Monday, November 23, 2015

Markets decline with oil at multi year lows

Dow lost 31, advancers were lightly ahead of decliners & NAZ fell 2.  The MLP index slid back 1+ to the 299s & the REIT index was fractionally higher in the 321s.  Junk bond funds did little & Treasuries gained as stock were sold.  Oil is down to the 39s & gold was also lower.  

AMJ (Alerain MLP Index tracking fund)

CLZ15.NYM....Crude Oil Dec 15....39.39 Down ...1.15  (2.8%)

Live 24 hours gold chart [Kitco Inc.]

Greece unlocked more of its rescue funds as the euro area called on Prime Minister Alexis Tsipras to maintain his nation’s commitment to meeting its bailout requirements. In the first aid payment since Aug, when Greece secured an €86B ($91B) 3rd bailout, the euro block approved a €2B disbursement from the European Stability Mechanism firewall fund which allows Greece to turn its attention to recapitalizing its banks & releasing another €1B in rescue funds before the end of the year.  “We are working based on a scenario that the Greek government sticks with its commitments and that the program is on track,” EU Commission VP Valdis Dombrovskis said.  “Greek authorities recognize that it’s important to ensure financial stability in Greece and we currently also see a clear commitment from the Greek government to stick with the program.”  Euro-area finance ministers said Greece committed to “finalize a second set of milestones by mid-December” & also to remove bottlenecks that have held up projects that could benefit from EU financing.  Eurogroup chief Jeroen Dijsselbloem said the first overall review of Greece’s bailout program will stretch into next year, given the bailout’s pace so far.  Dombrovskis said Greece was on track to finish recapitalizing its biggest banks “within the next few weeks,” so any needed aid funds can flow before the end of the year.  Now that Greece has met an initial set of financial-sector requirements, it must assess the capital needs of each bank, request aid money, & pass review from the commission’s state-aid authorities.  Tsipras may face increasing pressure on his gov as he presses ahead with the bailout program.  Last week’s vote on bailout-required measures saw his parliamentary majority erode to 3 seats, after 2 lawmakers previously aligned with the gov refused to back the bill.  Greece’s next reform targets will include financial-sector governance issues & pension reforms.  The euro area hasn’t spelled out exactly which milestones Greece must meet to earn the €1B.  Pensions are one of the issues the IMF will need to see progress on before it can rejoin the program, Dijsselbloem said.  He said the IMF renewed its commitment to be part of Greece’s rescue program once its conditions are met.

Greece Gets Aid Infusion As EU Counts on Tsipras to Pass Reforms

Belgium kept the threat level for Brussels at the highest level & may evaluate it on a daily basis, Prime Minister Charles Michel said.  At the same time, the subway system & schools in the Belgian capital will reopen on Wed, Michel said.  The rest of the country remains at threat level 3, the 2nd-highest.  The reopening of the metro system may be “progressive,” Michel said.  Earlier today, Belgian authorities charged one of 16 suspects detained during raids yesterday with taking part in the Paris attacks & released the other 15.  Belgium-born Salah Abdeslam, one of 2 brothers believed to have been involved in the Paris assaults that killed 130, continued to elude authorities.

Belgium Extends Highest Threat Level for Brussels Capital Region

Sales of previously owned homes in the US retreated in Oct from the 2nd-highest level since 2007 as lean inventory limited momentum in residential real estate.  Closings, which usually take place a month or two after a contract is signed, dropped 3.4% to a 5.36M annual rate, the National Association of Realtors reported.  Prices increased compared with Oct 2014 as the number of dwellings on the market decreased.  A limited supply of available properties, particularly more affordable homes, has made for a slow & steady recovery in residential real estate.  At the same time, steady employment growth, rising rents and low borrowing costs are bolstering prospects for the market.  The forecast called for sales at a 5.4M annual rate.  Compared with a year earlier, purchases increased 0.9% in Oct before adjusting for seasonal variations.  The median price of an existing home rose 5.8% from Oct 2014 to $219K.  The appreciation was led by an 8% year-to-year advance in the West.  Prices have been bolstered by a dearth of supply on the market.  The number of previously owned homes for sale dropped 2.3% in Oct from a month earlier to 2.14M, the fewest since Mar.  “This is disturbing,” Lawrence Yun, NAR chief economist, said.  Yun forecasts 5.3M homes will be sold in 2015, the most in 8 years.  “Once we reach the spring buying season we might be faced with a notable inventory crunch.”  At the current sales pace, it would take 4.8 months to sell those houses, compared with 4.7 months at the end of the prior month.  Less than a 5 months’ supply is considered a tight market.  Sales of existing single-family homes declined 3.7% to an annual rate of 4.75M from a month earlier.  Purchases of multifamily properties fell 1.6%.  While housing starts declined more than forecast, a boost in permits indicates that builders should stay busy in the months ahead.  Residential starts declined 11% to a 1.06M annualized rate from a 1.19M pace the prior month.  Permits for single-family home construction, the largest and most economically significant part of the market, climbed to a 711K rate, the strongest since 2007.

Sales of Existing U.S. Homes Fall From Second-Highest Since 2007

Stocks are holding up fairly well in the face of gloomy news.  Closing the Belgian economy for days will affect the euro area.  Chaos in the MidEast continues.  With this kind of news, the important holiday season in the US may come in below forecasts if consumers withhold some discretionary spending.  The Dow had a minor decline today, but it was enough to drag it into the red YTD.

Dow Jones Industrials

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