Monday, June 15, 2015

Markets tumble as Greek debt talks collpase

Dow lost 169, decliners over advancers 3-1 & NAZ dropped 49 (barely above 5K).  The MLP index lost 1 to the 415s for a multi year low & the REIT index fell 2 to the 309s.  Junk bond funds were mixed to lower & Treasuries rallied as stocks retreated.  Oil was weak, dropping below 60, & gold inched higher.

AMJ (Alerian MLP Index tracking fund)

CLQ15.NYM....Crude Oil Aug 15...59.38 Down ...1.02  (1.7%)

GCM15.CMX...Gold Jun 15.......1,180.50 Up ...1.70 (0.1%)

Euro policy makers raised pressure on Greece to return to the negotiating table & make further concessions to unlock aid, as each side laid out its demands to rally support for its respective position.  Stocks & the € fell as the extent of the policy divide that remains to be resolved was laid bare after weekend talks billed by Euro officials as a last attempt to end the standoff broke up early.  With signs that negotiating fatigue was stoking intrasigence on all sides, some euro-area officials publicly raised the prospect of Greece’s exit from the currency region as the Greek gov suggested it had reached the limits of its ability to make concessions.  Finance Ministry officials from the 19-nation euro zone are due to hold a Greece call tomorrow ahead of a meeting of ministers later this week.  “We’re reaching a potential period of turbulence if no accord is found,” French pres Hollande said.  “This is a message for Greece, because Greece mustn’t wait, it must renew talks with the institutions,” he added, referring to the European Commission, the IMF & the ECB.  ECB pres Mario Draghi will address lawmakers at the European Parliament in Brussels on Wed, after the commission & IMF separately outlined their respective goals in the talks.  Prime Minister Tsipras portrayed Greece as the torchbearer of democracy, standing firm against creditors’ demand for pension cuts.  “One can only read political motives in the creditors’ insistence on new cuts to pensions after five years of plundering them under the memorandum,” Tsipras said.  “We will wait patiently for the institutions to move toward realism.”

Europe Raises Heat on Greece to Make Further Concessions for Aid

Factory production unexpectedly declined in May as the slump in energy output deepened.  The 0.2% decrease at manufacturers followed a 0.1% increase in Apr, according to the Federal Reserve.  Total industrial production, which also includes mines & utilities, also dropped 0.2%.  Production of consumer energy products declined for a 3rd consecutive month, exacerbating a decrease in other non-durable goods such as foods & chemicals that swamped continued gains among automakers.  The sluggish data signal that a stronger dollar & decrease in fuel prices are still rippling thru the economy, holding back American factories.  Manufacturing, which makes up about 75% of total production, was forecast to increase 0.3% after Apr was previously reported as being unchanged.  Total industrial production was projected to rise 0.2%, with estimates ranging from a drop of 0.3% to a 0.6% gain.  Apr data were revised to show a 0.5% drop compared with a previously reported 0.3% decrease.  Capacity utilization, which measures the amount of a plant that is in use, declined to 78.1% in May from 78.3%.  Mining production, including oil drilling, fell 0.3% last month, the 5th consecutive decrease.  Drilling & servicing at wells declined 7.9% as companies seek to balance supply with demand amid a global oil glut.  Utility output increased 0.2% after falling 3.7% in Apr.  Consumer goods production decreased 0.3% last month, led by a 0.7% drop for non-durable goods.  Output of durable goods rose 1.1% as makers of autos & electronics revved up.  Consumers’ appetites for new cars continue to support production.  Output of motor vehicles & parts increased 1.7% after rising 2% a month earlier.  Excluding autos & parts, factory production declined 0.3% last month after being little changed in Apr.

Factory Production in U.S. Unexpectedly Drops

Confidence among US homebuilders rebounded in Jun to a 9-month high as warmer weather & a brighter economic outlook drew prospective buyers back to the market.  The National Association of Home Builders/Wells Fargo builder sentiment gauge rose to 59 this month, the strongest since Sep & exceeding all projections, from 54 in May.  The forecast called for 56.  Activity in the residential real estate market has shown a slow rebound as the busier selling season takes hold, which could help the economy overcome weakness in manufacturing.  Employment gains & rising wages are giving would-be home buyers reason to take the plunge.  The data show “a growing optimism among builders that housing will continue to strengthen in the months ahead,” the NAHB said.  “At the same time, builders remain sensitive to consumers’ ability to buy a new home.”  The builders’ index of current single-family home sales rose to 65 in Jun, the highest since 2005, from 58 in the prior month.  The homebuilder group’s gauge of prospective buyer traffic climbed to 44, the strongest in 5 months, from 39.  The measure of the 6-month sales outlook advanced to 69, the best since 2005, from 63 in May.  “Builders are reporting more serious and committed buyers at their job sites and this is reflected in recent government data showing that new-home sales and single-family construction are gaining momentum,” NAHB Chairman Tom Woods said.  Builder confidence climbed in all 4 regions, led by an 8-point gain in the Midwest to 57.

Confidence Among U.S. Homebuilders Increases to Nine-Month High

Stocks are selling off as the Greek debt extension goes from bad to much worse.  Nobody knows how this will turn out, but all indications are is that it will get extremely bad.  The US manufacturing data was another kick in the head for the economy that the stock market does not want to hear.  US recovery continues but is stumbling from month to month.  Stocks lack direction & Dow is down 100 YTD.

Dow Jones Industrials

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