Dow recovered 155, advancers over decliners more than 3-1 & NAZ went up 55. The MLP index rose 2+ to the 396s & the REIT index was fractionally higher to the 313s. Junk bond funds rose & Treasuries retreated. Oil recovered some of its recent losses & gold continued little changed.
AMJ (Alerian MLP Index tracking fund)
While Greece hasn’t submitted its new reform plan to the EU yet, the content of the document, probably a rehash of previous proposals, hardly matters now. On Sat & Sun, EU leaders are likely to make a political decision on whether to keep financing Greece & for how long (the gov wants a new 3-year bailout). EU leaders are under US pressure to give Greece what it needs to get by, which includes a debt write-off. The IMF advocates a debt restructuring, & Treasury Secretary Jack Lew yesterday pushed for it. European Council pres Donald Tusk, a Pole seen as a strong US ally, seconded those calls today. France will probably go along, too. But Germany is the problem. It appears reluctant to give up any ground. Even Greece’s erstwhile sympathizer, the junior partner in Germany’s ruling coalition, now says Greek Prime Minister Tsipras has “ruined the last bridges” toward a compromise. The German central bank said yesterday that Greeks had voted “against contributing any further to the solvency of their country through additional consolidation measures and reforms,” & that the solvency of Greek banks was now in grave doubt. More & more analysts now see Greece’s exit from the euro as the more probable scenario. Germany could still surprise them with a turnabout, but that would take a leap of faith from their deeply skeptical officials & politicians.
The IMF cut its forecast for global growth this year, citing a weaker Q1 in the US & warning that financial-market turbulence from China to Greece clouds the outlook. The world economy will grow 3.3% in 2015, less than the 3.5% pace projected in Apr & slower than the 3.4% expansion last year said in revisions to its World Economic Outlook. It left the forecast for growth next year unchanged at 3.8%. While the IMF left its 2015 projections for China & the euro area unchanged from Apr, it singled out both economies as areas sources of potential risk. “Disruptive asset price shifts and a further increase in financial market volatility remain an important downside risk.” Much of the global downgrade was driven by the US, which the fund now sees growing 2.5% this year, compared with 3.1% in Apr. The IMF this week reiterated its recommendation that the Federal Reserve hold off raising interest rates until the H1=2016, when wage & price inflation are expected to pick up. The IMF characterized the US setback as “temporary,” saying the US economy remains poised for an acceleration of consumption & investment as wages rise & employers hire workers. Still, the fund warned that risks to the world recovery remain “tilted to the downside.” “The projected pickup in global growth, while still expected, has not yet firmly materialized.” “Raising actual and potential output through a combination of demand support and structural reforms continues to be the economic policy priority.” The IMF acknowledged the recent turmoil caused by faltering debt talks with Greece & a plunge in Chinese stocks. It warned that risks to the world recovery remain “tilted to the downside" The IMF urged advanced economies to keep monetary policy loose to lift inflation back to target.
More Americans than forecast filed for unemployment benefits last week, representing a pause in the pace of labor-market improvement. Jobless claims climbed 15K to 297K, the highest since Feb, according to the Labor Dept. The forecast projected 275K applications. The data can be volatile this time of year because of the Jul 4 holiday & temporary shutdowns of auto plants to prepare for the production of new models. Applications for benefits have been below 300K for 18 straight weeks, the longest stretch since 2000 & indicating companies are content about their staffing levels. Stronger demand would probably help persuade employers to boost hiring & assure employers about the US outlook in the face of weaker economies abroad. The 4-week average of claims increased to 279K from 275K the week before. The number continuing to receive jobless benefits rose 69K to 2.33M in the latest week. In that same period, the unemployment rate among people eligible for benefits held at 1.7%.
