Dow dropped 157, decliners over advancers more than 4-1 & NAZ was off 50. The MLP index lost 3+ to the 403s (another multi year low) & the REIT index inched higher in the 308s. Junk bond funds were lower & Treasuries also retreated. Oil fell below 59 & gold continued in its flattish trading zone.
AMJ (Alerian MLP Index tracking fund)
Angela Merkel & Francois Hollande signaled they’ve reached the limits of their ability to safeguard Greece, offering the gov no further concessions to step back from the brink. The leaders of Europe’s 2 biggest economies gave little reason for hope to Greeks who found their banks shut & capital controls imposed as the gov took steps to avert the collapse of its financial system. Global stocks & Greek bonds tumbled as Prime Minister Tsipras’s decision to hold a Jul 5 referendum on the terms attached to rescue aid increased the risk that Greece will exit the euro. Merkel & Hollande, who have repeatedly said they want to hold the euro together, gave the Greek premier no leeway after he broke off negotiations over future bailout aid. Hollande suggested the referendum would determine whether Greece could stay in the 19-nation euro area, while Merkel said Europe’s credibility was at stake with its response. “If the euro fails, Europe will fail,” Merkel said. “That’s why we have to fight for these principles. We could maybe set them aside in the short term. We could maybe say we’ll just give in. But I say: in the medium and long term, we will suffer damage that way.” Tsipras, who promised to return “dignity” to the people & reject budget cuts imposed by creditors, appealed for “calm” after weekend-long queues at ATMs & gas stations. The bank controls followed a weekend of turmoil that started with Tsipras’s shock announcement late Fri of a Jul 5 referendum on austerity. People rushed to line up at ATMs & gas stations after the breakdown of aid talks & a ECB decision to freeze its lifeline to Greek banks. “In the coming days, what’s needed is patience and composure,” Tsipras said on television. “The bank deposits of the Greek people are fully secure. The same applies to the payment of wages and pensions -- they are also guaranteed.”
Chinese stocks tumbled, sending the benchmark index into a bear market, as signs of an exodus by leveraged investors overshadowed the central bank’s effort to revive confidence with an interest-rate cut. The Shanghai Composite Index dropped 3.3% to 4053, taking declines from its Jun 12 peak to more than 20%. The gauge swung between a loss of 7.6% & a gain of 2.5% in Mon trading, recording the biggest intraday point move in 23 years. The retreat marks an end to the nation’s longest bull market, a rally that’s lured record numbers of individual investors & convinced traders to bet an unprecedented amount of borrowed money on further gains. China’s interest-rate cut, along with assurances from the securities regulator that risks from margin trading are controllable, failed to ease concern that speculators are unwinding their positions. Losses spread to Hong Kong, with the Hang Seng Index sinking 2.6%. Margin investors have been forced to liquidate holdings & the recent selloff spurs more mutual fund redemptions. Margin debt on the Shanghai Stock Exchange fell for a 5th day, the longest stretch of declines in one year. Regulators are considering suspending IPOs to stabilize the tumbling stock markets. The Shanghai gauge had surged more than 150% in the 12 months prior to its Jun 12 peak as investors speculated monetary stimulus would revive the weakest economic expansion in more than 2 decades. The PBOC cut the one-year lending rate to 4.85% & lowered reserve ratios for some lenders including city commercial & rural commercial banks by 50 basis points. The doubling in China’s main indexes in the past year coincided with the weakest economic growth in a qtr century. China’s bull market, which turned 935 days old Fri, had been the longest since bourses opened for trading in 1990 & more than 5 times the average lifespan of the nation’s previous bull markets.
Contracts to purchase previously owned Us homes rose in May to a 9-year high, indicating recent strength in the real-estate industry will be sustained. The pending home sales index increased 0.9% to 112.6, the highest since Apr 2006, after a revised 2.7% advance in the previous month, according to the National Association of Realtors. The projection called for the gauge to climb 1%. Employment growth, a pickup in incomes & relatively low borrowing costs are helping lure buyers, including those making their first foray into the market. Progress in residential real estate & more construction will further fuel the economy after a weak start to the year. Purchase contracts rose 8.3% in the 12 months ended in May, on an unadjusted basis, after a 12.6% gain in Apr. A reading of 100 in the pending sales gauge corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic. “The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring,” NAR chief economist Lawrence Yun said. Relatively low borrowing costs are still supporting would-be buyers who can qualify for credit. The average rate for a 30-year fixed mortgage was 4.02% in latest week. While that’s the 2nd-highest rate this year, it’s below the average 4.17% for all of 2014. Sustained job gains and signs of a pickup in wage growth are helping to keep homebuilders & home-improvement retailers upbeat about business prospects.
The stock market is turning very ugly as the Greek debt mess becomes reality & the Chinese stock market collapses. US economic data, means little & that has been inconsistent with nothing to write home about for months. Dow is back in the red YTD although NAZ is hanging in above 5K so far. Very tough times lie ahead for the stock market.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLQ15.NYM | ...Crude Oil Aug 15 | ...58.63 |  ...1.00 | (1.7%) |
| GCN15.CMX | ...Gold Jul 15 | ........1,174.00 | ...1.10 | (0.1%) |
Angela Merkel & Francois Hollande signaled they’ve reached the limits of their ability to safeguard Greece, offering the gov no further concessions to step back from the brink. The leaders of Europe’s 2 biggest economies gave little reason for hope to Greeks who found their banks shut & capital controls imposed as the gov took steps to avert the collapse of its financial system. Global stocks & Greek bonds tumbled as Prime Minister Tsipras’s decision to hold a Jul 5 referendum on the terms attached to rescue aid increased the risk that Greece will exit the euro. Merkel & Hollande, who have repeatedly said they want to hold the euro together, gave the Greek premier no leeway after he broke off negotiations over future bailout aid. Hollande suggested the referendum would determine whether Greece could stay in the 19-nation euro area, while Merkel said Europe’s credibility was at stake with its response. “If the euro fails, Europe will fail,” Merkel said. “That’s why we have to fight for these principles. We could maybe set them aside in the short term. We could maybe say we’ll just give in. But I say: in the medium and long term, we will suffer damage that way.” Tsipras, who promised to return “dignity” to the people & reject budget cuts imposed by creditors, appealed for “calm” after weekend-long queues at ATMs & gas stations. The bank controls followed a weekend of turmoil that started with Tsipras’s shock announcement late Fri of a Jul 5 referendum on austerity. People rushed to line up at ATMs & gas stations after the breakdown of aid talks & a ECB decision to freeze its lifeline to Greek banks. “In the coming days, what’s needed is patience and composure,” Tsipras said on television. “The bank deposits of the Greek people are fully secure. The same applies to the payment of wages and pensions -- they are also guaranteed.”
Merkel, Hollande Turn Away From Greece
Chinese stocks tumbled, sending the benchmark index into a bear market, as signs of an exodus by leveraged investors overshadowed the central bank’s effort to revive confidence with an interest-rate cut. The Shanghai Composite Index dropped 3.3% to 4053, taking declines from its Jun 12 peak to more than 20%. The gauge swung between a loss of 7.6% & a gain of 2.5% in Mon trading, recording the biggest intraday point move in 23 years. The retreat marks an end to the nation’s longest bull market, a rally that’s lured record numbers of individual investors & convinced traders to bet an unprecedented amount of borrowed money on further gains. China’s interest-rate cut, along with assurances from the securities regulator that risks from margin trading are controllable, failed to ease concern that speculators are unwinding their positions. Losses spread to Hong Kong, with the Hang Seng Index sinking 2.6%. Margin investors have been forced to liquidate holdings & the recent selloff spurs more mutual fund redemptions. Margin debt on the Shanghai Stock Exchange fell for a 5th day, the longest stretch of declines in one year. Regulators are considering suspending IPOs to stabilize the tumbling stock markets. The Shanghai gauge had surged more than 150% in the 12 months prior to its Jun 12 peak as investors speculated monetary stimulus would revive the weakest economic expansion in more than 2 decades. The PBOC cut the one-year lending rate to 4.85% & lowered reserve ratios for some lenders including city commercial & rural commercial banks by 50 basis points. The doubling in China’s main indexes in the past year coincided with the weakest economic growth in a qtr century. China’s bull market, which turned 935 days old Fri, had been the longest since bourses opened for trading in 1990 & more than 5 times the average lifespan of the nation’s previous bull markets.
Contracts to purchase previously owned Us homes rose in May to a 9-year high, indicating recent strength in the real-estate industry will be sustained. The pending home sales index increased 0.9% to 112.6, the highest since Apr 2006, after a revised 2.7% advance in the previous month, according to the National Association of Realtors. The projection called for the gauge to climb 1%. Employment growth, a pickup in incomes & relatively low borrowing costs are helping lure buyers, including those making their first foray into the market. Progress in residential real estate & more construction will further fuel the economy after a weak start to the year. Purchase contracts rose 8.3% in the 12 months ended in May, on an unadjusted basis, after a 12.6% gain in Apr. A reading of 100 in the pending sales gauge corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic. “The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring,” NAR chief economist Lawrence Yun said. Relatively low borrowing costs are still supporting would-be buyers who can qualify for credit. The average rate for a 30-year fixed mortgage was 4.02% in latest week. While that’s the 2nd-highest rate this year, it’s below the average 4.17% for all of 2014. Sustained job gains and signs of a pickup in wage growth are helping to keep homebuilders & home-improvement retailers upbeat about business prospects.
Pending Sales of U.S. Existing Homes Increased 0.9% in May
The stock market is turning very ugly as the Greek debt mess becomes reality & the Chinese stock market collapses. US economic data, means little & that has been inconsistent with nothing to write home about for months. Dow is back in the red YTD although NAZ is hanging in above 5K so far. Very tough times lie ahead for the stock market.
Dow Jones Industrials
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