Monday, December 22, 2014

Cautious market advance on holiday cheer

Dow gained 97, advancers over decliners a mild 6-5 & NAZ added 9.  The MLP index was off 2+ to the 451s & the REIT index rose 2 to 330.  Junk bond funds drifted lower & Treasuries went higher.  Oil fell, extending a 4th weekly decline on concern OPEC’s refusal to cut production will worsen a global glut & gold was flattish.

AMJ (Alerian MLP Index tracking fund)

CLG15.NYM...Crude Oil Feb 15...56.06 Down ...1.07  (1.9%)

GCZ14.CMX...Gold Dec 14.....1,194.70 Down ...1.20  (0.1%)

3 Stocks You Should Own Right Now - Click Here!

China Offers Russia Help With Currency Swap Suggestion
Photo:   Bloomberg

2 Chinese ministers offered support for Russia as pres Putin seeks to shore up the ruble without depleting foreign-exchange reserves.  China will provide help if needed & is confident Russia can overcome its economic difficulties, Foreign Minister Wang Yi was cited as saying.  Commerce Minister Gao Hucheng said expanding a currency swap between the 2 nations & making increased use of yuan for bilateral trade would have the greatest impact in aiding Russia.  While the offer won’t relieve the main sources of pressure on the ruble, capital outflow tied to plunging oil prices & sanctions on Russia, the currency gained 3.1%.  Russia, the biggest energy exporter, saw its currency tumble as much as 59% this year.  Putin asked business leaders last week to report on plans to sell foreign currency revenues & to engage in responsible foreign exchange operations.  Former Economy Minister Alexei Kudrin said Russia was entering a full-fledged economic crisis.  China & Russia signed a 3-year currency-swap line of 150B yuan ($24B) in Oct, an agreement that can be expanded with the consent of both parties.  The People’s Bank of China published a chart detailing how such an agreement works in a microblog dated Dec 19 & the official People’s Daily newspaper said today that the explanation was provided to address concerns the nation could suffer losses if Russia used the facility to obtain funds.

China Offers Russia Help With Currency Swap Suggestion

U.S. Pump Prices
Photo:   Bloomberg

The average price of regular gasoline at US pumps slid to the lowest level in 5½ years according to Lundberg Survey.  Prices are 79¢ lower than a year ago.  The latest plunge in crude oil prices may lead to a further decline at the pump by a few more pennies, according to Lundberg.  Retail gasoline fell after crude prices dropped for the 4th consecutive week amid increasing production & weaker-than-expected global demand.  Slumping prices at the pump will save US households $550 next year, the Energy Information Administration said.  “It is a dramatic boon to fuel consumers,” according to Lundberg.  Gasoline “is a modest portion of our giant gross domestic product and yet it does have a pervasive and festive benefit to motorists.”

Santa Comes Early at Pump as Gasoline Falls to Lowest Since 2009

Air China, the largest Chinese carrier, will buy a mix of 60 current 737s & the new Max model of the jet from Boeing, a Dow stock, with a list price of about $6B to expand seating capacity with more-efficient planes.  Deliveries will run from 2016-2020.  Neither the airline nor BA gave details on the split between the existing 737 version & the Max with upgraded engines.  The purchase will boost Air China’s fleet capacity by about 8% over Dec 2013, excluding adjustments to fleet structure such as the disposal of old aircraft, it said.  The actual payment will be less than the $5.9B Jul 2012 open-market aircraft basic price because BA granted price concessions, including credit memorandums.  The stock rose 1.42.  If you would like to learn more about BA, click on this link:

Air China to Mix 737, Max Jets in $6 Billion Boeing Order

Boeing (BA)

This week & next should be an uneventful time with  low volume as some traders are away on holiday.  The REIT index continues rising.  It's up over 60 this year with only one  bump along the way.  Higher yielding securities have been in favor & many REITs have an added advantage that not all of the divs are taxed as ordinary income.  Meanwhile, MLPs have had a rough year & are struggling to break even in 2014.  These securities have been hit hard with the plunge in oil prices & volatility has shot up in the last few months.

Dow Jones Industrials

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