Markets advance on optimistic view of Greek debt

Stocks had their 2nd day of strong gains.  Dow rose 145, advancers over decliners almost 4-1 & NAZ added 41.  The Financial Index broke into the black in the PM, but continues to slosh around 200.

S&P 500 Financials Sector Index

Value	201.85
Change	0.83     (0.4%)

The MLPs rose & the REIT index went into the black, rising 1½ to the 238s (on a recommendation that they are under fair value).  Junk bond funds fell as did Treasuries with the yield on the 10 year Treasury backing up to over 3%.  Treasuries fell on hopes Greece problems will be worked out.  Oil had a rebound day as the $90 floor floor held & gold climbed back above $1500.

Alerian MLP Index

Value	366.78
Change	2.11    (0.6%)

Below is the link for today's Market Update video:

Treasury yields:

U.S. 3-month	0.025%
U.S. 2-year	0.489%
U.S. 10-year	3.044%

CLQ11.NYM

...Crude Oil Aug 11

...92.83

... 2.22

(2.5%)

Photo:   Bloomberg

Christine Lagarde, currently the finance minister of France, was named the new head of the IMF to become the first woman serving as the managing director. “I would like to thank the Fund’s global membership warmly for the broad-based support I have received,” Lagarde said. “I will make it my overriding goal that our institution continues to serve its entire membership with the same focus and the same spirit” as it did during the global economic crisis, she continued.  The IMF board said that it “looks forward to Ms. Lagarde effectively leading” the organization.  Her first major problem will be to getting the finances of Greece squared away.  Then there are more European countries to worry about.

Lagarde Named New Head of IMF


Filings for IPOs around the world are accelerating at the fastest pace since 2007 while the debt crisis in Greece & China’s rising inflation drag down stock markets.  720 companies, including Groupon & Beijing Jingneng Clean Energy, announced plans in Q2 for offerings of $67B, the largest number of deals in a qtr since 2007.  However, there are problems.  More European deals have been pulled this year in 5 years amid concern that Greece will default. All but 5 of the biggest IPOs in Hong Kong have declined since their debut, with Chinese inflation rising to its highest since 2008.  A jump in US-listed internet stocks wasn’t enough to buoy the market, even after LinkedIn (LNKD) more than doubled in its first trading day & Yandex NV surged 55%.  Online social game company Zynga plans to raise $1½-$2B in an IPO, possibly tomorrow.  Zynga is expected to float only a small portion of its shares & the IPO could value the company as high as $15-$20B.  Zynga's IPO would be the latest in a string of social media companies to take advantage of the equity markets. Speculative juices are running high.

IPO Filings Accelerate to Highest Since 2007 Just as Stock Markets Retreat

• Zynga could file for IPO as soon as Wednesday- Reuters

Photo:   Bloomberg

LinkedIn jumped $9.18 after 4 analysts began coverage of the stock.  This follows a rise of  $8.31 to $84.69 yesterday.  Its IPO last month helped open the floodgates to more technology IPOs, making for the biggest year in new internet stocks since the dot-com bubble burst in 2000.  This is the kind of behavior that makes me worry about the health of the stock market. 

LinkedIn Jumps After Banks Predict Stock Gains

LinkedIn Corporation (LNKD)

Stock markets are ignoring Greece, because earnings matter more.  Earnings season will begin in 2 weeks & expectations are high although the slowdown in the economic recovery may put a damper on those expectations.  IPOs are getting a lot of attention despite a largely dismal year.  Prada sold stock last week (in Hong Kong) & its reduced offering got only a lukewarm reception.  Greece needs to approve austerity measures tomorrow, something the population is not behind.  Stay tuned for the vote. 

Dow Industrials (INDU)

Get your favorite symbols' Trend Analysis TODAY!  

Click Here

Find out what's inside Trend TV  

Click Here

Markets extend gains on Greece debt hopes

Stocks are strong on hopes for the best with European finances.  Dow rose 110, advancers ahead of decliners 3-1 & NAZ was up 28.  However, bank stocks, traditional market leaders, are lower, having to deal with a host of problems, including earnings downgrades.

S&P 500 Financials Sector Index

Value	200.80
Change	-0.22     (-0.1%)

The MLP index rose 1½ to the 366s but the REIT index slipped a fraction in the 236s.  Junk bond funds were weak & Treasuries were lower ahead of an auction at lunch time. Oil rose from a 4-month low amid speculation that Greek lawmakers will approve austerity measures to prevent a default & on forecasts US fuel demand will rise before the Jul 4 holiday. Gold gained for the first time in 4 days as concern about Greece’s debt crisis spurred demand for the metal.

