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Jun 26, 2015

DealBook P.M. Edition - June 26, 2015: Top Story: Tempers Flare as Greek Talks Enter Final Stages.

Friday, June 26, 2015

Prime Minister Alexis Tsipras of Greece, right,  with  Chancellor Angela Merkel of Germany and President François Hollande of France, left, in Brussels on Friday.
Tempers Flare as Greek Talks Enter Final Stages With time running out in negotiations to resolve Greece's debt crisis, tensions showed in comments by European leaders.
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Wall Street at Close Report on June 26, 2015: Dow rides Nike’s gain to higher ground, but Greece still weighs on market

Dow rides Nike’s gain to higher ground, but Greece still weighs on market

Anora Mahmudova, Sara Sjolin
Consumer sentiment reached a five-month high in June.
U.S. stocks posted weekly losses Friday as slippery negotiations between Greece and its lenders failed to produce a decisive agreement.
Most of the main indexes finished the day lower even as the Dow industrials got a boost from Nike Inc. NKE, +4.27%  , which soared more than 4% a day after a better-than-expected earnings report. Its advance was responsible for more than half of the Friday gain by the price-weighted blue-chip benchmark.
Elsewhere, a report showing consumer sentiment rising in June to its highest level in five months, topping a consensus forecast, helped provide support for equities, but hand wringing over Greece’s fate kept stocks in check.
“The market is modestly higher year-to-date, despite all the bad news, including a weak economy during the first quarter, the Greece situation and geopolitical news. And when you add dividends, the return during the first half is pretty good,” said Bruce Bittles, chief investment strategist at R.W. Baird & Co.
The S&P 500 SPX, -0.04%  closed less than a point lower at 2,101.50 and recorded a 0.4% loss over the week.
The tech-heavy Nasdaq Composite COMP, -0.62%  ended the day down 31.68 points, or 0.6%, at 5,110. It declined 0.7% over the course of the week.
The Dow Jones Industrial Average DJIA, +0.31%  rose 57.12 points, or 0.3%, ending the week at 17,947.48. It fell 0.4% on the week.
“[W]e are cautious because valuations are stretched, and the fact the utilities and transports are down more than 10% is worrisome. If the S&P 500 falls below 2,070, we will rethink our bullish case for stocks. But until then, we will give it benefit of the doubt,” Bittles said.
Trading volumes surged shortly before the close as the Russell indexes go through their annual routine of adding and removing stocks. According to FactSet, daily volume on the stock exchanges was the year’s sixth highest.
For the better part of the week, the Greek drama has kept investors anxious. The Eurogroup of finance ministers will meet again Saturday in a last-ditch effort to hammer out a deal before Greece has to repay 1.54 billion euros ($1.73 billion) to the International Monetary Fund on Tuesday.
European stock markets closed mostly higher Friday, with the Stoxx Europe 600 index SXXP, +0.12%  gaining 0.1% to 396.85.
U.S. data: Consumer sentiment rose to a final June reading of 96.1, a five-month high, rebounding from a drop in May, according to reports on the University of Michigan gauge released Friday. Economists polled by MarketWatch had forecast a reading of 94.6.
Movers and shakers: Shares of Micron Technology Inc. MU, -18.15%  slumped 18% after the semiconductor company late Thursday reported a drop in third-quarter earnings.
Hospital and health-insurance stocks continued to rally after the Supreme Court ruled Thursday that “Obamacare” subsidies were constitutional. Tenet Healthcare Corp THC, +2.83%  gained 2.8%.
Read on: For more on today’s notable movers see the Movers & Shakers column.
Other markets: In Asia, China’s Shanghai Composite Index SHCOMP, -7.40%  slid more than 7% on ongoing concerns that the market is overvalued after an impressive bull run earlier in the year.
Investors sold off Treasurys, sending the yield on the 10-year note TMUBMUSD10Y, +2.65% up 6 basis points to 2.47%. Oil futures CLQ5, -0.08%  fell for a third straight session, settling 0.1% lower at $59.63. Gold futures GCQ5, +0.16%  settled a touch higher at $1,173.20 but still recorded a weekly loss. The dollar DXY, +0.20%  edged higher and booked its first weekly rise in four weeks.

Shanghai Gold Exchange in talks to list products on CME: GATA | THE GATA DISPATCH - June 26, 2015.

