Monday, January 25, 2016

Markets tumble as oil falls below $31

Dow sank 208 (closing at the lows), decliners over advancers more than 5-1 & NAZ fell 72.  The MLP index dropped 6+ to the 236s & the REIT index gave up 2+ to the 307s.  Junk bond funds drifted lower & Treasuries rallied.  Oil fell to below 31 as investor focus returned to the global oversupply amid news that Iraq's output reached a record last month & gold found favor with investors & they took it back over 1100.

AMJ (Alerian MLP Index tracking fund)

CLH16.NYM....Crude Oil Mar 16....30.66 Down ...1.53  (4.8%)

Live 24 hours gold chart [Kitco Inc.]

Energy demand will climb 25% worldwide by 2040, an increase equivalent to all the power and fuel consumed currently in the Americas, according to Exxon Mobil (a Dow stock & Dividend Aristocrat).  Crude oil will retain its dominant position among energy sources a qtr century from now as population growth & rising standards of living in much of the world more than offset energy-saving efficiency gains,  XOM said in its annual long-term outlook for natural gas will grow more than any other source & will account for 40% of the overall increase.  Oil demand will grow by 20% to 112M barrels a day in 2040.  The base year was 2014 for all the figures, which XOM relies on for long-term business & strategic planning.  Crude supplies will come increasingly from shale, oil-sands mines & deepwater fields & Venezuela will emerge as a major producer of crude from oil sands in coming decades.  Globally, output from oil sands will more than double by 2040.  China & India will account for ½ of the global increase in demand for all types of energy going forward.  Another 30% of the worldwide growth will be driven by just 10 countries: Brazil, Mexico, South Africa, Nigeria, Egypt, Turkey, Saudi Arabia, Iran, Thailand & Indonesia.  Coal use for power generation will drop to about 30% in 2040, from 40% in 2014, while natural gas will pull even with coal.  Wind & solar will provide more than 10% of the world electricity, up from about 4%.  The stock fell 2.59.  If you would like to learn more about XOM, click on this link:

Exxon Sees Energy Demand Rising 25% by 2040 as Population Grows

Exxon Mobil (XOM)

Kimberly-Clark, a Dividend Aristocrat, missed on Q4 earnings, sending the stock lower.  EPS was 91¢, which compares with a loss of 22¢ in 2014.  Adjusted EPS was $1.42 versus the $1.43 estimate.  Sales totaled $4.5B, down 6% from $4.8B the year before & the estimate was for $4.6B.  The company said EPS was negatively impacted by unfavorable currency exchange rates, increased marketing spend, research & general spending.  KMB removed the Venezuelan business from its balance sheet, which the company said "reflects the continued deterioration of conditions in the country."  It expects 2016 sales in the range of flat to down 3% & adjusted EPS of $5.95-$6.15, up from $5.76 in 2015.  The company is planning a share buyback of $600-$900M.  The stock lost 4.03.  If you would like to learn more about KMB, click on this link: ?a_aid=CD3289&a_bid=6ae5b6f7

Kimberly-Clark Shares Slide On Earnings Miss 

Kimberly-Clark (KMB)

Caterpillar, a Dow stock, slumped after the stock was downgraded to sell from neutral at Goldman Sachs.  Analysts forecast "sustained lower returns" in the machinery industry & axed its price target to $51 from $67 (a more than 16% decline from the Fri close).  Another analyst also lowered his estimate on the 2017 EPS to $3.20 from $3.41, (roughly 15% below the consensus view).  He cited excess capacity & lower demand from commodity export countries, such as China, for the sliced outlook . Last qtr, CAT partially blamed low economic growth in China for missing profit expectations & lowering its full-year outlook.  The average rating on the stock is the equivalent of neutral, while the average stock target is $66.  The stock lost 3.07.  If you would like to learn more about CAT, click on this link: ?a_aid=CD3289&a_bid=6ae5b6f7

Caterpillar downgraded to sell at Goldman Sachsat MarketWatch

Caterpillar (CAT)

The Fed announced the policy-setting FOMC plans to meet as scheduled Tues & Wed (no exciting news is expected from the meeting).  They stocked up on snow shovels last week.  Dow is back under 16K as it follows price swings of oil.  In the old days, stocks used to rise when oil went down.  Not in recent months.  The Jan stock market remains gloomy.  If Dow drops to 15,682 (only 200 above that now) by Fri, it will be down 10% in Jan, sending an extremely ugly signal for the rest of the year.

Dow Jones Industrials

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