Greek talks finished late but achieved nothing as an impasse continues.
The greater part of the Greek proposal involved increasing taxes-mainly sales tax.
That is unpalatable to the IMF and Angela Merkel says there is no deal until the IMF is happy.
Talks continue tonight but time is running out and there are huge questions surrounding Tsipras getting Parliamentary approval in time if at all.
Euro Stoxx was down 0.4%,DAX down 0.6% and Athens down 1.8% with the Greek Bank index down 6%
That gave a poor lead into the US which had the Dow down 166 points early before some recovery after some the GDP figure
US GDP fell a revised 0.2% from the earlier figure of a 0.7% drop and amazingly that matched consensus from Bloomberg’s 76 economists( had to happen eventually)
But then Carl Icahn weighed in with an interview on CNBC in which he said US markets, particularly junk bonds ,are way too overheated and smack of 2007.
He warned investors they were making errors and were at risk of another wipe-out
“I do think you are going to have a dramatic pullback”
He also said he was switching out of Netflix and sees Apple as the better vehicle as it has the same upside as Netflix had two years ago
Netflix fell 0.3% and Apple was the only Dow stock to rise on the day, up 1%.
Carl’s warning did seem to weigh on markets and all indices weakened into the close with Dow at its low of the day at minus 178 points and below 18000
Stocks of note included GM falling 3% after an analyst downgrade at Goldmans which also upgraded Ford to see that stock up 0.4%.
Monsanto was down 5% on soft earnings guidance after its result (as an aside as I go through earnings results there is a trend towards guidance not meeting analyst expectations and that can’t be a good trend given analysts have been paring back growth anyway)
Dow Transports are back in correction territory after a 2% fall overnight.
Particularly hard hit were railroad stocks with CSX, Kansas City South and Union Pacific down over 3% after disappointing rail volumes numbers
US crude stockpiles fell for the eighth straight week with a draw- down of 4.9mmbbls but a build- up in oil products weighed on WTI crude as did a stronger dollar.
The EIA announced that gasoline stockpiles rose by 680,000 barrels last week as opposed to an expected drop of 304,000.
WTI Crude fell 1.2% and Brent was down 1.4%
After the Bell
Disney was up 0.4% after announcing a 15% increase in dividend
Bed Bath & Beyond fell more than 2% after posting eps 1 c below consensus of 94c as it issued soft guidance for the next quarter.
CREE fell more than 5% after announcing a restructuring of its LED business
Chesapeake Energy and Murphy Oil were down around 1% after downgrades by UBS
Cochlear Limited announced that the FDA has approved the Cochlear Nucleus 6 Sound Processor for use with the Nucleus 22 Cochlear Implant. The Nucleus 22 was the first commercially available multi –channel Cochlear implant in the world .In some cases the implant has been worn for over 20 years.
Stocks Going Ex-Dividend:
ALR (Aberdeen Leaders) – 2cps
Tomorrow is REIT ex Div day around 5 points
The SPI is down 9 points ahead of local trade
– Beijing is planning to abolish the loan-to-deposit ratio form commercial banks in another attempt to reform the sector and boost lending growth as the economy continues to founder
– PBoC is set to approve a yuan-denominated gold fix which will be launched on the Shanghai Gold Exchange (SCMP)
– Thomson Reuters INSEAD Q2 Asian Business Sentiment Index:
* Fell to 70 vs 71 in Q1
* Fell from 74 y/y
* Biggest fall from India component which fell from 97 to 84
* Biggest gain from Thai component which rose to 94 from 79 in Q1
* Chinese companies showed lowest optimism for first time in 9 quarters recording a near flat reading of 55
* Property sector saw biggest fall in sentiment, dropping from 88 to 77 q/q
* Shipping, finance and automotive sectors saw the lowest sentiment reading
– China’s latest attempt at economic stimulus through infrastructure expenditure was announced yesterday when the Civil Aviation Administration of China announced plans to invest around US$80.6b in 193 domestic projects this year
– The Australian Government has pledged to contribute US$719m over five years to the new AIIB – making it the sixth largest shareholder
– A report from US research company FactSet has attributed the stellar performance of the Nikkei over the past two years to foreign investors. According to the report:
* Overseas investors have increased their Japanese shareholding by 90% since Dec. 2012
* Holding now total roughly US$145trillion
* The latest rally has been pushed along by Southern Europe and Asian investors
* For those concerned about overstretched valuations current P/E stands at 17 vs 100 during the IT bubble and 19 in the US
Today The Market Will Be Watching:
– Hong Kong May Exports, no est. (prior +2.2% y/y)
– Taiwan rate decision, est. unchanged
* May personal spending. Est. +0.7% m/m
* Markit June Flash Services Index, est. 56.5
* Weekly jobless claims
Iron ore shipped into the port of Qingdao was up 1.9% to US$62.53 per tonne