Thursday, December 18, 2014

Markets soar after FOMC promises patience on raising interest rates

Dow vaulted 421 (closing at the high), advancers over decliners more than 4-1 & NAZ jumped 102.  The MLP index went up 2+ to the 453s & the REIT index went up 2+ to the 327s (a new multi year high).  Junk bond funds had a good day after having a bad month (until yesterday) & Treasuries saw selling.  Oil dropped below 56 & gold inched higher, getting close to 1200.

AMJ (Alerian MLP Index tracking fund)

CLK15.NYMCrude Oil May 1555.56 Down 2.21 (3.8%)

Live 24 hours gold chart [Kitco Inc.]

Deere, agreed to sell its crop insurance segment to Farmers Mutual Hail Insurance of Iowa, retreating from a business that suffered years of losses.  The sale comprises John Deere Insurance & John Deere Risk Protection.  No terms were disclosed.  The buyer, founded in 1893, is counting on more demand as farm production expands to meet the needs of a growing population.  Agricultural output will need to double by 2050 as global population rises about 1/3 to 9.6B & the middle class expands, according to the Global Harvest Initiative, an effort supported by companies including DE that back expanded farm production.  DE is narrowing his company’s focus to businesses like farm machinery, technology & services. The stock rose 80¢.  If you would like to learn more about DE, click on this link:

Deere to Sell Crop Insurance Unit to Farmers Mutual Hail

Deere (DE)

Wal-Mart Groceries
Photo:   Bloomberg

Wal-Mart, a Dow stock & Dividend Aristocrat, is creating new senior leadership posts to focus on produce & meat, part of a push to improve the quality of its fresh grocery items & attract more organic-food shoppers.  The chain will have a new position in charge of “long-term sourcing strategy for meat.”  The post will be filled by Scott Neal, currently a senior VP for produce, meat, seafood & quality control for the US division.  Neal will “help ensure we have a sustainable approach to providing the best quality products for our customers,” WMT said in the message.  The moves follow a pledge in Oct to make fresh groceries a “big focus” this year.  The company said at the time that it was working to boost both the quality & consistency of its produce.  Separately, the company said that it’s imposing stricter safety standards on poultry suppliers, aiming to stave off foodborne illnesses.  The move requires vendors to undergo special testing by Jun 2016.  The stock rose 1.71.  If you would like to learn more about WMT, click on this link:
Wal-Mart Appoints Meat Czar as Part of Grocery Push

Wal-Mart (WMT)

German business confidence rose for a 2nd month in a sign that Europe's largest economy is overcoming the weakness it hit earlier in the year.  The Ifo institute’s business climate index, based on a survey of 7K execs, advanced to 105.5 in Dec from 104.7 in Nov, when it rose for the first time in 7 months.  That matches the estimate.  The Bundesbank has said the German economy is showing signs of strengthening after it effectively stagnated in the middle of the year & managed only a “modest start” to Q4.  Even so, the recovery may come too late to be much help to the euro area, leaving the ECB considering buying gov bonds to stave off region-wide deflation.  A gauge of current conditions in Germany was unchanged at 110 & an index of expectations climbed to 101.1 from a revised 99.8.  German investor confidence also rose for a 2nd month in Dec, a separate index showed this week.

German Business Confidence Rises With Signs of Growth 

This was the best 2 day rally in 2 years after Dow rose over 700.  While kind words from the FOMC are the main reason, stocks were also sharply oversold.  That means due for a recovery.  The MLP index shot up 32 from its lows just 3 days ago.  The VIX, volatility index doubled to almost 24 in a couple of weeks & dropped to the 17s today.  This is not a market for those feint of heart.   

Dow Jones Industrials

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