Thursday, August 13, 2015

Mixed markets amid economic data & China talk

Dow crawled up 5, decliners over advancers 3-2 & NAZ fell 10.  The MLP index dropped (along with oil) 5+ to the 358s & the REIT index was up chump change above 320.  Junk bond funds drifted lower & Treasuries were sold.  Oil is down to the 42s (a 6½ year low) & gold also saw selling.

AMJ (Alerian MLP Index tracking funds)

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CLV15.NYM....Crude Oil Oct 15....42.74 Down ...1.27  (2.9%)

Live 24 hours gold chart [Kitco Inc.]

US crude oil futures fell more than 2% to trade near their lowest price in 6½ years, as data showing a big rise in key US stockpiles intensified worries over a growing global glut.  A rise in the dollar, after higher US retail sales in Jul & strengthening employment data, added to the weight on oil.   Oil has fallen by nearly 1/3 since late Jun, a decline that continued this week after a 413K-barrel per day (bpd) refinery in Whiting, Indiana, the biggest in the Midwest, was forced to shut down 2/3 of its capacity for over a month or more of repairs due to a leak, sapping demand for crude.  Losses deepened this AM a report that stockpiles at the Cushing, Oklahoma delivery point for US crude futures has risen more than 1.3M during the week, adding to fears that the outage would cause stocks of surplus crude to swell.  If confirmed, it would be the biggest build since Mar.  Some analysts said a breach of the Mar low in US crude could trigger a cascade of sell orders, driving prices sharply lower again.  The market failed to rally yesterday after the Energy Information Administration (EIA) reported a 1.7M-barrel drop in crude stocks last week, as concerns over the Whiting outage offset the drawdown.  Traders focused instead on a big build in distillates, which include diesel & heating oil.  The EIA reinforced fears about the growing global glut in oil by reminding the market today that Iran had "technical capability" to boost output 600K bpd by end-2016 after the West lifts nuclear-related sanctions placed on its exports.

Crude Slumps to a Six-Year Low

Kohl's reported lower-than-expected quarterly same-store sales as consumers delayed back-to-school shopping due to a shift in tax holidays to Aug.  The company reported Q2 & profit below estimates.  Some US states offer a 3-day sales tax holiday on back-to-school purchases.  The tax holiday has shifted to Aug from Jul in most of those states in 2015.  Same-store sales rose only 0.1% for the qtr, much lower than the 1.7% rise expected.  "Our sales results were below our plan as the shift of sales in tax-free states from July into August was larger than anticipated," CEO Kevin Mansell said.  KSS largely caters to low- to middle-income customers for whom tax benefits are important for discretionary spending.  Lower spending on apparel & accessories & a general slowdown in consumer spending could have hurt.  EPS was 66¢.  The company incurred a loss of $170M due to debt refinancing.  Excluding items, EPS was $1.07, missing estimate of $1.1.  Net sales rose 0.6% to $4.27B, but was below the estimate of $4.31B.  Excluding the impact of debt extinguishment, KSS expects 2015 EPS to be at the low end of its forecast range of $4.40-$4.60.  The stock sank 5.39 (9%).  If you would like to learn more about KSS, click on this link:

Kohl's Same-Store Sales Miss

Kohl's (KSS)

Coca-Cola, a Dow stock & Dividend Aristocrat, named James Quincey pres & COO.  He has worked at KO for 19 years & has been pres of the company's Europe group since 2013 & helped lead the recently announced merger of Coca-Cola Enterprises (CCE), Coca-Cola Iberian Partners & Coca-Cola Erfrischungsgetranke.  The new entity will become the world's largest independent KO bottler based on revenue.  "His wealth of experience across our global system, particularly in Europe and Latin America, will be a valuable asset as we continue to accelerate growth through our 2020 Vision and our previously announced five strategic actions," CEO Muhtar Kent said.  The world's largest beverage company has been struggling recently as health-conscious consumers turn away from soda.  It said last year that it plans to eliminate at least 1-2K jobs globally in the coming weeks, the biggest thinning of its ranks in 15 years.  It also introduced stricter budgeting, telling executives to swap limousines for taxis & dropping its lavish Christmas party for Wall Street analysts.  The stock slid 16¢.  If you would like to learn more about KO, click on this link:

Coca-Cola Names New President, COO

Coca-Cola (KO)

Can't get no respect.  That was the problem with today's market.  Retail sales & jobless claims data was encouraging, but they were shrugged off with other problems.  In all fairness, the drop in oil prices is serious.  Maybe airlines aren't complaining, but this upsets a lot of  business plans, &, at a minimum, will bring more reductions in capital expenditures at energy companies.  Then there is the devaluation by China which seems to affect about everybody.  Aug is almost ½ over & shaping up as a disappointing month for stocks.

Dow Jones Industrials

stock chart 


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