Shanghai Gold Exchange in talks to list products on CME

Submitted by cpowell on Friday, June 26, 2015From Reuters Friday, June 26, 2015

SHANGHAI -- The Shanghai Gold Exchange is in talks to list its bullion products on CME Group's trading platform and launch yuan-denominated bullion contracts in Dubai, an exchange official said.
China, the top producer and a leading consumer of gold, is seeking to boost its global presence in the bullion market and increase the use of its currency, while also opening its own markets to foreign players.
State-run SGE, the world's biggest physical bullion exchange, will initially list its products and prices on CME, whose members and clients will be allowed to trade the Chinese exchange's products, SGE Vice President Shen Gang told an industry conference on Thursday. ...

... For the remainder of the report:

FTC Approves Final Consent Order Against Network Solutions for Misleading Consumers About Refunds: FTC Press Release - June 26, 2015.

FTC@100 Banner

Following a public comment period, the Federal Trade Commission has approved a final consent order involving Network Solutions, LLC, which misled consumers who bought its web hosting services by falsely promising a full refund if they canceled within 30 days.
In an administrative complaint issued in April 2015, the FTC alleged that Network Solutions, a domain name registrar and web hosting provider, offered web hosting packages with a “30 Day Money Back Guarantee,” but did not adequately disclose that it withheld up to 30 percent of the refund from customers who cancelled within 30 days of buying an annual or multi-year package and registering an included domain name.

European Markets at Close Report on June 26, 2015: Europe closes higher despite no Greek resolution

Europe closes higher despite no Greek resolution

Alexandra Gibbs, Holly Ellyatt
Euro zone stocks closed higher on Friday, paring earlier losses, as investors kept an eye on Greece's looming debt deadline. U.K. stocks underperformed to close lower.
The pan-European Stoxx 600 index finishing the day around 0.2 percent higher. On the week, the Stoxx 600 index closed roughly 3 percent higher.
The French CAC closed around 0.4 percent higher, with the German DAX finishing higher by around 0.2 percent.
The FTSE 100 index however, ended its trading day around 0.8 percent lower.


FTSE FTSE 100 Index 6753.70
-54.12 -0.79% 613762503
DAX DAX Index 11492.43
19.30 0.17% 94560472
CAC 40 CAC 40 Index 5059.17
17.46 0.35% 108847215
IBEX 35 IBEX 35 Idx 11372.30
63.90 0.57% 217127663
Greece is staring down the deadline gun, at risk of defaulting on a 1.6 billion euro ($1.8 billion) debt due to the International Monetary Fund on June 30.

The Eurogroup of euro zone finance ministers will meet yet again on Saturday to discuss proposals for a cash-reforms-deal to save Greece and soothe fears of a "Grexit" from the euro zone.
Read MoreCheckmate: Is this Greece's final, final deadline?

German Chancellor Angela Merkel told a news conference on Friday that time was running out and a deal was needed on Saturday.
"We are saying, not without careful thought, that this Eurogroup is of decisive importance, taking into account that time is very short and that a result must be worked on," she said, Reuters reported.
U.S. stocks traded mixed on Friday, as investors tracked the latest Greece headlines.

Elsewhere, Russia's economic contraction is steepening, data showed on Friday, with its economy shrinking by 4.9 percent year-on-year in May.

K+S soars, ARM tumbles

The STOXX 600's best performer on Friday was German agricultural chemical and salt company K+S, whose shares closed almost 30 percent higher after a 7 billion euro takeover offer by Canadian fertilizer producer Potash.
Two sources close to the matter said the deal was likely to be rejected as being too low, Reuters reported.
At the bottom of the STOXX and the FTSE 100 was ARM, shares of which finished 5 percent lower after Bernstein cut the semiconductor company's target price Friday.

Tesco topped the FTSE 100, ending around 2.7 percent higher, after the embattled retailer reported same-store sales, excluding fuel, that were down 1.3 percent in the first quarter and warned that short-term volatility remained.

Read More'Nobody said this was going to be easy': Tesco CEO

Incrementum's 'In Gold We Trust' report for 2015 -- valuation anomalies galore: GATA | THE GATA DISPATCH - Originally Published onJune 25, 2015

