Thursday, January 14, 2016

Oversold market recovers some of 2016 losses

Dow surged 227 (but faded into the close), advancers over decliners a relatively mild 2-1 & NAZ gained 88.  The MLP index recovered 13+ to the 252s & the REIT index was fractionally lower to the 309s.  Junk bond funds fluctuated & Treasuries were sold as money flowed into stocks.  Oil finally went up, 1 to the 31s, on short covering (see below) & gold slid a little lower.

AMJ (Alerian MLP Index tracking fund)

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CLG16.NYM....Crude Oil Feb 16....31.46 Up ...0.98 (3.2%)

Live 24 hours gold chart [Kitco Inc.]

JPMorgan Chase, a Dow stock, Q4 profit rose 10% as expenses from litigation & employee compensation shrank because a regulatory burden would have a smaller impact on capital requirements than previously estimated.  EPS was 1.32, versus 1.19 a year earlier.  EPS excluding litigation costs & accounting adjustments was 1.40, beating the 1.27 estimate.  The bank earned 24.4B for 2015, a 2nd-straight annual record.

The company had only $99M in litigation costs after getting $318M from the gov tied to its acquisition of Washington Mutual assets.  That compared with $990M in legal expenses a year earlier.  Revenue rose 1% to $22.9B in Q4 & non-interest expenses fell 7% to $14.3B.  Revenue on a managed basis, which includes tax adjustments, was $23.7B, beating estimates.  The number of employees declined to 234K, a drop of 3%.  Its surcharge for global systemically important banks, a closely watched measure that will determine its required capital ratio, fell to 3.5% after the company cut client deposits & reduced derivatives.  The bank said about a year ago that it could be as high as 5%.  The firm gave up an insignificant amount of revenue to whittle down the surcharge.  The stock rose 86¢.  If you would like to learn more about JPM, click on this link:

JPMorgan Fourth-Quarter Profit Rises 10%

J P Morgan Chase (JPM)

Oil prices rebounded, snapping an 8-day rout, as investors covered short positions, lifting prices that had plumbed 12-year lows on worries that Iran may add its barrels to a glutted global market sooner than expected.  Before rebounding, global crude benchmark Brent broke below $30 a barrel for a 2nd straight day.  A UN nuclear watchdog appeared likely to confirm by tomorrow that Iran has curtailed its nuclear program, paving the way for sanctions to be lifted against its oil.  With options for crude's front-month contract expiring today, many players were covering short positions.  It has been estimated that Iran will produce almost 700K barrels a day more in Q1-2016 than over the same period in 2015.  Iran aims to raise its crude exports by 1M barrels a day within 6 months of sanctions being canceled.  Oil & gas projects worth $380B have now been postponed or canceled since 2014 as companies slash costs to survive the oil price crash (including $170B of projects planned for 2016-2020).

Oil Rebounds After Eight-Day Rout

Brown-Forman, a Dividend Aristocrat, has agreed to sell its Southern Comfort & Tuaca brands to Sazerac for $543M. CEO Paul Varga said the deal "reflects the company's evolving portfolio strategy and a continuation of its efforts to focus resources on its highest strategic priorities."  BF.A is expecting to book a one-time gain on the deal of about $475M in fiscal 2016 & expected to close in 6 weeks.  The stock rose 44¢.  If you would like to learn more about BF.A, click on this link:

Brown-Forman Agrees To Sell Southern Comfort And Tuaca To Sazerac For $543.5 Million

This was one strong rally, but enthusiasm faded in the last hour, with Dow finishing 100 below session highs.  Market breadth was unimpressive.  Stock traders liked to see oil rise, but that may have more to do with shorts covering positions.  A 3 day holiday weekend approaches & few want to be exposed going into that period.  Dow is still down more than 1K in Jan & continues to have an ugly chart.

Dow Jones Industrials


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