Dow sank 350 (closing at the lows), decliners over advancers almost 10-1 & NAZ lost dropped 122 to go under 5K. The MLP index tumbled a very big 7 to the 399s (another new multi year low) & the REIT index fell 5 to the 303s. Junk bond funds also saw selling & Treasuries gained as stocks declined. The yield on the 10 year Treasury went down 14 basis points to 2.33%. Oil is below 61 & gold continued flattish.
AMJ (Alerian MLP Index tracking fund)
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Greece moved to check the growing strains on its crippled financial system on Sun, closing its banks & imposing capital controls that brought the prospect of being forced out of the euro into plain sight. After bailout talks between the leftwing gov & foreign lenders broke down at the weekend, the ECB froze vital funding support to Greece's banks, leaving it with little choice but to shut down the system to keep the banks from collapsing. Banks will be closed & the stock market shut all week, & there will be a daily €60 limit on cash withdrawals from cash machines, which will reopen tomorrow. Capital controls are likely to last for many months at least. "The more calmly we deal with difficulties, the sooner we can overcome them and the milder their consequences will be," a somber-looking Prime Minister Alexis Tsipras said. He promised bank deposits would be safe & salaries paid. Even as Tsipras spoke late on Sun, lines forming at petrol stations & in front of the dwindling number of bank machines that still contained cash highlighted the scale of the disaster facing Greeks, who have endured more than 6 years of economic decline. The failure to reach a deal with creditors leaves Greece set to default on €1.6B in loans from the IMF that fall due tomorrow & it must also repay billions of €s to the ECB in the coming months.
Prices on Puerto Rico’s newest general obligations sank to record lows after Governor Alejandro Garcia Padilla said investors should be prepared to sacrifice if they want the island’s economy to grow. General obligations maturing in 2035 traded as low as 68.5¢ on the dollar, down from an average of 77.3¢ on Fri & the weakest since they were first issued at 93¢ in Mar 2014. With 2 days left in Puerto Rico’s fiscal year, the commonwealth is struggling to pass a budget that would allow it to make payments on a $72B debt load. Investors should work with the commonwealth to reduce its obligations, Garcia Padilla said. “The debt is not payable,” he said. “There is no other option.” A report commissioned by the island suggests that Puerto Rico swap current debt to delay maturities. The US territory of 3½M is grappling with a jobless rate double the national average & a debt load bigger than every US state except California & NY. The territory’s House of Representatives & Senate last week passed differing budget bills for the fiscal year starting Jul 1, with negotiations between the 2 chambers continuing. Under the proposals, about 15% of the $9.8B budget would go to debt service. Puerto Rico’s cash crunch is intensifying. A group of former IMF officials recommend that Puerto Rico should voluntarily exchange old bonds for new ones with later maturities & lower debt payments. “There is no U.S. precedent for anything of this scale and scope, and there is the added complication of extensive pledging of specific revenue streams to specific debts,” the they wrote. “But difficult or not, the projections are clear that the issue can no longer be avoided.” The US Congress should allow Puerto Rico entities to file for Chap 9 bankruptcy protection, & an independent oversight board could help improve the island’s finances, the authors wrote.
General Electric, a Dow stock, deals to sell the bulk of its vehicle fleet-management business push the company near a goal of unloading at least $20B of finance assets before the qtr ends. Canada’s Element Financial will acquire GE Capital’s fleet assets in the US, Mexico, Australia & New Zealand for $6.9B. GE also said that it signed a provisional accord with Arval, a subsidiary of BNP Paribas, to sell the European portions of the leasing operations. The agreements represent about $8.6B in assets, excluding cash & some liabilities, & come less than a month after GE sold its $11B US private-equity lending business to Canada Pension Plan Investment Board. GE executives said last month they expect to announce $20-$30B of asset sales before the end of Jun. “We continue to demonstrate speed and execution on our strategy to sell most of the assets of GE Capital,” the unit’s CEO, Keith Sherin, said. “This announcement is the next step in GE’s transformation to a more focused industrial company.” GE Capital has said its top sale priorities are unloading units that finance health-care businesses & foreign buyouts. GE plans to shed about $200B of lending assets to refocus on industrial operations after GE Capital’s struggles during the 2008 financial crisis. It will retain divisions that support manufacturing -- including aircraft leasing, a boost for jet-engine production -- while unloading the fleet unit & similar businesses. GE Capital has announced about $63B in sales to date & the company remains “on track” to sell about $100B by the end of the year & be mostly done in 2016, Sherin said. The stock lost 45¢. If you would like to learn more about GE, click on this link:
club.ino.com/trend/analysis/stock/GE?a_aid=CD3289&a_bid=6ae5b6f7
There is a lot going on with the chaos in markets all over the globe. Among the many unknowns are how the chaos will affect raising US interest rates which is expected to begin this year, probably in Sep. If is difficult to think about that with so many immediate disasters to deal with today. Dow is down 200 YTD & is clearly on defense.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLQ15.NYM | ....Crude Oil Aug 15 | ....58.54 |  ...1.09 | (1.8%) |
Greece moved to check the growing strains on its crippled financial system on Sun, closing its banks & imposing capital controls that brought the prospect of being forced out of the euro into plain sight. After bailout talks between the leftwing gov & foreign lenders broke down at the weekend, the ECB froze vital funding support to Greece's banks, leaving it with little choice but to shut down the system to keep the banks from collapsing. Banks will be closed & the stock market shut all week, & there will be a daily €60 limit on cash withdrawals from cash machines, which will reopen tomorrow. Capital controls are likely to last for many months at least. "The more calmly we deal with difficulties, the sooner we can overcome them and the milder their consequences will be," a somber-looking Prime Minister Alexis Tsipras said. He promised bank deposits would be safe & salaries paid. Even as Tsipras spoke late on Sun, lines forming at petrol stations & in front of the dwindling number of bank machines that still contained cash highlighted the scale of the disaster facing Greeks, who have endured more than 6 years of economic decline. The failure to reach a deal with creditors leaves Greece set to default on €1.6B in loans from the IMF that fall due tomorrow & it must also repay billions of €s to the ECB in the coming months.
