Friday, June 26, 2015

Markets slide lower led by selling in tech stocks

Dow rose 56, decliners over advancers 4-3 & NAZ fell 31 when tech stocks were sold (see below).  The MLP index was off 2+ to the 406s (a multi year low) & the REIT index inched up 1 to308.  Junk bond funds were lower & Treasuries dropped again with the yield on the 10 year Treasury near 2½%.  Oil was off a tad & gold rose slightly.

AMJ (Alerian MLP Index tracking fund)

CLQ15.NYM....Crude Oil Aug 15....59.67 Down ...0.03  (0.1%)

Live 24 hours gold chart [Kitco Inc.]

Greece’s prospects for reaching a deal with creditors are better than 50% & the final outcome won’t become clear until Sat, an EU official said.  Talks with Greece continue on the offer that creditors put forward this week, which has some limited flexibility to adjust to Greek concerns.  The goal is to reach a tentative agreement by the time finance ministry deputies meet in Brussels, ahead of a euro-area ministers’ gathering slated for Sat.  All of Greece’s creditors, including the IMF, are on board with the offer as it stands.  The offer doesn’t include a debt relief component, instead it leaves room for the currency bloc to revive 2012 proposals to ease Greece’s debt burden.  Creditors are also leaving the door open to a 3rd bailout, as they did in a Feb extension of Greece’s bailout plans, adding that a majority of euro-area finance ministers have said they’re opposed to a 3rd bailout.  Finance ministers have expressed concerns that the offer is too lenient, while Greece has said it would be too tough on the economy.  Finance ministers haven’t yet taken an official stance on the plan.  Any Greek deal needs to arrive at the required primary surplus targets.  Greece & the creditor institutions should be able to bridge differences on sales taxes, & there also are gaps on pensions & other elements.  If Greeks and credit ors agree to a deal Sat, it would need approval by finance ministers & then by the Greek parliament.  Greece still might go into arrears on its Jun 30 payment to the IMF even if there is a deal.  This would be manageable as long as there is a clear plan in place to work thru the procedures of endorsing a deal. Euro-area leaders aren’t required to hold another summit if a deal moves forward.  Greek Prime Minister Tsipras favors a gathering of heads of state & gov, while most leaders oppose another summit.

Greek Decision Won’t Happen Until Saturday, EU Official Says

Nike trounced estimates for profit, sales & orders last qtr.  CEO Mark Parker has been calling NKE a “growth company” for several years.  Total sales in the fiscal Q4 rose 13% to $7.78 B, excluding currency exchange-rate changes, the company said, topping estimates of $7.69B.  For the fiscal year, revenue topped $30B for the first time, after surpassing $20B just 4 years ago.  Even more impressive was what NKE did in parts of the world where many global companies are struggling.  Revenue from China, when taking out the strength of the dollar, surged 20, Japan advanced 19% & Western Europe gained 17%.  The company has fueled growth by investing in innovation & introducing scores of new products each year.  It was also has been helped by fashion trends shifting toward casual & comfort, what’s been dubbed “athleisure.”  Worldwide futures orders showed the company isn’t slowing down.  They were up 13%, excluding the effects of foreign-currency exchange-rate fluctuations.  Analysts estimated a 10.4% gain on average.  The strength in orders was also broad-based.  “Our consistent growth is fueled by our connection to the consumer and our ability to deliver innovation at an unprecedented pace and scale,” Parker said.  Q4 EPS rose to 98¢, from 78¢.  The estimate was for 83¢.  The stock shot up 4.49.  If you would like to learn more about NKE, click on this link:

Nike Surges After 51-Year-Old ‘Growth Company’ Beats Estimatesat Bloomberg

Nike (NKE)

Micron fell the most in 5 years as the biggest US maker of memory chips issued a sales forecast that missed estimates on weaker demand for PC components.  Revenue for the fiscal Q4 will be $3.45-$3.7B the company said.  Analysts had projected sales of $4.16B.  For Q3, MU reported its first revenue decline in more than 2 years, reflecting sluggish PC sales as computer makers failed to win over consumers with new laptops.   Q3 sales fell 3.2% to $3.85B.  EPS excluding certain items was 54¢.  That compared with the estimates for revenue of $3.9B & EPS of 57¢.  Demand for PC parts was below where it normally is & that alone points to an improvement later in the year when a new Windows operating may help sales of new computers.  Pricing & profitability in PC memory will also be helped as suppliers move output to other products, such as memory for mobile phones.  “It was so far below seasonal demand in PCs that we think it’s got to be better and better in a environment where capacity is shifting to other markets,” MU pres Mark Adams said.  “That could help with the recovery.”  MU is the largest remaining US-based maker of computer memory, also known as DRAM chips.  The company is expanding its offerings to include memory for smartphones & servers and another type of chips used as storage in mobile devices & computers.  The stock sank 4.36.  If you would like to learn more about MU, click on this link:

Micron Drops Most in Five Years as Outlook Sees Further Slumpat Bloomberg

Micron Technology (MU)

The Greek mess will drone in over the weekend & it's likely nothing will be resolved by Mon.  Last minute deals are rarely good.  MU earnings was a kick in the head the market did not need.  It took NAZ 15 years to set new record highs & now that rise is being called into question.  The negative fundamentals behind lower earnings at MU, will affect the entire industry.  NAZ has fallen 80 from its record earlier this week 5160.
Dow is down about 400 from its recent record.  The markets look to be on shaky ground.18,312

Dow Jones Industrials

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