Tuesday, February 9, 2016

Lower markets on gloomy outlook for oil

Dow slid back 35, decliners over advancers more than 2-1 & NAZ went up 15 following its recent decline.  The MLP index dropped 6+ to the 213s & the REIT index lost 2+ to the 293s.  Junk bond funds drifted lower & Treasuries ran into selling.  Oil was little changed in the 29s & gold gave up some of its recent gains.

AMJ (Alerian MLP Index tracking fund)

CLH16.NYM...Crude Oil Mar 16...29.65 Down ....0.04  (0.1%)

GCG16.CMX...Gold Feb 16......1,197.70 Down ...0.20  (0.0%)

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The Global Oil Glut Is Even Bigger Than Expected, IEA Says

German industrial production unexpectedly fell for a 2nd month in Dec, a sign that a slowdown in major export markets is holding back factory activity despite strong domestic demand.  Output, adjusted for seasonal swings & inflation, fell 1.2% from Nov, when it declined by a revised 0.1%, data from the Economy Ministry said.  The reading, which tends to be volatile, compares with an estimate for a 0.5% increase.  The pullback comes at a time when record-low unemployment & low fuel costs are bolstering consumer spending, but slowing growth in China & emerging market economies are counteracting those positive trends to rein in production.  It also came amid a warm Dec, which could have driven down heating costs.  Slowing demand from abroad has been a major headwind for industrial output in Germany.  Growth in China is expected to slow to 6.3% in 2016 from 6.9% last year & 7.3% in 2014, the IMF said last month.  China is Germany's 4th-largest export market.  Total foreign sales fell 1.6% in Dec.  Imports declined 1.6% from the previous month.  Slower growth overseas may be weighing down companies' sentiment as.business confidence fell for a 2nd month in Jan.  German manufacturing output slid 1.1%, driven by a 2.6% slump in the production of investment goods.  Energy production declined 3% & consumer goods output fell 1.4%.

German Industrial Production Unexpectedly Fell in December

US small business confidence fell in Jan to its lowest level in nearly 2 years amid worries about the near-term outlook for business conditions & sales growth, consistent with a recent slowdown in economic growth.  The National Federation of Independent Business said its Small Business Optimism Index fell 1.3 points to 93.9 last month, the weakest reading in 2 years.  Still, small businesses remained fairly upbeat about the labor market.  The NFIB said there was little sign that a stock market selloff & Dec's interest rate hike had impacted confidence.  Owners' perceptions of business conditions in 6 months weakened sharply as did their views of expected sales.  "These expectations are important determinants of decisions to hire, to expand business operations and to order new inventory, all drivers of economic growth," the NFIB said.  The ebb in confidence mirrored other weak economic data ranging from manufacturing to consumer spending & trade.  Despite the downshift in sentiment & weak economic growth, small businesses are not scaling back on hiring & continue to report a shortage of qualified workers to fill job vacancies.  This is prompting businesses to start raising wages to attract & retain workers.  The share of small businesses raising compensation increased to its highest level since 2007.  With the sales outlook weak, businesses continued to hold back on increasing inventories last month & offer price discounts to clear stock from their warehouses.  "It appears that there was a lot of price cutting late in the year to boost sales and reduce inventory," the NFIB said.

U.S. Small Business Confidence at Two-Year Low

This is just another dreary day in the stocks.  But major losses in pre market futures have been trimmed with a modest amount of bargain hunting.  The outlook for oil is not pretty & that is adversely affected by slowing growth in China which hurts economies around the globe.  Dow is flirting with holding above 16K, nothing to be proud of.

Dow Jones Industrials


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