Monday, May 12, 2014

Dow reaches new record as tech stocks rally

Dow jumped 112, advancers over decliners better than 3-1 & NAZ soared 71 following recent selling.  The MLP index went up 1+ to 486 & the REIT index added 1 to go over 300 (a new 11 month high).  Junk bond funds rose with stocks while Treasuries pulled back.  Oil was higher & gold also rose on rising tensions between Russia & Ukraine.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLM14.NYM....Crude Oil Jun 14...100.48 Up ...0.49 (0.5%)

Live 24 hours gold chart [Kitco Inc.]

The US posted a smaller budget surplus in Apr than projected, as spending increased at more than twice the pace of tax receipts.  Revenue exceeded spending by $106.9B, compared with a $112.9B surplus a year before, the Treasury Dept said.  The estimate was for a $114B surplus.  So far this fiscal year (which began Oct 1), the country is running a budget shortfall that’s 37% smaller than it was a year earlier & was the narrowest at the 7-month mark since 2008.  Still, the economy nearly stalled in Q1, while outlays rose last month on defense & entitlement programs.  A faster pace of hiring & rising corp profits are lifting tax receipts & helping shrink a deficit this year that’s projected to be the smallest as a share of the economy since 2007.  The budget gap should narrow to $492B in this fiscal year, compared with $680B in 2013 & about is 1/3 of its 2009 record level at $1.4T, according to the CBO.  Next year, the shortfall is expected to decline further, to $469B.  The 2014 deficit will be 2.8% of GDP, compared with 4.1% in 2013 & lower than the 3.1% average of the past 40 years.  In Apr revenue increased 1.8% to $414.2B from $406.7B in 2013.  Spending totaled $307.4B, a 4.6% increase from a year earlier.  But GDP grew at a 0.1% annual rate in Q1, compared with a 2.6% gain in Q4.  During the first 7 months of fiscal 2014, individual tax receipts gained 3.5%, while corp tax revenue jumped about 15%.  The deficit so far this fiscal year totaled $306.4B, compared with a $487.6B shortfall a tear earlier.  A shrinking budget gap is giving the gov scope to scale back some debt auctions & enabling the Treasury to pay down $78B in net marketable debt in Q2, the biggest quarterly reduction in 7 years.

U.S. Posts Smaller Budget Surplus in April Than Forecast

Pfizer, a Dow stock, is planning a $4.25B bond offering to repay securities that mature within a year.  The issue will include $1.25B of 5-year notes that may yield 48 basis points more than similar-maturity Treasuries.  Proceeds of the sale will be used to fund the repayment of €900M ($1.2B) of 4.75% notes due in Dec, & a portion of its $3B of 5.35% notes due Mar 2015.  The bond issue comes as the company is offering $106B for AstraZeneca (AZN).  Along with the lower tax rate linked to its UK base, CEO Ian Read said the acquisition would give PFE a promising new generation of experimental cancer drugs that use the body’s own immune system to attack the disease.  PFE will also sell $1B of 3-year, fixed-rate notes, $500BM, $1B of 10-year bonds & $500M of 30-year debentures.  PFE stock was up a dime.  If you would like to learn more about PFE,
Click here for a FREE analysis of PFE and be sure to notice the intermediate time frame

Pfizer Said to Plan $4.25 Billion Bond Issue to Repay Debt

Pfizer (PFE)

Chevron, a Dow stock & Dividend Aristocrat, will seek additional partnerships with state-run Petroleos Mexicanos as Mexico prepares to welcome the oil industry’s elite.  The company is in talks with Mexico City-based Pemex for exploration opportunities in deepwater, shallow water or shale, according to Ali Moshiri, CVX pres of Latin America & Africa.  CVX is collaborating with Pemex & plans to continue to pair with the world’s 9th-largest crude producer on future development opportunities.  “We are not here to replace Pemex,” said Moshiri, who oversees exploration & production projects from Argentina to Angola.  “We are not here to change their strategy. We are here to complement what they are doing.”  CVX is waiting for the passage of Mexico’s secondary energy legislation before deciding where the first partnerships in Mexico will occur.  The legislation, which will determine Pemex’s participation in new projects as well as the tax structure for private companies joining the newly opened energy market, could be approved as soon as Jun.  “We look for the opportunity that brings the most value to the Mexican government, the Mexican people, and our shareholders,” Moshiri said.  “We are a huge company. We can invest money in conventional, deep-water, or shallow-water. What drives our decision is really to see what is the best for everybody.”  The stock added pocket change.   If you would like to learn more about CVX,
Click here for a FREE analysis of CVX and be sure to notice the intermediate time frame

Chevron Seeks Pemex Partnerships to Explore for Oil in Mexico

Chevron (CVX)

Stocks had an impressive rally without anything behind it other than betting on an improved US economy.  Tech issues led the way but the real story this year is with yield sensitive securities.  Even munis & muni funds are doing well (beating the Dow) with the search by investors to earn income in a low yield environment.

Dow Jones Industrials

This Undervalued Energy Stock is Set to Soar! Special Report

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