Friday, May 1, 2015

Markets rebound after steep 2 day decline

Dow gained 183, advancers over decliners almost 3-2 & NAZ went up 63.  The MLP index rose 1 to the 453s & the REIT index added 2+ to the 322s.  Junk bond funds were mixed to higher & Treasuries sank, taking the yield on the 10 year Treasury over 2.1% (a 7 week high).  Oil fell as Iraq exports reached a new record & gold retreated to a 6 week low.

AMJ (Alerian MLP Index tracking fund)

CLM15.NYM....Crude Oil Jun 15....58.98 Down ...0.65  (1.1%)

Live 24 hours gold chart [Kitco Inc.]

Greece & its intl creditors were locked in intense negotiations over a long holiday weekend as they raced against the clock to avert a default as early as this month. While talks have picked up pace in recent days, the 2 sides still have ground to cover to bridge differences on stalled reforms.  That’s making it uncertain there would be enough progress to clinch a deal in time for a May 11 meeting of euro-area finance ministers.  Greek Prime Minister Tsipras told his cabinet on yesterday that he's confident a deal is close, even as his gov sent conflicting signals on its willingness to agree on reforms required under the €240B ($270B) bailout.  Faced with debt payments totaling about €1B to the IMF on May 6 & 12, Greece hopes there will be enough progress in the talks by next week to allow the ECB to restore liquidity access for the country’s cash-strapped banks.  Greece & its creditors stepped up efforts to break the impasse with a target to reach a deal by Sun.  While there has been progress in terms of the process after Tsipras reshuffled the negotiating team, there is still a long way to go on the substance, according to a leaker.  The official said that the Greek gov economic assumptions are very optimistic, making it difficult to agree on the extent of fiscal adjustment measures the country must adopt to meet goals under its bailout.  The European Commission will publish on May 5 its spring economic forecasts, in which it will probably lower its growth projection for Greece this year.

Greece Races to Bridge Gap With Creditors Ahead of May Debt Bill

Chevron, a Dow stock & Dividend Aristocrat, Q1 earnings dropped 43%, but strength in the refining segment helped offset tumbling crude oil prices & its results topped estimates.  CVX has been working to increase its oil & gas production.  But oil prices have plummeted in recent months amid an oversupply, just as its drive begins to show results.  The company has said it will trim spending & stop buying back its shares as the collapse in oil prices has wiped $Bs from cash flow.  Profits were better insulated than most oil producers because it also makes money from refining the fuel into gasoline & diesel.  The lower-cost crude has helped its refinery businesses improve profit margins.  In Q1, refining, marketing & chemical operations (downstream) earnings doubled to $1.42B from $710M.  Meanwhile, earnings from exploration & production (the upstream segment), fell to $1.56B from $4.31B.  In all, EPS dropped to $1.37 from $2.36 a year earlier as revenue fell to $34.6B.  Analysts had forecast earnings of 79¢ on revenue of $24.4B.  The stock fell 2.02.  If you would like to learn more about CVX, click on this link:

Chevron Profits, Revenue Drop Sharply, Beat Views

Chevron (CVX)

CVS Health reported better-than-expected results for Q1, as growth in the company's drug-services business continued to outpace its retail stores.  The company also bumped up the low end of its 2015 earnings guidance.  CVS has gotten a boost recently from its Medicaid business, which has helped to offset retail sales declines in the wake of the company's decision to stop selling cigarettes.  In Q1, the pharmacy services business logged an 18% increase in revenue to $3.7B, driven by specialty pharmacy & pharmacy network claims.  Pharmacy network claims grew 11%, due in part to growth in its Medicaid program & public exchanges.  Overall, sales excluding newly opened or closed stores increased 1.2%, as a 4.2% gain in pharmacy sales helped to counter a 6.1% decline in sales at the front of the store, where cigarettes had been sold before the company discontinued their sale in Sep.  CVS has been embracing a broader health-care identity.  In addition to its antismoking moves, the company is expanding its walk-in medical clinics & specialty-pharmacy services.  For the year, CVS now expects to deliver EPS of $5.08-$5.19, compared with its previous guidance for $5.05-$5.19.  For Q2, CVS forecast EPS of $1.17-$1.20.  Analysts had forecast $1.25.  Overall, for Q1, CVS reported EPS $1.07, up from 95¢ a year earlier.  Excluding items, EPS was $1.14, ahead of the company forecast for $1.06-$1.09 a share in adjusted EPS.  Revenue grew 11% to $36.3B, topping the $35.9B analysts had forecast.  The stock rose 1.16.  If you would like to learn more about CVS, click on this link:

CVS Books 11% Increase in Quarterly Revenue

CVS Health (CVS)

This was a bargain hunter kind of day.  There was mixed news on the economy & earnings, but good enough to attract buyers.  Next week will bring more macro economic data for Apr along with the big jobs report next Fri.  Most of that should be more of the same, indecisive.  After today's rally, the Dow fell 57 this week.

Dow Jones Industrials

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