JPMorgan Chase Capital XVI (AMJ)

Treasuryyields:

U.S. 3-month	0.015%
U.S. 2-year	0.438%
U.S. 10-year	2.954%

CLQ11.NYM

....Crude Oil Aug 11

...91.88

... 1.27 (1.4%)

GCM11.CMX

...Gold Jun 11

.......1,499.50

... 3.50

(0.2%)

The Conference Board's Consumer Confidence Index slipped to 58.5 in Jun, down from a revised 61.7 in May.  Expectations were for the figure to edge up to 61.  The results follow an almost 6-point drop from May to Apr, which had marked a 6-month low as job worries increased.. A reading of 90 indicates a healthy economy on the index which measures how Americans feel about business conditions, the job market & the next 6 months.

• Consumers' confidence down in June on job worries- AP

Photo:   Bloomberg

Greek police fired tear gas to disperse protesters in the center of Athens as labor unions shut down gov services ahead of a vote on austerity measures to determine if the nation can avoid a default. Unions began their 4th general strike of the year at midnight, protesting a 5- year plan of budget cuts & asset sales. Police estimated about 12K joined marches on the first day of the 48-hour walkout.  The Prime Minister faces his 2nd survival test in a week with a vote on the package that’s needed before Greece can tap a 5th loan payment from last year’s €110B ($157B) rescue. Failure to pass would lead to the euro area’s first sovereign default.  “Voting for the medium-term plan means we can close this chapter of uncertainty for the Greek people,” Papandreou told lawmakers at the start of a 3-day debate late yesterday. “From the brink of catastrophe we are securing, colleagues, the great opportunity to change our country.”  Clearly, the situation remains tense. 

• Greek Police Fire Tear Gas to Disperse Protesters Before Vote on Austerity

Enbridge Energy Partners (EEP) sold 8.05M units for $30 a share in part to help reduce its debts.  The units were priced at a 2.9% discount to their closing price of $30.89 on Mon.  The units fell 1.03 to 29.86 & are a drag on the MLP index today.  EEP will receive more than $200M in net proceeds, used to repay debts & finance a portion of capital expansion projects.

Enbridge Energy to offer up to 8.07M common units AP

Enbridge Energy, L.P. (EEP)

The week is starting out on the right for for the bulls.  Stocks have moved ahead solidly, largely encouraged by a French plan to refinance Greek debts with 30 year bonds.  Of course, this all assumes that Greece will vote for the austerity measures & asset sales even though its people are not supporting this plan.  That's called a disconnect which is being ignored by the markets.  In the meantime, a plan to raise the debt ceiling for the US Treasury looks to be dead in the water.  The Reps are digging in their heals, demanding budget cuts, while the Dems want to raise taxes (while the economy is sputtering). .Uncertainty is on the rise, a negative for stock markets. 

Dow Industrials (INDU)

Find out what's inside Trend TV C
lick Here

Get your favorite symbols' Trend Analysis TODAY! Click Here

Markets rally on European debt news

Stocks were higher all day.  Dow gained 108, advancers ahead of decliners 2-1 & NAZ was up 35.  Bank stocks led the way on easing concerns about their need to raise additional capital relating to the new Basel regulations.

S&P 500 Financials Sector Index

Value	201.02
Change	2.25     (1.1%)

The MLP & REIT indices each had a decent (but not spectacular) gain, up 1+.  Junk bond funds were higher but Treasuries sold off, probably from profit taking after their recent run.  The yield on the 10 year Treasury bond rose above 3.9%.  Oil continued weak with all that supply coming to market & gold's chart shows it has fallen from 1525 to below 1500 in just the last 3 days. 

Alerian MLP Index

Value	364.67
Change	1.13    (0.3%)

Treasury yields:

U.S. 3-month	0.010%
U.S. 2-year	0.390%
U.S. 10-year	2.925%

CLQ11.NYM

...Crude Oil Aug 11

...90.64

... 0.21

(0.2%)

Today's Market Update video below:

Photo:   Bloomberg

The € rose against the dollar on word that French banks will accept a debt rollover to help Greece, easing fears that Greece could default. The plan is for the banks to reinvest their Greek debt holding into new 30-year bonds giving more funding & time for Greece to manage its debt.  The French Finance Minister said a first draft of the deal was ready.  The Greek parliament is expected to vote Wed on austerity measures which must pass in order for it to get its next installment of funding from last year's €110B bailout package.  It is hoped that the measures will pass & Greece will avoid a default.  Stay tuned, this is not a done deal.

European Banks Near 70% Greek Rollover Deal


Consumer spending failed to budge from Apr to May, as high gas prices & unemployment are squeezing household budgets. When adjusted for inflation, spending actually dropped 0.1% last month according to the Commerce Dept.  For the first time in a year, Americans have stopped spending more.  Apr consumer spending figures were revised to show a similar decline when adjusting for inflation. It marked the first 2-month decline in inflation-adjusted spending in 2 years.  Incomes rose 0.3% for the 2nd straight month. But adjusted for inflation, after-tax incomes increased only 0.1% in May, after falling by the same amount in the previous month.  The spike in gas prices has forced many consumers to cut back on discretionary purchases, such as furniture & vacations, which help boost growth.   However the slowdown in spending was partly the result of temporary factors.  Among them, auto purchases fell sharply in May.  And cheaper gas will likely allow consumers to spend more freely this summer & fall.  The news was less than inspiring but with rays of hope.

