Monday, July 27, 2015

Lower markets after Chinese stock markets tumble

Dow sank 91, decliners over advances more than 2-1 & NAZ lost 21.  The MLP index fell 2+ to the 269s & the REIT index was up a fraction in the 315s.  Junk bond funds sold off & Treasuries rose, taking the yield on the10 year Treasury down to 2.22%.  Oil is down to the 47s while gold is struggling to go back over 1100.

AMJ (Alerian MLP Index tracking fund)

CLV15.NYM....Crude Oil Oct 15...48.08 Down .....0.53  (1.1%)

GCN15.CMX...Gold Jul 15.......1,102.50 Up ...16.90 (1.6%)

Chinese shares tumbled more than 8% as an unprecedented gov rescue plan to prop up valuations abruptly ran out of steam, throwing the viability of China's efforts to stave off a deeper crash into doubt.  Major indices suffered their largest one-day drop since 2007, shattering 3 weeks of relative calm in the volatile stock markets since China unleashed a barrage of support measures to arrest a slump that had started in mid-Jun.  The CSI300 index of the largest listed companies in Shanghai & Shenzhen plunged 8.6%, to 3818, while the Shanghai Composite Index lost 8.5%, to 3725.  China's market gyrations have stoked fears among global investors about the broader health of the economy, hitting prices of growth-sensitive commodities such as copper, which fell to not far from a 6-year low.

Durable Goods Orders Rise More than Views

Orders for business equipment rose in Jun for just the 2nd time this year as US factories start to regain their footing after a weak spell.  Bookings for non-military capital goods excluding aircraft climbed 0.9% last month after decreasing 0.4% in May, according to the Commerce Dept.  Orders for all durable goods increased 3.4%, propelled by a rebound in the volatile aircraft category.  Business investment is projected to improve as the energy industry’s woes dissipate & companies look to expand, cushioning the hit from cooling foreign economies & a stronger dollar that will probably continue to damp sales of American-made goods.   The forecast projected total durable goods orders would rise 3.2%.  The data were boosted by a 66% jump in bookings for non-military aircraft.  Excluding transportation equipment, orders rose 0.8%, the biggest gain since Aug.  They were projected to increase 0.5%.  Orders for non-defense capital goods excluding aircraft are a proxy for future business investment in items like computers, engines & communications gear.  Shipments of those goods, used in calculating GDP, fell 0.1% last month & the prior reading was revised to show a 0.3% drop (larger than previously estimated).  The figures indicate that business investment and/or exports remained weak in Q2.  Even with recent setbacks, the past few months have shown signs of a letup from the global plunge in crude prices that had triggered cutbacks in investment since mid-2014.

U.S. Capital Equipment Orders Rise for Second Time This Year

Restaurant Brands International, owner of the Burger King & Tim Hortons restaurant chains, posted Q2 profit that topped estimates after new sandwiches & classic menu items lured customers.  EPS was 30¢, excluding some items, beating the 25¢ estimate.  QSR added items like the A1 ultimate bacon cheeseburger, the extra-long pulled pork sandwich & revived its classic chicken fries to boost revenue at Burger King.  Same-store sales rose 6.7%.  Analysts estimated 4.3%.  “We’re launching fewer and more impactful items,” CEO Daniel Schwartz said.  He cited the A1 cheeseburger & pulled pork sandwich as contributors to Burger King’s sales & franchisees’ profit, he said.  Tim Hortons, the Canadian doughnut chain, also reported higher-than-estimated same-store sales.  Revenue by that measure rose 5.5%, beating the 3.4% projection.  While companywide revenue slid 1.6% to $1.04B, hurt by currency exchange rates, that still topped the $1.02B  projection.  QSR, the world’s 3rd-largest fast-food company, is accelerating growth & adding restaurants in the US & abroad.  The company recently opened its first free-standing, drive-thru Tim Hortons in St. Louis & is expanding around Detroit, as well.  Burger King is opening more intl locations & is ramping up growth in India & France, CFO Josh Kobza said.  “It’s growth in a lot of our big emerging and developed markets,” he said.  The chain added 141 restaurants in the qtr, while Tim Hortons opened 52.  The company also boosted its quarterly div to 12¢ from 10¢.  The stock jumped 2.61. If you would like to learn more about QSR, click on this link:

Burger King Owner Tops Estimates as Chicken Fries Help Sales

Restaurant Brands (QSR)

The setback in Chinese stocks was felt in the US markets.  NAZ is at a 4 week low, with selling continuing after disappointing earnings last week from big name tech companies.  While Dow is off its early AM lows, it's still on defense.  Q2 GDP numbers are coming later this week & they can not be expected to help the stock market.

Dow Jones Industrials

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