Monday, December 14, 2015

Lower markets ahead of FOMC meeting

Dow fell 34, decliners over advancers better than 3-1 & NAZ declined 16.  The MLP index dropped 8+ to the 245s & the REIT index was fractionally lower to the 313s.  Junk bond funds declined more than 1% (big for them) & Treasuries were also sold
Oil slid to the low 35s & gold lost ground.

AMJ (Alerian MLP Index tracking fund)

CLF16.NYM...Crude Oil Jan 16...35.41 Down ...0.21  (0.6%)

GCZ15.CMX...Gold Dec 15....1,073.10 Down ...3.80  (0.4%)

Record warmth sent US natural gas prices tumbling to a 10-year low as Dec appeared to be a bust for bulls.  Gas slumped more than 6%, the most since Nov 20, as the latest forecasts showed temps more than 20 degrees Fahrenheit above normal in parts of the eastern US later this month.  Numerous cities broke temperature records dating back to the 19th century over the weekend.  NYC recorded a high yesterday of 67, a record for the date, beating a mark set in 1923.  Natural gas prices are collapsing as mild weather dims the prospect of erasing a stockpile surplus that’s the biggest for the time of year since 2012.  Supply from shale formations in the US East has overwhelmed demand for the heating fuel, prompting analysts to cut their 2016 price estimates.  Natural gas for Jan delivery fell 9.1¢ to $1.899 per million British thermal units, heading for a 2nd straight annual decline.

U.S. Gas Slumps to 10-Year Low as Forecasts Keep Getting Warmer

Congress is likely going to lift the nation's 40-year-old ban on oil exports as part of broader spending & tax legislation, a historic policy change that would reflect momentous political & economic shifts driven by a boom in US oil production.  Allowing oil exports is a key component of a deal lawmakers are negotiating as part of spending & tax measures Congress is aiming to pass by Wed.  As part of the deal under negotiation, Congress would lift the ban & at the same time adopt environmental & renewable energy measures, including extending wind & solar tax credits & reauthorizing a conservation fund.  The deal under this scenario also wouldn't block any Obama administration environmental regulations, a frequent target of Reps.  Dem aides cautioned that all those conditions would have to be met if they were to go along with the lifting of the oil export ban.  Other parts of the tentative deal remain unclear, including a controversial measure by Dems, which would create a tax credit for independent domestic refineries, especially a few in the Northeast whose profits could be hit if oil exports are allowed.  The House has voted twice in the last 2 months to lift the export ban, but the Senate hasn't taken up the proposal.  The White House has threatened to veto the House bill, saying that it isn't needed because the administration has the necessary authority.

Congress Seen Likely to Lift U.S. Oil-Export Ban

Newell Rubbermaid agreed to buy diversified consumer products company Jarden (JAH) for $13.2B, adding brands such as Sunbeam kitchen appliances & Coleman outdoor gear.  JAH shareholders will receive $21 in cash & 0.862 Newell shares for each share held.  The combined company, Newell Brands, will be led by NWL CEO Michael Polk.  NWL shareholders will own about 55% of Newell Brands after the transaction is complete, which is expected in Q2-2016.  Newell Brands will realize cost savings of $500M over the next 4 years.  NWL stock fell 2.37 & JAH rose 2.27.  If you would like to learn more about NWL, click on this link:

Newell Rubbermaid to Buy Jarden For $13B

Newell Rubbermaid (NWL)

This is a choppy day for stocks with a strong negative bias.  High yield securities continue to take it on the chin as the rise in interest rates approaches.  This is not shaping up as a good week for stocks.  Market selling is led by the energy stocks which are in an extreme bear market.

Dow Jones Industrials

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