Monday, November 9, 2015

Lower markets on forecast for slower global growth

Dow sank 179, decliners over advancers better than 5-1 & NAZ pulled back 48.  The MLP index lost 2+ to the 321s & the REIT index dropped 4+ to the 312s.  Junk bond funds eased lower & Treasuries were also sold.  Oil & gold each inched higher.

Dow Jones Industrials

CLZ15.NYM....Crude Oil Dec 15...44.13 Down .....0.16  (0.4%)

GCX15.CMX...Gold Nov 15.....1,087.60 Down ...16.80  (1.5%)

The OECD trimmed its global economic forecasts for the 2nd time in 3 months as slower growth in emerging markets spilled over into countries such as Germany & Japan.  World output will expand 2.9% in 2015 & 3.3% in 2016, down from the 3% & 3.6% predicted in Sep, the OECD said in a semi-annual report.  “Global growth prospects have clouded this year,” it said.  “The outlook for emerging-market economies is a key source of global uncertainty at present.”  With Russia & Brazil in recession & China poised to deliver its weakest expansion in more than 2 decades, the economies that powered world growth in recent years are now slowing it down.  Developed economies are feeling the brunt in the form of reduced demand for both commodities & manufactured goods.  It barely changed its forecasts for Chinese output, pegging growth at 6.8% this year & 6.5% in 2016.  Yet Brazil’s economy is now seen shrinking 3.1% this year & 1.2% next, compared with contractions of 2.8% & 0.7% predicted in Sep.  Russian GDP is on track to drop 4% in 2015 & 0.4%.  For emerging markets, “challenges have increased.”  Should their situation deteriorate, “growth would also be hit in the euro area, as well as Japan.”  Japanese GDP will grow 0.6% this year & 1% next.  The euro area expansion is now seen at 1.5% in 2015 & 1.8% in 2016, a reduction by 0.1% point for each year.  In terms of the economy, Europe’s immigration crisis represents a much needed potential boost.  It estimates that the influx of refugees may add between 0.1 & 0.2 points to growth in 2016 & 2017 thanks to extra gov spending.  The US expansion remains on track, with the OECD predicting growth of 2.4% this year & 2.5% in 2016.  In the U.S., “output remains on a solid growth trajectory, propelled by household demand.”  “Monetary policy remains very accommodative, which is consistent with stubbornly below-target inflation, subdued wage pressures and hints of downward pressure on inflation expectations.”

OECD Trims Global Growth Forecast on Emerging-Market Slowdown

DuPont, a Dow stock, appointed interim Chief Executive Edward Breen its permanent CEO & chairman.  Breen has been the company's interim CEO since Oct 16, when veteran Ellen Kullman suddenly stepped down.  DD is talking to rivals about its agriculture business, Breen said last month & added that DD would revisit its costs & budget allocation as it targets about $1.6B in annual savings by 2017.  The company has also slashed its earnings forecast at least twice this year as falling crop prices & rising fertilizer output pressure its agri business.  The stock rose 47¢.  If you would like to learn more about DD, click on this link:

DuPont Appoints Edward Breen Permanent CEO

E.I. du Pont de Nemours (DD)

Hertz Q3 profit soared 59% as the company emerges from recent accounting woes, though revenue fell short of expectations on currency effects.  In Jul, the company completed restating its financials, a process that cut its profit by about $58M in 2012 & $51M in 2013.  HTZ is facing new challenges as the rise of car-sharing operations continue to pressure the rental industry.  The company has been trying to turn things around.  HTZ named John Tague as CEO in Nov & said in May that it planned to raise rental rates.  "Our profit improvement in the third quarter is early evidence of the potential we see in our performance improvement plan," Tague said.  He pointed to fleet efficiency, which was up 3 percentage points from the qtr last year to 83%.  He also said the rental company had completed the integration of Dollar Thrifty operations, following the closing of the merger in Nov 2012.  EPS rose to 52¢, up from 32¢ a year earlier.  Adjusted EPS excluding certain items was 49¢ while revenue dipped 4.6% to $2.98B.  Analysts had forecast adjusted EPS of 52¢ on $3.1B in revenue.  Revenue fell 1.6% in the US car-rental business, 13.6% in its intl car-rental business & 2.9% in its world-wide equipment-rental business.  The stock sold off 1.64 (9%).  If you would like to learn more about HTZ, click on this link:

Hertz Profit Climbs, Despite Lower Top Line

Hertz Global Holdings (HTZ)

The incredible strong market advance in recent recent looks to be over.  A drab earnings season did not bother the bulls.  However a very strong jobs report indicating a likelihood of a rate hike next month along with another reminder the the outlook for growth around the world is is being lowered brought on selling.  Yield securities such as MLPs, REITs & junk bond funds are feeling a lot of selling pressure.  Currently, stocks are at session lows.

Dow Jones Industrials

No comments: