Friday, June 19, 2015

Markets waver near record levels as Greek drama plays on

Dow fell 32, advancers barely ahead of decliners & NAZ went down 12.  The MLP index dropped 3+ to the 417s & the REIT index lost 1+ to the 317s.  Junk bond funds inched higher & Treasuries advanced on growing Greek debt uncertainties.  Oil pulled back to 60 & gold was a tad higher.

AMJ (Alerian MLP Index tracking fund)

CLQ15.NYM....Crude Oil Aug 15...59.80 Down ...1.02  (1.7%)

GCM15.CMX...Gold Jun 15.......1,202.40 Up ...0.90 (0.1%)

3 Stocks You Should Own Right Now - Click Here!

Greece secured a few more days of financial breathing space from the ECB, as Prime Minister Tsipras said on a visit to Russia that his country can survive its current crisis.  The ECB increased the emergency cash for Greek banks after deposit withdrawals accelerated & policy makers may discuss liquidity again on Mon.  On the same day, European finance ministers will reconvene before an evening summit of leaders that could determine Greece’s future in the euro.  “We are in the midst of great turbulence,” Tsipras said in St. Petersburg, where he met with Russian pres Putin for the 2nd time in 3 months.  “But we are a nation of seafarers, who know how to deal with storms, and aren’t afraid to sail to distant oceans, to uncharted waters, in search of a safe harbor.”  While discussions, deadlines & apparent denouements have come & gone during almost 5 months of brinkmanship, the wrangling over a deal to keep Greece afloat is at the sharp end.  An existing bailout agreement expires on Jun 30, the day Greece is due to make a payment to the IMF.  Earlier, he insisted a deal can be done on Mon now that negotiations have moved to a higher level.  Talks among finance ministers broke down in Luxembourg yesterday amid frustration.  Greece & its creditors -- the ECB, IMF & the European Commission -- seemed further apart than ever after 4 hours of closed-door talks.  “The key emergency is to secure a dialog with adults in the room,” IMF Managing Director Lagarde said after listening to Greek Finance Minister Varoufakis expound yesterday.  “What we lack is a dialog.”  Without a settlement, the ties still binding Greece to the currency bloc may begin to unravel with the funding keeping Greek banks afloat under scrutiny.  The drama plays on.

Greece Buys Time From ECB as Tsipras Says Country Will Prevail

The ECB has raised the ceiling on emergency liquidity Greek banks can draw from the country's central bank for the 2nd time this week, according to a leaker. The amount was  not disclosed.  The ECB's governing council held a teleconference today to discuss extending the emergency liquidity assistance after Greek savers pulled €3B from Greek lenders this week on fears that Greece will fail to reach a deal with lenders.  "The ELA increase was approved, they all (ECB governing council) expect a positive outcome at Monday's summit," the source said, referring to a summit of euro zone leaders on Mon to discuss the fate of Greece.  Earlier this week the ECB raised the ELA ceiling by €1.1B to €84.1B.

ECB Extends Emergency Bank Liquidity

Speaking of bailouts, Ukraine is giving its creditors a few weeks to accept a proposal submitted today to restructure $19B of debt before imposing a moratorium on payments, according to a leaker.  The offer involves a 40% reduction in the face value of sovereign bonds.  The nation’s $1.25B of notes due Apr 2023 are headed for their worst week since Mar as the gov struggles to bridge a divide with bondholders who insist a haircut isn’t needed.  The country needs to convince bondholders including its biggest, Franklin Templeton, to give it debt relief after fighting with pro-Russian separatists sent the economy into a tailspin.  The proposal submitted today is based on the nation’s worsening economic outlook after the IMF downgraded its recession forecast for this year to 9% from 5.5%, Finance Minister Natalie Jaresko said.  She didn’t specify the size of the writedown being sought, but said the offer includes a “substantial” haircut, coupon reductions & maturity extensions.  The gov plans to honor a coupon payment due to Russia, its 2nd-biggest creditor, on Mon.  Ukraine is also proposing a value-recovery provision that would be applicable if the economic situation improves after the end of an IMF program tied to a $17.5B rescue package.  The plan “will ensure Ukraine cuts its debt burden to acceptable levels,” Jaresko said.  “If there is no real progress in talks in near future, if creditors do not use the last chance to reach an accord, Ukraine have a full moral and legal right to take a decision” on a moratorium, she added.

Ukraine Said to Give Creditors Few Weeks to Accept Writedown

Foreign debts are gaining importance in the world economy & the outlook is grim.  Not much to say about Greece because Jun 30 seems to be a long way away.  Until then, all that is coming from Europe is hot air.  It's hard to believe that the popular averages are up YTD & within inches of their record highs.  That's called a major disconnect!

Dow Jones Industrials

No comments: