Dow fell 17, advancers 5-4 ahead of decliners & NAZ was off 7. The Financial Index was essentially even.
After its big run up in recent months, the MLP index pulled back 4 to 391. The REIT index was fractionally changed & junk bond funds were mixed. Treasuries were slightly higher on the goings on in Europe & the MidEast. Oil dropped for a 3rd day, but remained above $100, as German industrial output declined, signaling that growth may have stalled & with concern easing that Iran will block shipments in the Persian Gulf. Gold inched up on global tensions.
ALERIAN MLP Index
DJ REIT INDEXDJR
Photo: Yahoo
Germany & France warned Greece it will get no more bailout funds until it agrees with creditor banks on a bond swap & pressed for an early deal to avert a potential default. Merkel & Sarkozy insisted that private sector bondholders must share in reducing Greece's debt burden, along with new European & IMF lending. They rejected a call by the ECB to abandon plans to make private investors take losses & a leaked IMF memo that cast doubt on Greek ability to reform public finances. "We must see progress on the voluntary restructuring of Greek debt," Merkel said. "From our point of view, the second Greek aid package including this restructuring must be in place quickly. Otherwise it won't be possible to pay out the next tranche for Greece." Merkel & Sarkozy voiced determination to press ahead with a tax on financial transactions opposed by Britain, but diverge on the timing. Sarkozy suggested France could go it alone & challenge other states to follow suit. Merkel said should move ahead if other countries continued to block an EU decision. However she acknowledged that she did not have full agreement on this within her centre-right coalition gov. A Greek official said talks with private bondholders on a debt swap key to averting default were progressing but there was no deal. A senior insurance executive briefed on the negotiations said they were very difficult & likely to be unsuccessful. The problem is bondholders are supposed to accept a 50% haircut (writedown) & they are not happy if it triggers credit default insurance. Bottom line, talks are going nowhere.
Merkel Says Budget Rules May Be Fast-Tracked
Financing by the ECB to help Portuguese lenders rose for a 2nd month in Dec. ECB financing increased to €46B ($58.7B) from €45.7B in Nov. ECB financing levels peaked at €49.1B in Aug 2010. Portugal in Apr became the 3rd euro-area country to seek a bailout after Greece & Ireland, are receiving €78B under the agreement with the IMF & the EU. The aid plan earmarks €12B for Portugal’s lenders (if needed). As part of the plan, Portugal’s lenders were required to raise Core Tier 1 capital ratios to 9% by the end of 2011 & 10% by the end of 2012. The Portuguese central bank said on Dec 8 that the country’s lenders needed to raise €6.95B in capital to meet the EBA target.. Since then Portuguese banks have carried out capital increases to reduce their shortfalls. Greece is not the only country in trouble.
ECB Financing to Portuguese Lenders Rose to 46 Billion Euros in December
Photo: Bloomberg
A pipeline to transport crude oil from the UAE to bypass the Strait of Hormuz has been delayed because of construction difficulties. Numerous construction issues have pushed back the completion date of the $3.3B project. It's not expected to be ready until at least Apr. Abu Dhabi, holder of most of the UAE crude reserves, had planned to start exports in Jan 2011 to a port outside the strait. “The pipeline is almost complete, so hopefully it will be operational, say, within six months, by May-June,” U.A.E. Oil Minister Mohamed al-Hamli said. “It’s a big project, there’s a lot to do.” The 1.5M barrel-a-day link would ensure the UAE can export crude without risking a blockade at Hormuz. The possibility that Iran might try to close the waterway has complicated completion of the project.
Oil Pipeline Bypassing Hormuz Said to Be Delayed as Iranian Tensions Mount
There's not much for the markets do do while the the "biggies" meet in Europe. It's difficult to imagine they will come up with much given the enormity of European debt problems. While Greece is getting the bulk of the attention, other countries (such as Italy, Portugal, Hungary, etc.) also have major debt troubles. The jobs report on Fri was reasonably good, but the future remains cloudy. Extending individual tax cuts & unemployment benefits under emergency programs looks like a major stumbling block. Many taxes are going up next year (not that far away) from Obamacare & new gov programs, not to mention reduced gov spending. The big news tonight will be Alcoa (AA), a Dow stock, earnings & they are expected to be good.