Incrementum's 'In Gold We Trust' report for 2015 -- valuation anomalies galore

Submitted by cpowell on  Thursday, June 25, 2015.  Thursday, June 25, 2015

Liechtenstein-based asset management firm Incrementum partners Ronald-Peter Stoeferle and Mark J. Valek today published the firm's annual "In Gold We Trust" report, a magisterial review of gold's standing in the financial markets.
The report identifies many anomalies suggesting that gold now may be more undervalued since King Croesus of ancient Lydia recognized its potential as money and minted the first gold coins, or at least since GATA Chairman Bill Murphy, toward the end of the long night of the organization's founding in 1998, mistakenly put a Louis d'or into a vending machine in pursuit of a Dr. Pepper.
These anomalies are why Incrementum remains bullish on gold. But while the report includes a chapter on "financial repression" -- central bank intervention to defeat markets and expropriate investors -- it seems not to mention the biggest mechanism of repression, gold price suppression, which, documented extensively by GATA here --
-- largely explains the anomalies cited in the report and must temper bullishness about gold.
Despite that omission, the report should get people wondering about those anomalies, and it's posted in PDF format at Incrementum's Internet site here:

NYT First Draft on Politics - June 26, 2015: G.O.P. Finds Much to Add to Justices' Final Say on Health Care Law,

6/26/2015 »
First Draft

G.O.P. Finds Much to Add to Justices’ Final Say on Health Care Law

Demonstrators cheering in front of the Supreme Court building on Thursday after the announcement of the court’s decision to uphold a central part of the Affordable Care Act. Zach Gibson/The New York Times
By Alan Rappeport
Good Friday morning from Washington, where the Supreme Court has taken over both the Capitol and the campaign trail. Its ruling in favor of a central provision of the Affordable Care Act prompted declarations of victory from the White House and increased pledges to repeal the law from the Republicans looking to move in.

DealBook Today's Top Headlines - June 26, 2015: Humana Said to Pursue Deal to Sell Itself | Prison Term Sought for Email Hacker | Greek Bailout Talks Go Down to the Wire | Calpers's Private Equity Fees Under Scrutiny

Friday, June 26, 2015
HUMANA SAID TO PURSUE DEAL TO SELL ITSELF Humana, the smallest of the big five health insurers in the United States, could reach an agreement by next week to sell itself to another insurer, according to a person briefed on the matter, Michael J. de la Merced writes in DealBook. Among the suitors are Aetna and Cigna, which have both been the targets of takeovers themselves as insurance companies look to cut costs through consolidation and take advantage of the opportunities that are part of the Affordable Care Act.

U.S: Stock Market Future Indications - June 26, 2015: U.S. investors stay cautious ahead of the weekend

U.S. investors stay cautious ahead of the weekend

Sara Sjolin
Consumer sentiment data are on tap on Friday
After a volatile trading week, U.S. stock futures struggled for direction early on Friday, with investors cautious of making any big moves ahead of consumer sentiment data and another “make it or break it” meeting on Greece over the weekend.
Futures for the Dow Jones Industrial Average YMU5, +0.14%  inched 6 points higher, while those for the S&P 500 index ESU5, +0.12%  slipped 0.40 points to 2,093.25. Futures for the Nasdaq 100 index NQU5, -0.06%  dropped 5 points to 4,504.
In the last minutes of Friday’s trade, stock trading volumes are expected to surge as the Russell indexes go through their annual routine of adding and removing stocks.
Earlier this week, markets marched firmly higher, with the Nasdaq Composite COMP, -0.20% and small-cap benchmark Russell 2000 index RUT, -0.05%  ending at record closing highs partly due to optimism that Greece and its international lenders would reach an agreement. However, that optimism has faded in recent days as the anti-austerity Greek government and its creditors continue to disagree on reform plans to unlock bailout funds for the country.
The Eurogroup of eurozone finance ministers will meet again on Saturday in a last-ditch effort to hammer out a deal before Greece has to repay 1.54 billion euros ($1.73 billion) to the International Monetary Fund on Tuesday. German Chancellor Angela Merkel called Saturday’s meeting “decisive” in resolving the crisis, insisting a deal must be reached before financial markets open on Monday.
European stock markets were Friday lower across the board, with the Stoxx Europe 600 index SXXP, -0.17%  down 0.7%.
U.S. data: Investors were also waiting for the final reading on consumer sentiment in June. The report comes out at 10 a.m. Eastern and is forecast to confirm the flash estimate of 94.6, according to economists polled by MarketWatch.
Among Federal Reserve speakers, Kansas City Fed President Esther George will give a speech on the payments system at 12:45 p.m. Eastern. George is not a voting member of the policy-setting committee this year.
Movers and shakers: Shares of Micron Technology Inc. MU, -0.17%  slumped 12% ahead of the bell after the semiconductor company late Thursday reported a drop in fiscal third-quarter earnings.
Nike Inc. NKE, -0.94%  could also be active premarket after the sportswear company late Thursday said earnings rose in the fourth-quarter and beat analyst forecasts.
Other markets: Asian stocks dropped, with China’s Shanghai Composite Index SHCOMP, -7.40%  sliding more than 7% on ongoing concerns about overvaluation in the country’s stock market after an impressive bull run earlier in the year.
Oil futures CLQ5, -0.92%  fell 0.5%, while gold futures GCQ5, +0.06%  edged up. The dollar DXY, +0.02%  was little changed, on track for its first weekly rise in four weeks.

