Friday, March 11, 2016

Markets rise, completing a 4 week winnning streak

Dow shot up 217 (closing at the highs), advancers over decliners 5-1 & NAZ gained 86.  The MLP index rose 4+ to the 261s & the REIT index went up 6+ to the 327s.  Junk bond funds were higher & Treasuries ran into selling as stocks rose.  Oil was up to the 38s & gold declined.

AMJ (Alerian MLP Index tracking fund)

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CLJ16.NYM....Crude Oil Apr 16....38.63 Up ...0.79 (2.1%)

Live 24 hours gold chart [Kitco Inc.]

Oil prices rose after a top energy monitor said that prices might have bottomed on hopes that falling supply would help alleviate the global glut of crude.   The International Energy Agency said that prices have been supported by easing supply around the globe but cautioned that the recent rally might not be sustainable as the demand outlook remains uncertain.  Crude prices have rebounded by around 40% since their lows last month.  "For prices there may be light at the end of what has been a long, dark tunnel," the agency said.  "But we cannot be precisely sure when in 2017 the oil market will achieve the much-desired balance."  The IEA cautioned that risks to global oil demand growth are to the downside, with China demand growing at a below-average rate.  Crude oil inventories have continued to increase as the surplus crude goes into storage.  In the US, crude stockpiles last week rose to their highest level in more than 80 years.

Oil Prices Rise on Hopes Glut Will Ease

US import prices fell in Feb for an 8th straight month, weighed down by declining costs for petroleum & a range of other goods, but the pace of decline is slowing as the $ rally fades & oil prices stabilize.  The Labor Dept said import prices slipped 0.3% last month after a revised 1.0% decrease in Jan.  Import prices have decreased in 18 of the last 20 months, reflecting a robust $ & plunging oil prices.  They were down 6.1% in the 12 months thru Feb, the smallest year-on-year drop since Dec 2014.  The import deflation is likely close to an end as $ appreciation loses some steam after gaining roughly 20% from Jun 2014 - Dec 2015.  So far this year, the $ has strengthened about 0.9% as oil prices have also shown tentative signs of stabilizing.  Should these trends continue, import prices could start to rise soon & help to prop up domestic inflation.  Reports showed a broad pick-up in prices in Jan, raising optimism inflation will rising toward the Federal Reserve 2% target & allow it to continue to gradually raise interest rates this year.  Last month, imported petroleum prices fell 4.0% after plummeting 14.3% in Jan.  Imported food prices fell 2.0%, the largest drop since Feb 2012, while prices for industrial supplies & materials excluding petroleum slipped 0.3%.  Prices for imported capital goods were unchanged & the cost of imported automobiles fell 0.1%.  Export prices fell 0.4% after sliding 0.8% in Jan & were down 6.0% from a year ago.

Import Prices Fall Less Than Expected in February

Colgate-Palmolive, a Dividend Aristocrat, will cut more jobs under an extended restructuring program as it grapples with tough macro-economic conditions, including a strong $.  The program, now expected to end in Dec 2017, will result in the reduction of 3.3-3.8K positions globally.  The company, had earlier said it expected to complete the program this year & cut 2.7-3.2K positions.  CL, which gets more than ¾ of its revenue from outside the US, has been raising prices to counter the impact of the stronger $.  But that has hit volumes in regions such as Latin America, its biggest market.  It will take pre-tax charges of $1.41-$1.59B by the end of 2017, up from the previous $1.28-$1.44B it had estimated under the original program.  It will also cut costs on its supply chain & focus on expanding its commercial hubs.  The stock rose 14¢.  If you would like to learn more about CL, click on this link:

Colgate Extends Restructuring to Cut More Jobs

Colgate-Palmolive (CL)

Dow is up 1.2K in the last 4 weeks, an amazing rise.  It's largely attributable to a major recovery in the oil market, an improving sentiment about the Chinese economy & the ECB throwing more money into the euro markets.  Of course, that puts stocks in an extremely overbought condition.  A significant reversal may be in the wind.  For the time being, the bulls are in command & Dow is well over 17K, an important resistance level that has held it back for a week.

Dow Jones Industrials


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