Dow rose 13, decliners over advancers 2-1 & NAZ added 8. The MLP index sank a very big 8+ to go under 381 & the REIT index was fractionally higher in the 317s. Junk bond funds lost ground & Treasuries retreated. Oil is back down to 50 & gold can not find friends as it nears 1100.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.9533878592932592)
Greece repaid €6.8B ($7.4B) to creditors, as depositors queued at reopened banks in the first signs of normality after the bailout deal. The ECB & IMF confirmed receipt of money owed after the Greek Finance Ministry said that the country ordered payments to both those institutions & its central bank. The disbursements close one chapter on Greece’s debt crisis. In the standoff between the country & its creditors, it imposed capital controls on depositors & became the first developed-world nation to find itself in arrears with the IMF. While banks reopened, Greek financial markets will remain closed at least thru Wed. As Greece gets relief, steps toward a possible bailout of up to €86B are only starting. Parliament is scheduled to vote Wed on a 2nd set of prerequisites for further financial aid, & Angela Merkel said the repayment terms for earlier aid loans can't be eased yet. With the IMF & ECB pres Mario Draghi urging relief, Merkel ruled out a cut in the nominal value of Greek debt. Greek stock & bond markets will only reopen after the lawmakers approve the 2nd batch of conditions for the proposed bailout by the European Stability Mechanism, the euro area’s firewall fund. At banks, check deposits, access to safety deposit boxes & teller-window transactions have already been restored, though most transfers abroad are still prohibited.
JPMorgan, a Dow stock, still has a shortfall of as much as $12.5B in meeting capital rules approved by the Federal Reserve today. The Fed assigned capital charges totaling more than $200B for 8 of the biggest & most complex US banks to mitigate the danger that they could threaten the financial system. The extra capital requirements, or surcharges, range from 1-4½% of the banks’ risk-weighted assets, leaving the firms to choose between expensive capital demands or getting smaller. “They must either hold substantially more capital, reducing the likelihood that they will fail, or else they must shrink their systemic footprint, reducing the harm that their failure would do to our financial system,” Janet Yellen said. JPM, the biggest bank by assets, faces the full brunt of the rule, with a 4.5% cushion. The Fed said 7 of the 8 already meet the capital demand, which wouldn’t go into effect until 2019. JPM was previously identified as the only institution facing a shortfall, which was more than $20B when the rule was first proposed in Dec but has been narrowed as the company has cut more than $100B in non-operating deposits, extra cash held in client accounts, & billions in trading assets. The rule is based on an international accord reached by the multi-nation Basel Committee on Banking Supervision. Fed Governor Daniel Tarullo said the Fed’s version went in a different direction to give the banks more incentive to improve their scores, making their risk levels “based on a fixed measure of each firm’s systemic importance, rather than -- as in the Basel method -- on a measure relative to that of other firms of global systemic importance.” The stock was up pennies. If you would like to learn more about JPM, click on this link:
club.ino.com/trend/analysis/stock/JPM?a_aid=CD3289&a_bid=6ae5b6f7
Even though NAZ reached a new record, stocks really had more of a mixed day. Greece has pulled away from death's door, but the crisis is far from over. The Chinese stock markets look very chancy. Most importantly, the US economy is going to have another drab year. Even if it grows at a 3% rate in H2, for the full year the growth rate will be below 2%. Unemployment has fallen, because low paying jobs are replacing higher paying ones that have been lost. This economic environment does not support stock averages soaring to new heights. Lower oil prices dragging down MLPs is another serious concern.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLQ15.NYM | ....Crude Oil Aug 15 | ....50.02 |  ...0.87 | (1.7%) |
Greece repaid €6.8B ($7.4B) to creditors, as depositors queued at reopened banks in the first signs of normality after the bailout deal. The ECB & IMF confirmed receipt of money owed after the Greek Finance Ministry said that the country ordered payments to both those institutions & its central bank. The disbursements close one chapter on Greece’s debt crisis. In the standoff between the country & its creditors, it imposed capital controls on depositors & became the first developed-world nation to find itself in arrears with the IMF. While banks reopened, Greek financial markets will remain closed at least thru Wed. As Greece gets relief, steps toward a possible bailout of up to €86B are only starting. Parliament is scheduled to vote Wed on a 2nd set of prerequisites for further financial aid, & Angela Merkel said the repayment terms for earlier aid loans can't be eased yet. With the IMF & ECB pres Mario Draghi urging relief, Merkel ruled out a cut in the nominal value of Greek debt. Greek stock & bond markets will only reopen after the lawmakers approve the 2nd batch of conditions for the proposed bailout by the European Stability Mechanism, the euro area’s firewall fund. At banks, check deposits, access to safety deposit boxes & teller-window transactions have already been restored, though most transfers abroad are still prohibited.
