Monday, August 10, 2015

Higher markets on oil recovery

Dow shot up 241 closing near the highs, advancers over decliners almost 3-1 & NAZ gained 58.  The MLP index exploded, up 11+ to 356 after recent selling, & the REIT index slid a fraction to the 317s.  Junk bond funds were mixed to higher & Treasuries retreated as stocks rallied.  Oil rebounded, if that's what you call it, to the 45s & gold clawed its way back over 1100.

AMJ (Alerian MLP Index tracking fund)

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CLV15.NYM...Crude Oil Oct 15....45.54 Up ...1.18 (2.7%)

Live 24 hours gold chart [Kitco Inc.]

Consumers in the US last month envisioned the slowest rate of growth in their planned spending in at least 2 years, according to a survey by the Federal Reserve Bank of New York.  The New York Fed’s Jul Survey of Consumer Expectations found that households expect to increase spending by 3.5% over the next year, down from the 4.3% gain seen in Jun.  This was the lowest reading since the survey started in 2013.  Expected inflation over the next year was unchanged at 3%.  The monthly New York Fed survey comes ahead of the release of a Commerce Dept report on Thurs that is forecast to show US retail sales rose 0.6% in Jul after falling 0.3% in Jun.  The Fed is looking for signs that the labor market & inflation have returned to normal before beginning to raise its benchmark federal funds rate.  Most economists expect policy makers will act at their next meeting on Sep 16-17.  Spending data are important because the consumer underpins the Fed’s optimism that economic growth will accelerate.  “That’s really fundamental to our improved outlook,” Chicago Fed pres Charles Evans said last month.  “We are really counting on the consumer playing a strong role.”

U.S. Consumers Rein in Spending Growth Plans, New York Fed Says

Sysco, a Dividend Aristocrat, profit in its latest qtr fell, as the company booked charges stemming from its abandoned plan to acquire rival US Foods.  Adjusted EPS topped expectations.  The nation's largest distributor of food & related supplies to restaurants & cafeterias, in Jun dropped its $3.5B attempt to buy US Foods amid growing signs the deal wouldn't pass regulatory muster.  CEO Bill DeLaney said the company's focus would shift to the possibility of smaller acquisitions, cost-cutting & efforts to update its product offerings & technology to compete with rivals that have more natural & organic items & online ordering.  Operating expenses during the qtr jumped 21%, mainly due to $313M in merger-termination charges.  DeLaney highlighted 6% growth in adjusted operating income, which was credited to improved expense management.  Gross margin improved to 17.9% from 17.5% a year earlier.  Food cost inflation was flat with modest inflation in the meat, poultry & frozen categories offset by modest deflation in the dairy, produce & seafood categories.  EPS fell to 12¢ from 43¢.  Excluding the merger-related costs, among other items, earnings increased to 52¢ from 49¢.  Revenue edged 0.9% higher to $12.4B.  The strong dollar hurt sales by 1.4%.  Analysts expected EPS of 51¢ on $12.67B in revenue.  The stock rose 66¢.  If you would like to learn more about SYY, click on this link:

Sysco Profit Drops, Hurt by US Foods-Related Costs

Sysco (SYY)

Dean Foods reported Q2 EPS of 28¢, compared with a loss of a penny last year.  Excluding non-recurring items, adjusted EPS came to 33¢, beating the estimate of 26¢.  Sales fell to $2.01B from $2.39B, just below the $2.07B forecast, as total volume declined 3%.  Raw milk costs fell 33% from a year ago.  For Q3, the milk producer expects EPS of 17-27¢, which compares with the 21¢ by analysts.  "With volume performance coming in-line with our expectations and a generally favorable commodity environment, we delivered a fourth consecutive quarter of sequentially improving gross profit and operating income," said CFO Chris Bellairs.  Separately, the company disclosed that Chairman Tom Davis resigned from the board of directors, effective immediately.  The stock dropped 52¢.  If you would like to learn more about DF, click on this link:

Dean Foods Swings To Profit, Beats Expectations

Dean Foods (DF)

It's difficult to make sense out of today's market's rally.  Oil had one of its best days in months, badly needed for this battered commodity.  Other commodities also recovered some lost ground following recent selling.  But there was no significant news behind the buying.  That makes for a suspicious rally.  The chart below shows the Dow is still sloshing around its lows since Nov & is in the red YTD.  The sideways trend remains.

Dow Jones Industrials

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