Wednesday, November 12, 2014

Lower markets on concerns of European slowdown

Dow pulled back 45, decliners over advancers 5-4 & NAZ lost 8.  The MLP index was fractionally lower to 499 & the REIT index fell 2+ to the 316s.  Junk bond funds edged higher & Treasuries rose.  Oil is sloshing in the 77s & gold inched higher at depressed levels.

AMJ (Alerian MLP Index tracking fund)

stock chart

CLZ14.NYM....Crude Oil Dec 14...77.00 Down ...0.94  (1.2%)

GCX14.CMX...Gold Nov 14.....1,165.70 Up ...2.90 (0.3%)

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OPEC said Saudi Arabia led declines in the group’s oil output last month, weeks before the 12 nations meet to decide whether to trim a global supply glut that drove crude prices into a bear market.  Saudi Arabia’s production fell 69K barrels a day to a 6-month low of 9.6M, OPEC said.  OPEC pumped 30.25M barrels a day, a decrease of 226K barrels, the largest since Mar.  There are signs of global economic recovery.  Brent crude futures, used to price more than half the world’s oil, traded near a 4-year low today on speculation that OPEC’s biggest members will refrain from paring output to drain a global surplus.  “The improvement in manufacturing activities is positively impacting oil consumption,” OPEC’s research dept said in its monthly report.  “With economic indicators pointing to a continued recovery in the global economy, any additional improvement in the economies of major oil consuming countries should help the demand trend to pick up further.”  The organization’s forecasts for global demand, and the amount of crude it will need to supply this year & next were unchanged from its last monthly report.  World oil consumption will increase by 1.19M barrels a day in 2015 to 92.3M a day, it said. 

Saudi Arabia Leads OPEC Oil Output Lower as Next Meeting Looms

Macy's posted a 23% gain in net income last qtr after the company cut expenses, helping it weather disappointing sales.  EPS was 61¢, up from 47¢ cents, a year earlier.  Selling, general & administrative expenses shrank to about $2B compared with $2.1B a year earlier.  While Macy’s is still struggling to get customers in the door, the company maintained its gross margins, a sign it isn’t relying as heavily on discounts to boost sales.  But the company lowered its projections for the year.  EPS will be $4.25-$4.35, down from a previous forecast for as much as $4.50.  Analysts estimated $4.40.  CEO Teryy Lundgren is coping with a broader retail slump & a shift toward e-commerce, putting pressure on the company ahead of the all-important holiday season.  In a bid to entice more shoppers this year, Macy’s plans to open stores at 6PM on Thanksgiving day, 2 hours earlier than it did in 2013.  Q3 sales at stores open at least a year declined 1.4%, missing the projection for a 1.9% increase compiled by Consensus Metrix.  “Sales did not live up to our expectations in the quarter,” Lundgren said.  He is optimistic about the 4th qtr, partly because of the company’s product assortment & new online capabilities.  The stock rose 1.54.  If you would like to learn more abut Macy's, click on this link:

Macy’s Profit Jumped Last Quarter Despite Slow Sales

Macy's (M)

Wal-Mart, a Dow stock & Dividend Aristocrat, will make Black Friday a weeklong event, shifting away from the chaotic one-day sales that once epitomized the day after Thanksgiving.  The “New Black Friday” will include 5 days of sales on & in stores, starting at 12:01AM online on Thanksgiving & running thru Cyber Mon.  “Black Friday has become Black Friday week,” Duncan Mac Naughton, Wal-Mart’s chief merchandising officer said.  “Our customers want to shop when they want to shop so we’re trying to expand the times and product availability with them.”  WMT is spreading out promotions to lure shoppers during a holiday season that promises to hold a number of challenges.  While analysts have predicted retail sales would gain this month & next, many of those purchases are expected to shift online or be won with discounts that threaten retailers’ profitability.  The company also is dealing with choppy spending by consumers who haven’t seen their wages grow much despite the job market’s recovery.  The company is expected to report that sales in the qtr thru Oct rose 2.3% tomorrow.  WMT will run waves of in-store sales at 6-8PM on Thanksgiving & again at 6AM on Black Friday, Mac Naughton said.’s deals will start early on Thanksgiving to capture the growing number of shoppers looking for deals before sitting down for turkey.  The stock was even at 79.01.  If you would like to learn more abut WMT, click on this link: 
Wal-Mart Plans to Stretch Black Friday Over Five Days to Attract Shoppers

Wal-Mart (WMT)

There's no significant news driving the selling which is mild & the Dow remains close to its record high reached yesterday.  There is still plenty of chaos in the world, lower oil prices are not bringing the big rewards expected & there are more signs that US retail is struggling.  With Dow is at records highs, retailers should be doing much better.  But many consumers are not impacted by the rise in stock prices.  Their important metric is that household income has stalled or is heading lower.

Dow Jones Industrials

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