Greece Makes ECB Debt Deadline
There’s a more than 50-50 chance
the Federal Reserve will raise interest rates in Sep, St. Louis
Fed pres James Bullard said. “The economy is much closer to normal today than it’s been in quite a
while, certainly over the last five years,” Bullard said. “The main problem is we are in
emergency settings for monetary policy.” Bullard had previously argued the Fed
should start raising rates sooner rather than later & last year was
favoring a first move earlier in 2015. Policy makers are edging toward raising rates for the first time
since 2006 following solid gains in the labor market. Janet
Yellen last week told lawmakers that waiting too long to raise borrowing
costs holds risks for the US economy, along with tightening too
quickly. The nation’s jobless rate was 5.3% in Jun, down from 6.1% a year earlier. “Unemployment will probably come down below 5 percent. We’ve got a
lot of reaching for yield in the economy,” Bullard said. “So I think it
would be prudent to move off zero and then take it meeting-by-meeting
from there.” Bullard added that while the Fed is trying to be data-dependent in
deciding when to tighten, interest rates will probably rise if the
economy stays on track for 3% growth H2. “The economy as a whole -- you can complain about this or that being
sluggish -- but it’s not in emergency mode,” he said. “We’ve got
unemployment very close to the natural rate. Inflation is a little low”
but will probably return to target. Bullard doesn’t see Greece’s turmoil or China’s slowdown threatening the US outlook. “Of course there are risks that are out there but I don’t think
they’re going to manifest themselves in actually coming back to bite the
U.S. economy during the second half of the year or beyond that,” he
said.
Fed’s Bullard Sees More Than 50-50 Chance of September Rate Rise
JPMorgan, a Dow stock, still has a shortfall of as much as $12.5B in meeting capital rules approved by the Federal Reserve today. The Fed assigned capital charges totaling more than $200B for 8 of the biggest & most complex US banks to mitigate the danger that they could threaten the financial system. The extra capital requirements, or surcharges, range from 1-4½% of the banks’ risk-weighted assets, leaving the firms to choose between expensive capital demands or getting smaller. “They must either hold substantially more capital, reducing the likelihood that they will fail, or else they must shrink their systemic footprint, reducing the harm that their failure would do to our financial system,” Janet Yellen said. JPM, the biggest bank by assets, faces the full brunt of the rule, with a 4.5% cushion. The Fed said 7 of the 8 already meet the capital demand, which wouldn’t go into effect until 2019. JPM was previously identified as the only institution facing a shortfall, which was more than $20B when the rule was first proposed in Dec but has been narrowed as the company has cut more than $100B in non-operating deposits, extra cash held in client accounts, & billions in trading assets. The rule is based on an international accord reached by the multi-nation Basel Committee on Banking Supervision. Fed Governor Daniel Tarullo said the Fed’s version went in a different direction to give the banks more incentive to improve their scores, making their risk levels “based on a fixed measure of each firm’s systemic importance, rather than -- as in the Basel method -- on a measure relative to that of other firms of global systemic importance.” The stock was up pennies. If you would like to learn more about JPM, click on this link:
club.ino.com/trend/analysis/stock/JPM?a_aid=CD3289&a_bid=6ae5b6f7
JPMorgan $12.5 Billion Short in Fed Systemic-Risk Charges
JPMorgan (JPM)
Even though NAZ reached a new record, stocks really had more of a mixed day. Greece has pulled away from death's door, but the crisis is far from over. The Chinese stock markets look very chancy. Most importantly, the US economy is going to have another drab year. Even if it grows at a 3% rate in H2, for the full year the growth rate will be below 2%. Unemployment has fallen, because low paying jobs are replacing higher paying ones that have been lost. This economic environment does not support stock averages soaring to new heights. Lower oil prices dragging down MLPs is another serious concern.
Dow Jones Industrials
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