Amid Crisis, Greece Imposes Capital Controls
Prices on Puerto Rico’s newest general obligations sank to record lows after Governor Alejandro Garcia Padilla said investors should be prepared to sacrifice if they want the island’s economy to grow. General obligations maturing in 2035 traded as low as 68.5¢ on the dollar, down from an average of 77.3¢ on Fri & the weakest since they were first issued at 93¢ in Mar 2014. With 2 days left in Puerto Rico’s fiscal year, the commonwealth is struggling to pass a budget that would allow it to make payments on a $72B debt load. Investors should work with the commonwealth to reduce its obligations, Garcia Padilla said. “The debt is not payable,” he said. “There is no other option.” A report commissioned by the island suggests that Puerto Rico swap current debt to delay maturities. The US territory of 3½M is grappling with a jobless rate double the national average & a debt load bigger than every US state except California & NY. The territory’s House of Representatives & Senate last week passed differing budget bills for the fiscal year starting Jul 1, with negotiations between the 2 chambers continuing. Under the proposals, about 15% of the $9.8B budget would go to debt service. Puerto Rico’s cash crunch is intensifying. A group of former IMF officials recommend that Puerto Rico should voluntarily exchange old bonds for new ones with later maturities & lower debt payments. “There is no U.S. precedent for anything of this scale and scope, and there is the added complication of extensive pledging of specific revenue streams to specific debts,” the they wrote. “But difficult or not, the projections are clear that the issue can no longer be avoided.” The US Congress should allow Puerto Rico entities to file for Chap 9 bankruptcy protection, & an independent oversight board could help improve the island’s finances, the authors wrote.
Puerto Rico Bonds Tumble After Governor's Warning
General Electric, a Dow stock, deals to sell the bulk of its vehicle fleet-management business push the company near a goal of unloading at least $20B of finance assets before the qtr ends. Canada’s Element Financial will acquire GE Capital’s fleet assets in the US, Mexico, Australia & New Zealand for $6.9B. GE also said that it signed a provisional accord with Arval, a subsidiary of BNP Paribas, to sell the European portions of the leasing operations. The agreements represent about $8.6B in assets, excluding cash & some liabilities, & come less than a month after GE sold its $11B US private-equity lending business to Canada Pension Plan Investment Board. GE executives said last month they expect to announce $20-$30B of asset sales before the end of Jun. “We continue to demonstrate speed and execution on our strategy to sell most of the assets of GE Capital,” the unit’s CEO, Keith Sherin, said. “This announcement is the next step in GE’s transformation to a more focused industrial company.” GE Capital has said its top sale priorities are unloading units that finance health-care businesses & foreign buyouts. GE plans to shed about $200B of lending assets to refocus on industrial operations after GE Capital’s struggles during the 2008 financial crisis. It will retain divisions that support manufacturing -- including aircraft leasing, a boost for jet-engine production -- while unloading the fleet unit & similar businesses. GE Capital has announced about $63B in sales to date & the company remains “on track” to sell about $100B by the end of the year & be mostly done in 2016, Sherin said. The stock lost 45¢. If you would like to learn more about GE, click on this link:
club.ino.com/trend/analysis/stock/GE?a_aid=CD3289&a_bid=6ae5b6f7
GE Nears $20 Billion Asset-Sale Target
General Electric (GE)
There is a lot going on with the chaos in markets all over the globe. Among the many unknowns are how the chaos will affect raising US interest rates which is expected to begin this year, probably in Sep. If is difficult to think about that with so many immediate disasters to deal with today. Dow is down 200 YTD & is clearly on defense.
Dow Jones Industrials
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