Friday, July 24, 2015

Lower markets on new homes data

Dow dropped 60, decliners over advancers 2-1 & NAZ pulled back 7.  The MLP index recovered 4 to the 372s & the REIT index was off pennies in the 314s.  Junk bond funds were mixed & Treasuries advanced.  Oil is sloshing around in the 48s while gold is at a 5½ year low.

AMJ (Alerian MLP Index tracking fund)

CLU15.NYM....Crude Oil Sep 15...48.62 Up .....0.17 (0.4%)

GCN15.CMX....Gold Jul 15.......1,079.30 Down ...14.70  (1.3%)

3 Stocks You Should Own Right Now - Click Here!

Purchases of new homes in the US unexpectedly retreated in Jun & prior readings were revised down, painting a picture of less robust improvement during the industry’s busiest time of year.  Sales fell 6.8% to a 482K annualized pace, the weakest since Nov & lower than any forecast, according to the Commerce Dept.  3 of 4 regions suffered setbacks.  The report represents a departure from recent data that’s shown the housing industry was accelerating amid steady job growth & still-low mortgage rates.  That may mean the residential real estate market is about to plateau as a tight supply of available homes & meager wage gains present hurdles to growth.  The estimate called for a 548K pace.  The reading for May was revised down to 517K from a previously reported 546K, which had been a 7-year high.  Figures for Apr & Mar were also revised down.  New-home purchases were 17.5% higher in Jun than the same period in 2014 on an unadjusted basis.  The median price of a new home decreased 1.8% last month from a year ago to $281K.  The drop in purchases was led by a 17% slump in the West, only the Northeast showed an increase.  The supply of homes at the current sales rate increased to 5.4 months from 4.8 months in May.  There were 215K new houses on the market at the end of last month, the most since May 2010.  Sales of new properties, which are counted when contracts are signed, are considered a more timely measure of the market than previously owned dwellings, which are counted when a purchase is finalized.  Sales of those homes climbed 3.2% to a 5.49M annualized rate, the most since Feb 2007, the National Association of Realtors said.  Prices also climbed amid a tight supply of available properties.  This report is at odds with other recent data that have portrayed a housing market that’s finally finding its legs, bolstered by steady job gains, rising household formation & historically low mortgage rates.  That has builders more upbeat about the real-estate market than at any time in the last decade.  Building permits for single & multifamily projects rose to an almost 8-year high & housing starts climbed in Jun to the 2nd-highest level since 2007 as builders boosted work on apartment projects.

Sales of U.S. New Homes Unexpectedly Fall to Seven-Month Low

Now that Greece is eligible again for loans from the IMF, getting any more money from the fund may hinge on a test of wills between Christine Lagarde & Angela Merkel.  The bailout of as much as €86B ($95B) assumes financing from the IMF & is conditional on Greece seeking a new loan program from the IMF once the current one expires in Mar.  The IMF, which requires borrowers to have sustainable debt, has made clear it won’t ask its 187 other member nations to approve a deal until euro-area states significantly ease terms on existing loans.  While Merkel hasn’t signed on to debt relief for Greece, she hasn’t ruled it out.  That means that either Lagarde or Merkel may need to cede ground if Greece is to receive bailout money from the IMF. Merkel has been reluctant to commit to debt relief, while Lagarde, when asked if the accord is viable without debt restructuring, said: “The answer is quite categorically not.”  An  IMF spokesman said the fund’s participation in the new bailout is contingent on a balanced approach that includes both Greek reforms & a commitment to the required financing.  “We’ve said pretty clearly that debt relief is required,” he said.  Greece’s parliament early yesterday passed a 2nd bundle of measures demanded by the country’s European creditors as Prime Minister Tsipras urged lawmakers to stop the country from being forced out of the euro.  He won the support of 230 lawmakers in the country’s 300-seat legislature for a bill that will simplify court decisions and apply European rules to failing banks.  The push by Lagarde, who was previously French finance minister, sticks Merkel with the choice of bending to the IMF’s terms or potentially driving the fund away from the bailout.  The chancellor sought IMF participation in 2010, over the initial objections of Finance Minister Wolfgang Schaeuble, to secure the fund’s expertise in restructuring struggling countries & benefit from its reputation as a guarantor of strict terms and enforcement.

Lagarde's Push for Greece Debt Relief Challenges Merkel

AbbVie, a Dividend Aristocrat, reported a 24% jump in quarterly profit due to higher sales of its arthritis drug, Humira, & the inclusion of sales of Pharmacyclic's blood cancer drug, Imbruvica.  EPS rose to 83¢ in Q2 from 68¢ last year.  Revenue rose 11% to $5.48B.  ABBV completed the acquisition of  Pharmacyclics on May 26, giving it about one month's revenue from Imbruvica.  The stock fell 2.09.  If you would like to learn more about ABBV, click on this link:

AbbVie Profit Jumps 24% as Humira Sales Rise

AbbVie (ABBV)

Stocks continue to slip & slide.  Earnings have been uninspiring, the Greek debt mess is stumbling along & the Chinese stock market is another source of worry.  GDP data should be out next week & that probably will not be pretty.   Dow is down 1% YTD & looks to be heading lower with more drab earnings reports coming.  The bear market for major commodities is another dark cloud hanging over the stock market.

Dow Jones Industrials

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