Wednesday, May 21, 2014

Matkets rise prior to minutes from FOMC meeting

Dow jumped 131, advancers ahead of decliners 2-1 & NAZ rose 28.  The MLP index went up 1+ to just over 490 & the REIT index slid about 1 to 297.  Junk bond funds were higher while Treasuries pulled back.  Oil rose to a one-month high after an industry report showed US stockpiles tumbled last week & gold retreated.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

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U.S. 2-year


U.S. 10-year


CLN14.NYM...Crude Oil Jul 14...103.17 Up ...0.84 (0.8%)

GCK14.CMX...Gold May 14....1,290.10 Down ...4.40  (0.3%)

Photo:   Bloomberg

Russia reached a $400B deal to supply natural gas to China thru a new pipeline over 30 years, a milestone in relations between the world’s largest energy producer & the biggest consumer.  Pres Putin is turning to China to bolster Russia’s economy as relations sour with the US & EU because of the crisis in Ukraine.  The accord will allow state-run gas producer OAO Gazprom to invest $55B developing giant gas fields in eastern Siberia to build the pipeline, Putin said.  Gazprom CEO Alexey Miller signed the deal with Zhou Jiping, chairman of China National Petroleum.  The agreement is for 38B cubic meters of gas annually over 30 years, Miller said, with a total value of about $400B.  “This is the largest ever contract for Gazprom,” Miller added, adding the deal will start in 4-6 years.  China may make as much as $25B in advance payments under the contract to invest in the necessary infrastructure, Russian Energy Minister Alexander Novak said.  Russia will invest $55B in the pipeline & the Siberian fields to feed it while China, responsible for a pipeline on its territory, will spend at least $20B.

Russia, China Sign $400B Gas Deal After Decade of Talks

Target, a Dividend Aristocrat, posted Q1 profit that missed estimates & cut its annual forecast.  EPS was 66¢, down from 77¢ a year earlier.  Analysts had projected 71¢.  TGT is trying to regain its footing as it searches for a new chief executive officer, revamps its Canadian division & copes with the theft of 40M credit card numbers by hackers.  Sales rose 2.1% to about $17B, in line with estimates.  While US same-store sales dropped 0.3%, that was better than the 1.1% decline projected.  TGT cut its annual EPS forecast to $3.60-$3.90, down from a previous range of as much as $4.15.  It projected adjusted EPS of 85¢-$1 for Q2, compared with an average estimate of about $1.03.  TGT said yesterday that Tony Fisher, its top executive in Canada, will step down immediately & be replaced by Schindele, a senior VP in charge of merchandising operations.  The Canadian business lost $211M before interest & taxes in Q1, a wider deficit than the $205M posted a year earlier.  In the last fiscal year, the division lost $941M before interest & taxes, reducing the year’s EPS by $1.13.  The stock rose 51¢.  If you would like to learn more about TGT,
Click here for a FREE analysis of TGT and be sure to notice the intermediate time frame

Target Misses Estimates as It Struggles to Recover From Breach

Target (TGT)

American Eagle Outfitters announced plans to close an additional 150 stores after posting sluggish sales.  The teen-apparel chain, which is seeking a new CEO, will close the locations over the next 3 years.  In Q1, sales at stores open at least a year declined 10%, worse than the 7.8% drop that had estimated.  Other retailers also reported same-store sales declines, underscoring the impact of a particularly cold winter & still-shaky consumer confidence.  The stock sank 32¢.  If you would like to learn more about AEO,
Click here for a FREE analysis of AEO and be sure to notice the intermediate time frame

American Eagle to Close Stores in Glum Day for Retailers

American Eagle Outfitters (AEO)

There is no special news driving today's rally.  For almost 2 months the Dow has been pretty much trading sideways even though it was able to just barely set a new record.  Jan was a down month followed by a recovery in Feb.  Since then not a lot has been going on because a sell-off in momentum stocks has been a drag on the overall market.  At the same time, income stocks have been bid higher.  Let's see what Janet had to say later today. 

Dow Jones Industrials

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