Asian Markets at Close Report on June 26, 2015: China stocks plunge 7%, slide toward bear territory

China stocks plunge 7%, slide toward bear territory

Chao Deng
China’s stock markets plunged toward bear territory Friday, a sharp turnaround after a year of strong gains.

The Shanghai market, China’s largest, closed down almost 20% from its recent peak, while the second-largest Shenzhen market fell 20%, entering bear-market territory. The country’s startup stocks have lost a quarter of their value since hitting a record high earlier in the month.

The Shanghai Composite Index SHCOMP, -7.40%  became one of the best-performing markets globally last year after years of dismal performance. This year, it has been up as much as 60%, as local investors—cheered by a series of stimulus measures introduced by China’s central bank last November—have borrowed a flood of cash from their brokerages to invest in the stock market. The benchmark hit its highest level since the global financial crisis on June 12.

The Shanghai Composite Index fell 7.4% to 4,192.87, after a 13% loss last week.
 The smaller Shenzhen Composite Index 399106, -7.87% fell 20% from a recent peak. The benchmark was down 7.9% at 2,618.41 Friday, well off its record high of 3,140.66 earlier this month.
The selling has been particularly dramatic among riskier startup stocks. The ChiNext Price Index 399006, -8.91%  closed down 8.9% at 2,920.70, tumbling 27% from its record close of 3982.25 on June 3.
Investors have started to question the longevity of that stimulus-driven rally, and analysts are sounding louder warnings that China’s market has reached unsustainable levels. A selloff over the past two weeks has taken a big bite out of earlier gains.
“People still think there’s money to be made in China,” but they’re increasingly looking to buy China shares offshore in Hong Kong instead of on the mainland where shares have gotten more expensive, said Mohit Baja, director of ETF trading solutions at WallachBeth Capital LLC.
The Hang Seng Index HSI, -1.78% down 1.8% to 26,663.87 on Friday, has been steadier as volatility spikes in the mainland. Hong Kong is up around 13% this year, compared with Shanghai’s more-than-30% rise.

To be sure, China’s central bank has introduced new easing measures in the past couple of days: removing a cap on banks’ loan-to-deposit ratio and injecting cash into the financial system. Still, some investors fret that those steps don’t go far enough, and limit the likelihood of more potent measures, such as another cut to the amount of reserves banks are required to hold.
On Thursday, China’s central bank injected cash in to the financial system for the first time in 10 weeks, and a day earlier the State Council said it would remove a loan-to-deposit cap for banks, which has long limited the amount banks can lend. The central bank already has cut interest rates three times and the reserve-requirement ratio twice since late last year.
“This is probably not a dip to buy,” wrote analysts at Morgan Stanley. The bank lowered its price target for the Shanghai benchmark in a report Thursday, citing concerns like lofty valuations and high margin debt relative to China’s free float market capitalization. Margin debt, or the use of borrowed cash from brokerages, has reached 8.5% of the value of China’s tradable shares. That’s well above the 4.6% level Taiwan reached at the height of its market bubble.

Elsewhere in Asia, stalled progress on Greece’s bailout talks added to investor uncertainty, while a slide in the price of crude oil pressured Australian shares.
Australia’s S&P ASX 200 XJO, -1.54%  was down 1.5%, led down by the energy sector, after U.S. government data showed a surprise increase in inventories of refined fuels like gasoline. That led oil prices CLQ5, -0.69%  back below $60 a barrel late Thursday in New York.
In Japan, the Nikkei Stock Average NIK, -0.31%  slipped 0.3% to 20,706.15.

Greece’s talks with its creditors appear likely to go down to the wire. European leaders have put off until the weekend talks to seal a bailout deal after cutting short talks in Brussels on Thursday to give negotiators more time to settle differences, including budget cuts and policy overhauls. Greece is just days away from defaulting on a €1.54 billion ($1.72 billion) loan payment.
“Heading into the weekend, where talks between Greece and its creditors will be extended, investors will want to reduce risk by closing positions,” says Norihiro Fujito, senior investment strategist Mitsubishi UFJ Morgan Stanley Securities.