S&P 500 Financials Sector Index
| Value | 180.66 |  |
| Change | 0.08 (0.0%) |
After its big run up in recent months, the MLP index pulled back 4 to 391. The REIT index was fractionally changed & junk bond funds were mixed. Treasuries were slightly higher on the goings on in Europe & the MidEast. Oil dropped for a 3rd day, but remained above $100, as German industrial output declined, signaling that growth may have stalled & with concern easing that Iran will block shipments in the Persian Gulf. Gold inched up on global tensions.
ALERIAN MLP Index
DJ REIT INDEXDJR
Treasury yields:
U.S. 3-month | 0.010% | |
U.S. 2-year | 0.252% | |
U.S. 10-year | 1.954% |
| CLG12.NYM | ...Crude Oil Feb 12 | ...100.64 | ... 0.92 (0.9%) |
| GCF12.CMX... | Gold Jan 12 | .........1,618.80 | ... 2.70 . (0.2%) |
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Germany & France warned Greece it will get no more bailout funds until it agrees with creditor banks on a bond swap & pressed for an early deal to avert a potential default. Merkel & Sarkozy insisted that private sector bondholders must share in reducing Greece's debt burden, along with new European & IMF lending. They rejected a call by the ECB to abandon plans to make private investors take losses & a leaked IMF memo that cast doubt on Greek ability to reform public finances. "We must see progress on the voluntary restructuring of Greek debt," Merkel said. "From our point of view, the second Greek aid package including this restructuring must be in place quickly. Otherwise it won't be possible to pay out the next tranche for Greece." Merkel & Sarkozy voiced determination to press ahead with a tax on financial transactions opposed by Britain, but diverge on the timing. Sarkozy suggested France could go it alone & challenge other states to follow suit. Merkel said should move ahead if other countries continued to block an EU decision. However she acknowledged that she did not have full agreement on this within her centre-right coalition gov. A Greek official said talks with private bondholders on a debt swap key to averting default were progressing but there was no deal. A senior insurance executive briefed on the negotiations said they were very difficult & likely to be unsuccessful. The problem is bondholders are supposed to accept a 50% haircut (writedown) & they are not happy if it triggers credit default insurance. Bottom line, talks are going nowhere.
Merkel Says Budget Rules May Be Fast-Tracked
Financing by the ECB to help Portuguese lenders rose for a 2nd month in Dec. ECB financing increased to €46B ($58.7B) from €45.7B in Nov. ECB financing levels peaked at €49.1B in Aug 2010. Portugal in Apr became the 3rd euro-area country to seek a bailout after Greece & Ireland, are receiving €78B under the agreement with the IMF & the EU. The aid plan earmarks €12B for Portugal’s lenders (if needed). As part of the plan, Portugal’s lenders were required to raise Core Tier 1 capital ratios to 9% by the end of 2011 & 10% by the end of 2012. The Portuguese central bank said on Dec 8 that the country’s lenders needed to raise €6.95B in capital to meet the EBA target.. Since then Portuguese banks have carried out capital increases to reduce their shortfalls. Greece is not the only country in trouble.
ECB Financing to Portuguese Lenders Rose to 46 Billion Euros in December
A pipeline to transport crude oil from the UAE to bypass the Strait of Hormuz has been delayed because of construction difficulties. Numerous construction issues have pushed back the completion date of the $3.3B project. It's not expected to be ready until at least Apr. Abu Dhabi, holder of most of the UAE crude reserves, had planned to start exports in Jan 2011 to a port outside the strait. “The pipeline is almost complete, so hopefully it will be operational, say, within six months, by May-June,” U.A.E. Oil Minister Mohamed al-Hamli said. “It’s a big project, there’s a lot to do.” The 1.5M barrel-a-day link would ensure the UAE can export crude without risking a blockade at Hormuz. The possibility that Iran might try to close the waterway has complicated completion of the project.
Oil Pipeline Bypassing Hormuz Said to Be Delayed as Iranian Tensions Mount
There's not much for the markets do do while the the "biggies" meet in Europe. It's difficult to imagine they will come up with much given the enormity of European debt problems. While Greece is getting the bulk of the attention, other countries (such as Italy, Portugal, Hungary, etc.) also have major debt troubles. The jobs report on Fri was reasonably good, but the future remains cloudy. Extending individual tax cuts & unemployment benefits under emergency programs looks like a major stumbling block. Many taxes are going up next year (not that far away) from Obamacare & new gov programs, not to mention reduced gov spending. The big news tonight will be Alcoa (AA), a Dow stock, earnings & they are expected to be good.
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