Consumer Spending in U.S. Stagnated in May


Delta Air Lines said it expects to make money in Q2 even though its fuel bill will be $1B larger than last year.  DAL also predicted that unit revenue will rise 10% in Q2 compared with the same period last year (unit revenue is revenue for each seat flown one mile, a key airline industry measure).   DAL said "higher revenues have largely offset the impact" of higher fuel prices.  It now expects to pay $3.23 per gallon of jet fuel during Q2, 91¢ higher than the same period last year. It expects to pay $3.03 per gallon in Q3 based on current prices.  In addition, the travel dropoff in Japan after its nuclear crisis will hurt Q2 results by $125M.  The stock was up 23¢.  These higher costs will pinch other company earnings.

Delta says 2Q will be profitable despite fuel AP

Delta Air Lines Inc. (New) (DAL)

Markets had a good day, but not great. Breadth was relatively modest all considered.  The news out of Europe was encouraging, but the situation remains fluid.  Bank stocks are still in the dumps, with the Financial Index down 12 YTD.  Projections for Citi (C) & Goldman Sachs (GS) Q2 EPS were cut today, more cuts for banks are coming.  These are meaningful because bank stocks are market leaders.  Meanwhile the economic recovery is still trying to find its footing.  Resolution of Greek debt probelms will be the key driver this week & that is a long way away.

Dow Industrials (INDU)

Get your favorite symbols' Trend Analysis TODAY! 

Click Here

Find out what's inside Trend TV  

Click Here

Higher markets on encouraging signs about the Greek debt crisis

Oversold stocks started the week strong.  Dow rose 77, advancers ahead oi decliners 2-1 & NAZ was up 22.  Bank stocks led the way up but the Financial Index remains near 200 where it has been stuck for a month.

S&P 500 Financials Sector Index

Value	200.77
Change	2.00     (1.0%)

The MLP index fell 1 to the 362s while the REIT index rose 1½ to 237.  Junk bond funds were higher following a good week & Treasury yields were little changed.  Oil continues weak on the increased supply coming to market in Jul & gold dipped below $1500 an ounce.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month	0.005%
U.S. 2-year	0.357%
U.S. 10-year	2.874%

CLQ11.NYM

....Crude Oil Aug 11

...90.64

.... 0.52 (0.6%)

GCM11.CMX

...Gold Jun 11

.......1,497.00

... 3.50

(0.2%)

Photo:   Bloomberg

The Federal Reserve (FED) will remain the biggest buyer of Treasuries, even after the QE2 ends Thurs, as the central bank uses its $2.9T balance sheet to keep interest rates low.  When the $600B program winds down, the FED said it will continue to buy Treasuries with proceeds from the maturing debt it currently owns. That could mean purchases of as much as $300B of debt in the next 12 months without adding money to the financial system.  Ben Bernanke said last week that progress bringing down the 9.1% unemployment rate was “frustratingly slow.” 

Fed May Buy $300 Billion in Treasuries After QE2


George Papandreou, Greek Prime Minister, faces a 2nd survival test this week as the parliament votes on a 5-year austerity plan. Failure to pass the plan may lead to the euro area’s first sovereign default as Greece needs to cover €6.6B ($9.4B) of maturing bonds in Aug. Complicating matters, the week will be marked by a 48-hour general strike in Greece. The uncertain outcome is unnerving investors who last week pushed the € to a record low against the Swiss franc. The yield on Greece’s 10-year notes rose 3 basis points to 16.81%.  The thought of contagion is unnerving investors.

Papandreou Faces Showdown on Austerity


Citigroup Q2 profit estimate was reduced by 2 analysts who said the bank’s fixed-income & trading revenue was likely to tumble.  EPS of the 3rd largest US lender could be 97¢, 20% lower than a previous forecast of $1.22 according to one analyst while the other cut his estimate to 95¢. The average estimate of 22 analysts is 99¢.  Citi’s fixed-income revenue is projected to tumble 20% from Q1 & trading revenue could fall 15% (Q1 trading revenue was $4.9B).  I'm a big fan of Citi, but it has to get over big bumps in the road especially with the many problems facing banks.  The stock rose 35¢ in an up market.

 Citigroup’s EPS Profit Estimate Cut by Analysts on Weak Trading Revenue

Citigroup Inc. (C)

Bulls are happy with rising markets, but this seems to be more of a nervous reaction.  Maybe bears are taking a long weekend holiday.  Greek debts are the center of attention & nothing has been resolved but the country does not look like it wants to along with austerity moves.  The administration is getting involved with discussions on raising the debt limit (by Aug 2) which will involve budget cuts, one more tough battle.  Jul is still shaping up as a difficult month.

Dow Industrials (INDU)

Find out what's inside Trend TV  
Click Here



Create FREE Portfolio C
lick Here

Get your favorite symbols' Trend Analysis TODAY!  
Click Here