Monday, August 29, 2016

Higher markets on economic data

Dow rose 107 (closing near the highs), advancers over decliners 5-2 & NAZ added 13.  The MLP index was fractionally higher to the 311s & the REIT index went up 3+ to the 362s.  Junk bond funds were a little higher & Treasuries were purchased even though stocks rallied.  Oil declined (see below) & gold prices were little changed.

AMJ (Alerian MLP Index tracking fund)

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Crude Oil Oct 16

Live 24 hours gold chart [Kitco Inc.]

Boeing, a Dow stock, isn't raising prices for the first time in 7 years as it contends with demand cooled by economic uncertainty & a glut of twin-aisle aircraft.  The aerospace giant typically adjusts its published charges for commercial aircraft once a year to reflect an internal formula that takes into account increases in the costs of goods, services & labor.  BA boosted prices 2.9% last year & 3.1% in 2014.

The prices posted in Jul 2015 will continue to serve as a basis for customer discussions.  They range from $80.6M for its smallest narrow-body aircraft, the 737-700, to $400M for the 777-9, the first twin-engine plane designed to haul more than 400 travelers.  “From time to time, we do not process an update to our pricing catalog. Boeing didn’t publish an update in 2001 or 2009,” BA said.  “Our goal is to set the standard for value and service for our customers.”  Aerospace list prices don't reflect the heavy discounts that are customary in the industry.  Planemakers have seen demand clipped by the Brexit vote, a commodities market crash in Latin America & moderating oil prices, which have encouraged carriers to hold on to older models they might have otherwise retired.  BA landed 335 net orders this year as of Aug 23, while rival Airbus logged 323 net sales thru the end of Jul.  The stock rose 67¢.  If you would like to learn more about BA, click on this link:

Boeing Skips Annual Jetliner Price Hike Amid Sluggish Sales

Boeing (BA)

Apple, another Dow stock, invited journalists to an event in San Francisco on Sep 7 where it is expected to roll out a series of product upgrades.  The company is expected to introduce next-generation versions of the iPhone & Apple Watch.  The successors to the iPhone 6S & 6S Plus will include advanced photography capabilities & upgraded hardware with a design similar to last year's models.  The stock slid back pennies.  If you would like to learn more about AAPL, click on this link:

Apple Sends Invitations for September 7 Product Event

Oil futures fell as doubts that major oil producers will reach a pact next month to stabilize production prompted prices to settle lower for the first time in 3 sessions.  Oct WTI crude fell 66¢ (1.4%), to settle at $46.98 a barrel.

Oil Futures Settle Under $47 a Barrel On Nymex

The bears stayed home today which let the bulls control the market.  Nothing special happened but the few bulls out there were able to take stocks higher.  Barring outside events, this should be a very quite week for the stock market until Fri when the Aug jobs report is released.

Dow Jones Industrials


Higher markets on consumer spending data

Dow climbed 89, advancers over decliners 3-1 & NAZ gained 13.  The MLP index  lost 1 to the 309s & the REIT index remained strong, adding 3+ to the 362s.  Junk bond funds did little & Treasuries were slightly higher.  Oil & gold each pulled back (more on oil below).

AMJ (Alerian MLP Index tracking fund)

Crude Oil Oct 16

Gold Futures,Dec-2016

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For a 2nd week, money managers slashed bets on falling prices by a record & boosted wagers on a rally.  Futures have climbed 23% in less than 3 weeks as some OPEC members raised the possibility of an output freeze amid signs the global glut is easing.

Saudi Arabia will be willing to listen to other producers & what they have to offer when it comes to an output freeze, the kingdom's Energy Minister Khalid Al-Falih said.  Oil suppliers want a deal to manage output, OPEC Secretary General Mohammed Barkindo said.  Speculators slashed their short position in West Texas Intermediate by 66K futures & options last week, the most in data going back to 2006.  Bets on rising prices jumped to the highest in more than a year.  Futures rose 3.3% to $48.10 a barrel in the report week.  WTI, the US benchmark, entered a bull market Aug 18, less than 3 weeks after tumbling into a bear market.  Prices were down 1.4% today.

Oil Pessimists Exit as OPEC Cap Talk Spurs Bets Glut Easing

Consumer spending advanced for a 4th straight month in Jul, bolstered by stronger income gains, sending the biggest part of the US economy to a solid Q3 start, according to the Commerce Dept.  Purchases climbed 0.3% (matching the estimate) after 0.5% rise that was revised up.  Incomes grew 0.4% (matching the forecast) following 0.3% advance that was also revised up. The saving rate increased to 5.7% from 5.5% & disposable income adjusted for inflation climbed 0.4%, the most this year.  The figures support projections that economic growth will rebound this qtr after the weakest H1 since 2011.  Adjusted for inflation, a 0.3% advance in Jul purchases followed an upwardly revised 0.4% gain in the previous month, indicating a better start to Q3.

China stocks were steady, with gains in industrial shares offsetting falls in the banking sector as a slew of interim corp results showed tentative signs of bottoming-out in struggling sectors such as coal & steel.  The blue-chip CSI300 index was unchanged at 3307, while the Shanghai Composite Index was also flat, at 3070.  For investors grappling with an economy showing signs of stress in many sectors, there were clear earnings improvement in the much-maligned bloated sectors, including coal, steel & construction materials.  The rise in industrial stocks was offset by falls in the banking sector.  Lenders will likely be hit by Beijing's plan, to be rolled out as soon as next month, that will urge banks to convert loans into equities in some struggling state-owned borrowers.

Solid Earnings Offset Drop in Chinese Bank Shares

Holiday week is starting with a rising stock market.  With many traders away, volume is light & price movements don't mean a lot.  The jobs report on Fri will be watched for, although that is a long way away.

Dow Jones Industrials