Friday, May 23, 2014

Markets rise on economic data

Dow rose 63, advancers over decliners 2-1 & NAZ advanced 31.  The MLP index lost 2+ to just over 490 & the REIT index went up 2+ to the 298s.  Junk bond funds fluctuated & Treasuries rose with the yield on the 10 year Treasury near a 1 year low.  Oil gained & gold pulled back lower.

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Putin Says Russia Will Work With Elected Ukrainian President
Photo:   Bloomberg

Pres Putin said Russia will work with the next Ukrainian pres after elections on Sun, even though the vote won’t meet intl standards.  “But let them hold it like that, at least,” Putin said.  He said Russia wants “the situation to calm down” & will “respect the will of the Ukrainian people.”  He spoke one day after an attack by rebels near Volnovakha left 16 Ukrainian servicemen dead, the highest death toll for Ukraine’s forces since the separatist conflict led by pro-Russians in the eastern part of the country began in Mar.  “After the elections, we will work with the new elected institutions,” said Putin.  Russian Foreign Minister Lavrov said earlier that Russia will wait until the results of the May 25 vote & possible runoff before making a decision on recognizing the winner.  Yet Putin’s message on the election was mixed.  He also said that “strictly speaking, under the current constitution, it’s impossible to hold an election” because former pres Yanukovych, who fled to Russia in Feb after mass protests, “wasn’t removed from power using constitutional methods.”  Putin has also put out contradictory messages on the withdrawal of what NATO says are 40K troops deployed on Ukraine’s borders.  NATO Secretary General Anders Fogh Rasmussen complained this week that Putin has pledged pullbacks 3 times without moving any substantial forces.  Putin said May 21 the soldiers would withdraw “when the weather is good.”  OK!

Putin Says Russia Will Work With New Ukrainian President

Exxon Mobil, a Dow stock & Dividend Aristocrat, extended its partnership with Russia's state-controlled oil company even as US & European nations threaten additional sanctions to punish Putin’s regime for its actions in Ukraine.  The agreement was signed with OAO Rosneft CEO Igor Sechin today, extending a pact that involves drilling for crude in the Arctic & Siberia & liquefying natural gas for export in Russia’s Far East.  XOM is among American oil producers that rebuffed US State Dept pressure to skip the International Economic Forum this week in Putin’s hometown.  With at least $30B already invested in Russia’s oil & gas sector, US & European explorers are betting the Ukraine crisis won’t derail their aspirations to capture some of Russia’s 75B barrels of reserves. 
Among US companies, XOM is the biggest player in Russia, where it has a series of joint ventures with Rosneff.  It already produces oil in Russia’s Far East with Rosneft & the 2 companies plan to start drilling an exploration well in the Kara Sea this year.  Together they hold licenses to explore huge swathes of the Arctic Ocean.  While sanctions against Russia have targeted individuals, including Sechin, & avoided industrywide measures, the US has threatened stronger action if Putin’s gov obstructs the Ukraine presidential election on Sun.  Producers still plan to invest more in Russia, pursuing exploration in the Arctic Ocean & drilling shale oil fields in Siberia.  The stock fell pocket change.  If you would like to learn more about XOM,
Click here for a FREE analysis of XOM and be sure to notice the intermediate time frame

Exxon Deepens Russian Ties as Ukraine Election Approaches

Exxon Mobil (XOM)

US retailers’ Q1 earnings are trailing estimates by the widest margin in 13 years after bad weather & weak spending by lower-income consumers intensified competition.  Chains are missing projections by an average of 3.1%, with 87 retailers (70% of those tracked) having reported, researcher Retail Metrics said.  That’s the worst performance relative to estimates since Q4-2000, when they missed by 3.3%.  Over the long term, chains typically beat by 3%.  Extreme winter weather thru Feb & Mar forced store closings & stifled sales.  Lower & moderate-income consumers had little discretionary spending power, & chains also faced price competition from e-commerce sites.  “The American consumer is not fully back and remains cautious,” Ken Perkins, Retail Metrics’ pres, wrote.  What’s more, the expectations the chains are missing have been significantly lowered.  While analysts now project retailers’ earnings fell an average of 4.1%, back in Jan they had estimated a 13% gain.  Most retail segments are showing profit declines, with department stores, teen-apparel chains & home-furnishing stores faring the worst.  About 41% of retailers missed estimates, while 45% have beat.  Improved weather, pent-up demand & better employment trends may help the industry in Q2.  Analysts are projecting an 8.6% gain in profit in Q2.

U.S. Retailers Missing Estimates by Most in 13 Years

Stocks extended their winning steak to 3 days but volume was low.  This will be a long weekend which with the important election in Ukraine, & positions need to be closed.  The news about retail earnings, while no surprise, was disturbing.  Of course, new months bring new data.  Yield stocks have been flattish for a couple weeks, but remain near yearly highs.  The tech sector, which sold off in Mar-Apr, has been inching its way back in May.

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