This blog gives investors more financial information for very smart investing!
Tuesday, August 25, 2015
A strong market start fades with heavy selling in the last hour
Believe it or not, Dow lost another 204 & closed at session lows (almost 700 below its high in the AM) following yesterday's rout, decliners ahead of advancers 5-4 & NAZ lost 19. The MLP index rose 3+ to the 333s & the REIT index dropped 7+ to the 292s. Junk bond funds recovered some of yesterday's losses & Treasuries were sold. Oversold oil bounced back to the 39s & gold fell after recent strength.
Even after cutting interest rates for the 5th time since Nov & telling banks they can hoard less cash, the People’s Bank of China (PBOC)
governor Zhou remains under pressure to do more to support the economy amid the biggest slide in stocks since 1996. Equities rallied around the world on Tues after the PBOC said it
will cut the one-year lending rate by 25 basis points to 4.6%
lowered the required reserve ratio by 50 basis points for all banks.
Zhou swung into action 2 weeks since a devaluation of the yuan & a
deceleration in his economy ignited fears about the outlook for global
growth. The fresh easing reinforces efforts by policy makers to deliver on
Premier Li Keqiang’s 2015 growth goal of about 7%. That is being
jeopardized by deflation risks, over-capacity & a debt overhang, which
leave the economy poised for its slowest expansion since 1990.
Industrial production, investment & retail data all trailed
estimates in Jul. The easier conditions for banks may have been necessitated by a need
to offset a drying up of liquidity in markets following the surprise
decision of Aug 11 to devalue the yuan. The PBOC subsequently bought
its currency to stabilize the exchange rate & curb capital outflows. The shift marked a return to more conventional monetary tools after
the decision to let the yuan weaken & failed gov efforts to
buoy stocks via interventions in the equity market. It also drew
comparisons with past crisis-fighting efforts from the Fed & other key
central banks to act aggressively to protect economies from slowdowns & financial markets from selloffs.
Chemical industry activity is slowing, which isn't a good sign for the future of US industrial output. One
of the big questions surrounding the outlook for the US expansion is
how slowing growth abroad & a strong dollar will affect exports & manufacturing. The Fed index of industrial production
has slowed this year, rising 1.3% for the 12 months ending Jul,
down from a 4.5% gain at the start of the year. The
Chemical Activity Barometer (CAB), whose indicators include the
production, inventory & selling prices of numerous chemicals as well
as prices of chemical stocks, rose just 1.8% in Aug from a year ago
(on a 3-month moving average basis), the slowest pace since late 2012. The
chemical barometer's recent decline indicates the pace of manufacturing
will slow further into 2016, making for sub-par growth ahead.
Coca-Cola, a Dow stock & Dividend Aristocrat, along with its bottling
partners expect to be replenishing 100% of the water used in
their factories by the end of 2015, reaching a longstanding conservation
goal 5 years ahead of schedule. It announced the replenishment target in 2007,
saying it’s already “balancing” about 94% of the water. That means KO is offsetting each gallon it uses by recycling or conserving a
gallon somewhere in the world. The company relies on a mix of systems
to accomplish this, including waste treatment at its plants &
reforestation projects that help restore watersheds. “As a consumer of water, the Coca-Cola system has a special
responsibility to protect this shared resource,” CEO
Muhtar Kent said. The project is meant to ensure the company will have enough water to
meet its needs, as well as reassuring customers who may be concerned
about drought in California & elsewhere. KO had originally
planned to be water-neutral by 2020. Thru 209 projects in 61 countries, the company &
its bottling partners have given back almost 153B liters of
water. The KO system has also recycled 127B liters of
water after waste treatment. Combined, these numbers are set to meet the
company’s goal by the end of 2015 based on 2014 sales volume. The program isn’t philanthropic so much as a
strategic business imperative, Greg Koch, global director of water
stewardship at KO, said. Local water access is
vital to the company’s success since “the price point that we
sell our products demands that we manufacture and distribute locally.” When water supply is stressed, “that presents risks, risk to those
communities, those ecosystems, and all businesses operating there --
including ours,” Koch said. The stock fell 39¢. If you would like to learn more about KO, click on this link:
Dow was up 600 in futures trading before the market opened, but that enthusiasm withered during the day. Selling in the last hour made a dreary day worse. Early on, lower interest rates in China brought out buyers. Then 2nd thoughts gave them reason to pause. The Chinese economy changed little during the last few hours, fundamental problems of slow growth remain. Slow & uneven growth in the US economy continues. Traders are nervous about its financial future as they were at yesterday's close. Dow lost 500 in the last hour, signalling another gloomy day tomorrow. It's down more than 2½K from its peak in May & the chart below looks just plain UGLY!!
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.24742991452043928)
...1.05 
No comments:
Post a Comment