The Shanghai Composite shot up almost 6%, its best day in almost 6 years. This can happen in a vastly oversold market. Problems remain in China. The Greek debt mess will go nowhere today & tomorrow, prior to the big meeting this weekend which will decide Greece's fate. Then there is the US economy. While growing, it keeps stumbling, unable to show consistent, impressive gains. Dow is still in the red YTD.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLQ15.NYM | ....Crude Oil Aug 15 | ...53.18 |  ...1.53 | (3.0%) |
| GCN15.CMX | ....Gold Jul 15 | .......1,163.60 | ...0.30 | (0.0%) |
While Greece hasn’t submitted its new reform plan to the EU yet, the content of the document, probably a rehash of previous proposals, hardly matters now. On Sat & Sun, EU leaders are likely to make a political decision on whether to keep financing Greece & for how long (the gov wants a new 3-year bailout). EU leaders are under US pressure to give Greece what it needs to get by, which includes a debt write-off. The IMF advocates a debt restructuring, & Treasury Secretary Jack Lew yesterday pushed for it. European Council pres Donald Tusk, a Pole seen as a strong US ally, seconded those calls today. France will probably go along, too. But Germany is the problem. It appears reluctant to give up any ground. Even Greece’s erstwhile sympathizer, the junior partner in Germany’s ruling coalition, now says Greek Prime Minister Tsipras has “ruined the last bridges” toward a compromise. The German central bank said yesterday that Greeks had voted “against contributing any further to the solvency of their country through additional consolidation measures and reforms,” & that the solvency of Greek banks was now in grave doubt. More & more analysts now see Greece’s exit from the euro as the more probable scenario. Germany could still surprise them with a turnabout, but that would take a leap of faith from their deeply skeptical officials & politicians.
Lines Are Drawn
The IMF cut its forecast for global growth this year, citing a weaker Q1 in the US & warning that financial-market turbulence from China to Greece clouds the outlook. The world economy will grow 3.3% in 2015, less than the 3.5% pace projected in Apr & slower than the 3.4% expansion last year said in revisions to its World Economic Outlook. It left the forecast for growth next year unchanged at 3.8%. While the IMF left its 2015 projections for China & the euro area unchanged from Apr, it singled out both economies as areas sources of potential risk. “Disruptive asset price shifts and a further increase in financial market volatility remain an important downside risk.” Much of the global downgrade was driven by the US, which the fund now sees growing 2.5% this year, compared with 3.1% in Apr. The IMF this week reiterated its recommendation that the Federal Reserve hold off raising interest rates until the H1=2016, when wage & price inflation are expected to pick up. The IMF characterized the US setback as “temporary,” saying the US economy remains poised for an acceleration of consumption & investment as wages rise & employers hire workers. Still, the fund warned that risks to the world recovery remain “tilted to the downside.” “The projected pickup in global growth, while still expected, has not yet firmly materialized.” “Raising actual and potential output through a combination of demand support and structural reforms continues to be the economic policy priority.” The IMF acknowledged the recent turmoil caused by faltering debt talks with Greece & a plunge in Chinese stocks. It warned that risks to the world recovery remain “tilted to the downside" The IMF urged advanced economies to keep monetary policy loose to lift inflation back to target.
IMF Cuts World Growth Outlook
More Americans than forecast filed for unemployment benefits last week, representing a pause in the pace of labor-market improvement. Jobless claims climbed 15K to 297K, the highest since Feb, according to the Labor Dept. The forecast projected 275K applications. The data can be volatile this time of year because of the Jul 4 holiday & temporary shutdowns of auto plants to prepare for the production of new models. Applications for benefits have been below 300K for 18 straight weeks, the longest stretch since 2000 & indicating companies are content about their staffing levels. Stronger demand would probably help persuade employers to boost hiring & assure employers about the US outlook in the face of weaker economies abroad. The 4-week average of claims increased to 279K from 275K the week before. The number continuing to receive jobless benefits rose 69K to 2.33M in the latest week. In that same period, the unemployment rate among people eligible for benefits held at 1.7%.
More Americans Than Forecast Filed Jobless Claims Last Week
The Shanghai Composite shot up almost 6%, its best day in almost 6 years. This can happen in a vastly oversold market. Problems remain in China. The Greek debt mess will go nowhere today & tomorrow, prior to the big meeting this weekend which will decide Greece's fate. Then there is the US economy. While growing, it keeps stumbling, unable to show consistent, impressive gains. Dow is still in the red YTD.
Dow Jones Industrials
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