workers climbed 4.2% in Q1 from the same period in 2014 to $22.88 an hour, Labor Department figures showed.  That compares with a 4% year-over-year gain in Q4 & is the strongest since 2006.  Average hourly earnings reported by the Labor Dept accelerated in May to a 2.3% year-over-year pace, the fastest since Aug 2013.  Total non-financial debt increased at a 2.8% annual pace.  Federal gov obligations fell 0.4%, while business borrowing increased 6.6%.  State & local gov debt advanced at a 4.8% pace.

Household Worth in U.S. Rose by $1.63 Trillion in First Quarter

Amazon faces a probe into its e-book contracts with publishers as the EU Antitrust Commissioner Margrethe Vestager added to her growing list of fights with US technology companies.  EU regulators said the world’s biggest online retailer may be squeezing out rival distributors of e-books by insisting that publishers can’t give them better terms.  “We’re not actually targeting U.S. companies -- we don’t have a geographic bias,” Vestager said.  “This just reflects that there are many strong companies in the U.S. that influence the digital market elsewhere.”  The e-books probe is its latest clash with the EU after it was embroiled in an investigation into tax loopholes for multinationals.  The EU’s antitrust watchdog said the company includes clauses in its contracts that “require publishers to inform Amazon about more favorable or alternative terms offered to Amazon’s competitors” & to “ensure that Amazon is offered terms at least as good as those for its competitors.”  AMZN, now the largest distributor of e-books in Europe, helped pioneer the market with the introduction of the Kindle device in 2007.  “Amazon is confident that our agreements with publishers are legal and in the best interests of readers,” the company said.  “We look forward to demonstrating this to the commission as we cooperate fully during this process.”  The EU will analyze whether the clauses inserted by AMZN prevent competitors from developing new products & “whether such clauses may limit competition between different e-book distributors.”  This behavior may violate “EU antitrust rules that prohibit abuses of a dominant market position and restrictive business practices,” regulators said.  The stock rose 2.20.  If you would like to learn more about AMZN, click on this link:

Amazon Probed for E-Books as EU Widens Scrutiny of U.S. Tech (AMZN)

Whole Foods, which announced plans last month to open a new line of stores focused on millennials, appointed an executive to run the chain & revealed its name: 365 by Whole Foods Market.  Jeff Turnas, a 20-year veteran of the company, will be pres of the 365 division.  He previously served as pres of the company’s North Atlantic region & the head of its UK branch.  The new stores will begin opening in 2016.  The idea is to create a chain that’s “fun and convenient,” Turnas said.  “A modern, streamlined design with innovative technology and a carefully curated product mix will offer an efficient and rewarding way to grocery shop.”  It is creating the chain to help reinvigorate sales & get back its pioneer image.  WFM has struggled with the perception that its groceries are too expensive & easily found elsewhere. The new store concept will have cheaper offerings.  The company is embarking on the new store concept after reporting several quarterly revenue & same-store sales that trailed estimates.  The new division’s expansion will be “fairly rapid.”  WFM has 417 locations, with plans to increase that to 1200 US stores.  The new chain will be open 365 days a year, true to its name, & sell grocery staples, fresh produce & prepared foods.  Turnas described the 365 concept, saying the chain would be “hip, cool” & let the company open locations in new areas.  “This is a big endeavor,” he said.  The stock fell 16¢.  If you would like to learn more about WFM, click on this link:

Whole Foods’ New Millennial-Focused Chain Will Be Called 365

Whole Foods (WFM)

The economic data which should have been helpful did little for the stock market.  The dark cloud around Greek debt mess is a larger influence on stock prices.  The IMF announced that its delegation had left negotiations in Brussels & flown home because of major differences with Greece.  The surprise move came as the EU told the Greek Prime Minister to stop gambling with his cash-strapped country's future & take the crucial decisions needed to avert a devastating default.  The outlook for Greece is glum.  However the Dow was able to hang on a gain at the close (70 below the AM high).

Dow Jones Industrials

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