Monday, October 6, 2014

Markets inch higher on hopes for extending low interest rates

Dow climbed 34, advancers ahead of decliners nearly 3-2 & NAZ slid back 1.  The MLP index slipped pocket change to the 523s & the REIT index was up a fraction to 295.  Junk bond funds went up around 1% (a good gain) & Treasuries advanced.  Oil & gold crawled higher from their trading depths.

AMJ (Alerian MLP Index tracking fund)

CLF15.NYM....Crude Oil Jan 15...88.03 Up ...0.16 (0.2%)

GCQ15.CMX...Gold Aug 15....1,190.00 Down ...5.60  (0.5%)

German Factory Orders Plunge Most Since 2009 in August
Photo:   Bloomberg

German factory orders plunged the most since 2009, underlining the risk of a slowdown in Europe’s largest economy.  Orders, adjusted for seasonal swings & inflation, fell 5.7% in Aug, the Economy Ministry said.  The forecast predicted a 2.5% decline.  The data are volatile, & the drop followed a 4.9% increase in Jul that was the most in more than a year.  But orders fell 1.3% from a year earlier.  Deteriorating confidence is undermining a rebound in Germany’s economy from a Q2 slump.  The region is struggling to sustain its recovery amid rising political tension with Russia over its support of separatists in Ukraine & inflation that’s running at a fraction of the ECB definition of price stability.  Export orders dropped 8.4%, while domestic demand fell 2%.  Investment-goods orders plunged 8.5% & basic goods orders slid 3%, while consumer goods rose 3.7%.  While Aug orders were weak partly because of school holidays, they were also affected by the slowing euro-area economy & geopolitical risks, the ministry said.  Euro-area inflation was 0.3% last month, compared with the ECB’s goal of just under 2%.  A slowing Chinese economy & spiraling intl sanctions against Russia have weakened business & investor sentiment.

German Factory Orders Slump Most Since 2009: Economy

Hewlett-Packard is splitting into 2 companies, using a breakup to become nimbler after failing to keep up with the shift away from the printing & PC businesses it pioneered.  CEO Meg Whitman will lead Hewlett-Packard Enterprise, a new company focusing on corp hardware & services, while Dion Weisler, VP in charge of personal-computer & printer operations, will become CEO of that business, called HP Inc.  Whitman is reversing an earlier position that the company should remain a single enterprise.  When she took the helm 3 year ago, she ended plans by her predecessor to spin off the PC unit.  HPQ, which had set the pace in computers for decades, had embarked on a rapid expansion plan thru acquisitions followed by tumultuous years of strategy shifts, cost cutting & reduced profit targets.  Now Whitman is pursuing the kind of spinoff plan that’s gathering steam at other technology companies.  The HPQ breakup will be a tax-free distribution.  Whitman will also become chairman of the PC & printer company, while current lead independent director Patricia Russo will be chairman of the enterprise unit.  Planned job cuts will increase to 55K & costs to restructure cost will be about $600M.  That compares with as many as 50K previously projected.  The stock rose 1.62 on the news.  If you would like to learn more about HPQ, click on this link:

Hewlett-Packard Breaks Into Two Units to Stay Competitive

Hewlett-Packard (HPQ)

Chevron, a Dow stock & Dividend Aristocrat, will sell a 30% stake in a venture to develop oil & natural gas from Canada’s Duvernay shale to Kuwait Petroleum, giving the Mideast producer a foothold in a top North American play.  CVX said the $1.5B purchase price includes cash & an agreement to contribute to the venture’s capital costs.  CVX has drilled 16 exploration wells in the area.  The Duvernay area in Alberta is among the most promising shale opportunities in North America.  So far, wells in the region have proven more expensive & taken longer to drill than similar shale formations in the US.  Kuwait has relied on traditional drilling while hydraulic fracturing & horizontal drilling have helped the US unlock oil & gas reserves in shale plays.  CVX will keep a 70% share in the venture & remain the operator.  It built its Duvernay holdings last year with the purchase for an undisclosed price.  “We remain encouraged by the early results of our exploration program,” Jeff Shellebarger, pres of CVX North American unit, said.  The stock gained 1.28.  If you would like to learn more about CVX, click on this link:
Chevron to Sell Stake in Canadian Shale for $1.5 Billion

Chevron (CVX)

Stocks began the day higher, but all of that enthusiasm did not last.  The bulls are hoping that the modestly mixed economic news from the jobs report on Fri will not give the Federal Reserve courage to raise interest rates early next year.  However less than enthusiastic economic news is not good to hear when combined with mediocre news from Europe & China.  Dow is holding above 17K (where it has been for several months).

Dow Jones Industrials

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