Thursday, June 19, 2014

Markets crawl higher after Obama sends 300 advisers to Iraq

Dow, under water for most of the day, edged up with a gain of 14, advancers ahead of decliners 5-4 & NAZ slid 3.  The MLP index jumped a staggering 8+ to the 509s, a new record (with some of the gain at the close), & the REIT index went up 2 to 302.  Junk bond funds were lower & Treasuries retreated.  Oil continued to rise on growing conflict around Iraq & gold surged the most in 9 months as the Federal Reserve (FED) said interest rates will remain low, driving the dollar down & boosting demand for alternative investments.

AMJ (Alerian MLP Index tracking fund)

CLN14.NYM....Crude Oil Jul 14....106.13 Up ...0.16 (0.2%)

Live 24 hours gold chart [Kitco Inc.]

Obama Sending 300 Advisers to Help Iraqi Military Battle ISIL
Photo:    Bloomberg

Pres Obama said he’s sending as many as 300 military advisers to assist the Iraqi army battle an insurgency & is prepared to take additional “targeted” action if necessary.  The advisers will work with the Iraqi army to set up joint operations centers to coordinate intelligence & planning with the Iraqis without engaging in the fighting, he said.  “American forces will not be returning to combat in Iraq,” Obama said after meeting with his national security team.  “The test is before him (Maliki) & other Iraqi leaders,” Obama said. “The fate of Iraq hangs in the balance.” Obama, under pressure to intervene more aggressively with airstrikes, is trying to bolster the Iraqi army in its fight against the Islamic militants without tying the US to Maliki’s gov.  A Sunni insurgency led by the Islamic State in Iraq & the Levant, an al-Qaeda breakaway, has overrun the forces of Maliki’s Shiite-dominated gov in sections of the country.  The violence is closing in on the capital, Baghdad, & threatens to spill over Iraq’s borders.  “It is in our national security interests not to see an all-out civil war inside of Iraq,” Obama said, warning that the ISIL Jihadists might find a safe haven in the chaos.  The conflict threatens to draw in regional powers, including Shiite-ruled Iran & Sunni Gulf Arab states.  Obama said Iran can play a constructive role if it reaffirms the message that Iraq’s gov must be “inclusive.”  Iraq has asked the US to use airstrikes to help defeat the Sunni fighters, but Obama made no commitment.  “We will be prepared to take targeted and precise military action if and when we determine that the situation on the ground requires it,” he said.  The US already is conducting reconnaissance flights from an aircraft carrier in the Persian Gulf.

Obama Sending 300 Advisers to Help Iraq Battle Insurgency, Ready to Take 'Targeted' Action

Fed Dots Ignored as Investors Focus on Yellen Rate Message
Photo:    Bloomberg

Investors trying to anticipate FED interest-rate policy are ignoring the dots & focusing on Chair Janet Yellen’s words.  FED officials yesterday released forecasts, represented as dots on charts, showing that starting next year interest rates would rise from zero faster than previously expected.  Equity markets rallied on Yellen’s pledge of monetary stimulus for as long as necessary to achieve the central bank’s goals.  Yellen brushed aside concerns about quickening inflation, diminishing labor-market slack & asset-price bubbles in her statement & press conference, emphasizing the Federal Open Market Committee’s view that rates are likely to stay low “for a considerable time.”  Yellen’s press conference followed a decision yesterday to continue reducing the pace of bond purchases intended to keep long-term borrowing costs low.  The FED said it would cut monthly purchases by another $10B, to $35B, keeping it on pace to stop the program late this year.  She repeated that the FED is likely to make further reductions in “measured steps” & that it expects interest rates to stay low after the buying ends.  Yellen declined to offer a more specific timetable for the first rate increase since 2006, saying there’s “no mechanical formula.”  As she has in the past, Yellen downplayed the significance of the rate forecasts.  “Around each of those dots, I think every participant who’s filling out that questionnaire has a considerable band of uncertainty around their own individual forecast,” she added.

Fed Dots Ignored as Investors Focus on Yellen’s Message

A Coach Store in New York
Photo:   Bloomberg

Coach fell the most in more than a year after forecasting a prolonged slump in sales at its North American stores.  Sales at North American stores open at least a year will fall at a mid- to high-teens percentage rate in the year thru Jun 2015, executives said.  The average estimate was for a 9.6% decline.  Comparable sales including revenue from the website may drop at a mid- to high-20s percentage rate.  CEO Victor Luis has been working to transform COH into a lifestyle brand selling everything from high-heeled shoes to trench coats after facing increased competition in the handbag segment.  The transition so far has been rocky.  North American comparable-store sales plunged 21% in the latest qtr, steeper than the 15% slide analysts had projected & worse than the 14% drop during Q4.  COH said it would close about 70 underperforming stores, a small portion out of more than 950 locations.  The company, known for its $300 handbags, now offers a full array of shoes, outerwear & other accessories.  Since assuming his position in Jan, Luis has changed the design team, which is refurbishing the chain’s stores & will introduce new products this fall.  Earlier this month, COH said it will start discounting purses at its North American full-price stores twice a year, breaking with a tradition of being one of the few fashion & luxury companies that refused to discount goods in its domestic shops.  The move is consistent with what the brand does overseas.  The company is clearly on defense as the stock tumbled 3.50 (9%).  If you would like to learn more about COH,
Click here for a FREE analysis of COH and be sure to notice the intermediate time frame

Coach Falls on Forecast of Prolonged North American Slide

Coach (COH)

The king of dithering isn't changing his habits & the bad guys keep rolling on with victories.  More action is needed to stop them, 300 advisers won't be able to much good.  Of course this is an unusually messy situation which the US contributed to by quitting 3 years ago.  There is no reason that the growing conflict will be limited to Iraq.  All countries within 500 miles are under threat.  And the bad guys have made it clear, ultimate objectives are attacks on Israel & the US.  But the stock market is more interested in every word said by Janet Yellen.  So the Dow & S&P500 are flirting with new record highs even though the economic fundamentals are tepid.  For a starter, consumer spending in the US is uneven as mentioned above.

Dow Jones Industrials

This Undervalued Energy Stock is Set to Soar! Special Report

I’m a huge fan of INO & from what I have seen so far, their service Marketclub!  This isn’t a stripped down version, everything in MarketClub is available to you.  I don’t want to give everything away, but you’ll have unlimited access to my favorite 3 tools: Trade Triangles, Smart Scan & Alerts!  The best part is that the MarketClub customer support team will be providing UNLIMITED support!  You can call or email for an instant response to any question, comment or concern.

Here’s that link:

I’d recommend you jump on this now.

No comments: