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Weekly Market Update – June 26, 2015

The Dow managed a 56-point gain Friday despite stalled Greek debt talks and weakness in the technology sector. 

On Friday, Greece rejected a five-month bailout extension, setting the stage for another meeting with European officials on Saturday, the fifth such meeting in the last week.  Greece needs to secure 1.8 billion euros for payment to the IMF by the end of June to stave off default and a possible exit from the euro and European Union.  European markets were mostly lower on the news. 

In the US, technology stocks, specifically semiconductor shares, fell Friday after a disappointing report from Micron, one of the leading chip makers.  Data-wise, consumer confidence rose to a five-month high.

The yield on the 10-year Treasury rose 8 bps to 2.48%, up 10 bps for the week and now up 31 bps for the year.  Through Thursday, June 25, our trust preferred portfolios were up approximately 3%, on average, versus -.38 % for the Barclays Aggregate Bond Index. 

In an SEC filing on Thursday, Magnum Hunter, which many of our accounts have via its preferred security, reported that it will pursue the sale of the entirety of its Eureka Hunter pipeline.  Magnum Hunter believes the sale of its 45.53% Eureka interest could generate $600- $700 million.  This would be a significant positive for Magnum Hunter, and the sale price confirms our view of the quality of the firm’s assets.  As a result, the preferreds have rallied 25-30% this week, recovering some of their recent price decline.  We expect further appreciation upon confirmation of a deal and as additional liquidity events are announced.

Oil fell 7 cents to $59.63 Friday, down 34 cents for the week or .6%.  The loss was attributed to the ongoing Greek debt situation, concerns that Iran could soon release additional oil stores, and a drop in the oil rig count of only three for the week, an indication that the contraction in drilling might be coming to an end.  

Next week’s economic calendar highlights include June manufacturing and consumer confidence reports on Tuesday and the June jobs report on Thursday.  Expect manufacturing activity to increase from May, consumer confidence to rise and the jobs report to show the creation of approximately 250,000 jobs in June (vs. 280,000 in May) and no change in the unemployment rate (5.5%). 


Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464