Wednesday, October 28, 2015

Markets rise ahead of FOMC announcement

Dow rose 67, advancers ahead of decliners better than 3-1 & NAZ added only 4.  The MLP index rebounded 6+ to the 316s & the REIT index went up 2 to the 327s.  Junk bond funds crawled higher & Treasuries were a little lower.  Oil recovered to the 43s & gold had a nice gain with its eyes on 1200.

AMJ (Alerian MLP Index tracking fund)

CLZ15.NYM....Crude Oil Dec 15...43.63 Up ...0.43 (1.0%)

GCV15.CMX...Gold Oct 15......1,176.00 Up ....9.20 (0.8%)

3 Stocks You Should Own Right Now - Click Here!

Less than a week after pres Mario Draghi primed investors for an expansion of quantitative easing & the possibility of another cut in the deposit rate, Governing Council members are publicly revealing the arguments that will define their Dec 3 decision-making meeting.  A rift has already emerged, with Peter Praet, the ECB chief economist, saying that the bank has a duty to use all instruments available, & Executive Board member Benoit Coeure saying that a slower-than-anticipated return of inflation toward the ECB's 2% goal may warrant additional stimulus.  Taking up the other side of the debate are Ardo Hansson, a council member from Estonia, & his Latvian counterpart, who said they see no need to rush action.  With the euro area’s fragile economic recovery at risk of being derailed & an emerging-market slowdown dragging on global trade, the focus is now on ECB VP Vitor Constancio, who takes the stage shortly at a conference on financial stability  “We have a very rich discussions in the Governing Council, and as I always say high quality, there are different views but the analysis is always rich and respectful,” Praet said.  Officials are “not only willing, but also able to act, we have always demonstrated this capacity to act collectively.”  Praet’s comment that downside risks have “clearly increased” is a reflection of the ECB's struggle to nurture the recovery & revive inflation.  Draghi all but promised to ease policy at the Dec meeting by committing to be “vigilant,” invoking his predecessor Jean-Claude Trichet’s preferred signal for imminent action.  “Of course, there is six weeks until that time, if something very fundamentally changes, I can reevaluate, but now I don’t see any grave need to take such a step,” Hansson said.  “The external environment has become more fragile and that’s clearly on the table. But we see also in the domestic euro-area economy quite a lot of resilience, we see growth continuing near projected levels.”  The ECB predicted in Sep that the 19-nation economy would expand 1.4% this year, 1.7% in 2016 & 1.8% in 2017.  Inflation was seen at 0.1%, 1.1% & 1.7%, respectively.

ECB Officials Haggle Over Fresh Stimulus in Draghi's Aftermath

Walgreens Boots Alliance, a Dividend Aristocrat,  reported a better-than-expected quarterly profit, helped by lower costs achieved thru its cost-cutting plan.  The largest U.S. drugstore chain by store count said on Tuesday it would buy rival Rite Aid (RAD) for $9.4B to widen its footprint in the US & negotiate for lower drug costs.  In Apr the company launched a plan to cut $1.5B in costs by the end of fiscal 2017, which would include store closures & freezing salary hikes for senior US execs.  Sales at US Walgreens & Duane Reade stores open at least a year rose 6.4%, benefiting from higher purchases per buyer.  EPS was 2¢, in fiscal Q4, compared with a loss of 23¢ a year earlier.  Excluding items, EPS was 88¢.  Net sales rose 49.7% to $28.5B, also helped by the company's acquisition of Europe's Alliance Boots in Dec.  Analysts expected EPS of 81¢ on revenue of $28.4B.  The company also said it suspended the balance of its $3B share repurchase plan to fund its RAD acquisition (leaked to the press yesterday).  The stock lost 6.26.  If you would like to learn more about WBA, click on this link:

Walgreens' Quarterly Sales Beat Estimates

Walgreens Boots Alliance (WBA)

Hershey cut its full-year profit forecast, hurt by weak demand in North America & higher marketing costs ahead of the holiday season.  The company also reported lower-than-expected sales for Q3 due to weak demand for candy, mint & gum, which accounted for 90% of US retail sales.  The fall in sales to some retailers cutting down on marketing & fewer shoppers visiting stores.  A shift in consumer preference from candies & other sugary snacks to healthier foods has forced retailers to limit their marketing efforts on such products.  Slowing growth in China has also reduced spending on items such as Hershey's Kisses chocolates, which are popular gift items in the economy.  HSY said it expected sales to be flat to slightly up this year, down from the 1.5-2.5% growth it forecast in Aug.  This is the 5th time the company is cutting its sales forecast.  EPS is now expected to be 4.10 compared with the 4.10-4.18 it anticipated earlier, as it expects to "markedly" ramp up spending during the holiday quarter.  EPS fell to 70¢ from $1 a year earlier.  Net sales were nearly flat at $1.96B, missing the expectation of $1.98B.  Excluding items, EPS was 1.17, beating expectations by 4¢.  The stock sank 4.20.  If you would like to learn more about HSY, click on this link:

Hershey Posts 31% Drop in Profit, Cuts Forecast

Hershey (HSY)

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Stocks are higher as traders are hoping for another extension of near zero interest rates.  Earnings have generally been drab, but they are getting less attention that what Janet will say in a few hours.  Dow is already up an astounding 1400 in Oct.  Hard to believe.

Dow Jones Industrials

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