Wednesday, June 24, 2015

Markets sell off as Greek debt talks stall

Dow dropped 61, decliners over advancers 4-3 & NAZ fell 4.  The MLP index lost a fraction to the 414s (near its multi year lows) & the REIT index was off pennies in the 311s.  Junk bond funds were mixed & Treasuries saw limited buying.  Oil & gold did little.

AMJ (Alerian MLP Index tracking fund)

CLQ15.NYM....Crude Oil Aug 15...60.90 Down ...0.11  (0.2%)

GCM15.CMX...Gold Jun 15.......1,176.60 Up ...0.40 (0.0%)

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Germany downplayed the chances of an imminent deal with Greece as Prime Minister Tsipras’s gov rejected the latest terms set by creditors to unlock bailout aid.  The downbeat tone reinforced the brinkmanship at play as Tsipras met with the heads of the 3 creditor institutions: IMF Managing Director Christine Lagarde, European Commission pres Jean-Claude Juncker & ECB pres Mario Draghi.  “Our impression is that there’s still a long way to go,” German Finance Ministry spokesman told reporters.  Creditor institutions have made “exceptionally generous” concessions to the Greek gov, & “it’s now up to the Greek side to show some movement,” he said.  Greek stocks fell as Tsipras dug in over the conditions attached to any accord before heading for talks aimed at patching together a deal before Greece’s bailout expires & about €1.5B ($1.7B) in payments come due to the IMF on Jun 30 (next Wed).  Earlier Wed he denounced creditors for refusing to accept his own proposals for higher taxes, & his gov later rejected a counter proposal tabled by creditors, saying it differed little from an earlier document which had also been shot down.

Germany Says Greece Breakthrough Is Far Off

The US economy shrank less in Q1 than previously estimated, aided by a bigger gain in consumer spending.  GDP fell at a 0.2% annualized rate, revised from a previously reported 0.7% drop, according to the Commerce Dept (matching the forecast).  Q1 growth has underperformed the rest of the year by about 1.6-1.7 percentage points on average, based on a range of results from those who believe the figures are faulty.  The first estimate of Q2 GDP is scheduled for Jul 30.  The economy should expand at a 2.5% rate in Q2 & average 3% growth in H2.  Among the details of today's report, household consumption grew at a 2.1% annualized, revised up from an initial estimate of 1.8%, reflecting larger outlays on food & transportation.  The forecast projected consumer spending would be revised up to 1.9%, after a 4.4% gain in Q4.  Spending has held up as the job market improves.  In addition to consumer spending, bigger gains in inventories & home building, & a smaller decline in nonresidential structures also helped lift GDP.  While the cutbacks in oil exploration & drilling in the wake of plunging crude prices hurt Q1, the worst may be over as crude prices have steadied.  Residential construction increased at a 6.5% annualized rate, more than previously projected.  The pickup in the housing market indicates the contribution may expand.

U.S. GDP Shrinks Less Than Last Estimated

German business confidence fell for a 2nd month in a sign of concern that the ripples from any Greek debt default would reach Europe’s largest economy.  The Ifo institute’s business climate index dropped to 107.4 in Jun from 108.5 in May.  The estimate was for a decline to to 108.1.  While German economic growth is supported by record-low unemployment, uncertainty over the unity of the euro area is clouding the outlook.  Should the region’s govs fail to reach agreement with Greece on reforms to unlock bailout payments, the country could miss debt repayments & ultimately be forced out of the bloc.  Ifo’s measure of current conditions fell to 113.1 from 114.3 in May & a gauge of expectations dropped to 102 from 103.  German investor confidence fell for a 3rd month in Jun.  Still, a purchasing managers index by Markit Economics published yesterday rose more than forecast, pointing to accelerating economic momentum.  The Bundesbank boosted its economic growth outlook this month, forecasting an expansion of 1.7% in 2015 compared with the 1% predicted in Dec, on the back of an “extraordinarily positive” consumer climate.

German Business Confidence Falls as Greek Risk Weighs

Optimism about the Greek debt talked faded rapidly today as reality set in.  Greece wants the money without making any sacrifices.  That's what this gov was elected to do.  There are still 7 days before the next deadline (which will NOT be the last).  Revision in the GDP data revision was pretty much a non-event.  Traders are more concerned about Q2 data which is only a month away.  Stocks will conitnue to bob around based on talk coming from Europe.  However, words are cheap.  Action is what counts as the popular averages are within inches of their record highs.

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