Thursday, April 28, 2016

Stocks tumble while commodities rally on weak dollar

Dow sank 210 (closing near the lows), decliners over advancers 2-1 & NAZ dropped 57.  The MLP index pulled back 1+ to the 294s following a recent run shown in the chart below & the REIT index added 5+ to the 336s.  Junk bond funds were mixed to lower in a very good year for them & Treasuries were bid higher.  Commodities rallied on a weak $.  Oil is back over 46 & gold had a big gain (shown in its chart).

AMJ (Alerian MLP Index tracking fund)

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CLM16.NYM....Crude Oil Jun 16....46.03 Up ...0.70 (1.5%)

Live 24 hours gold chart [Kitco Inc.]

Ford reaped the benefits of Americans' love of SUVs & pickups in Q1, posting record net income of $2.5 billion that exceeded estimates on the back of those popular models.  EPS excluding one-time costs was 68¢, beating the 48¢ estimate.  Ford gained market share in North America, bolstered by sales of F-Series pickups & SUVs like the Explorer & the Flex.

Ford posted quarterly pretax earnings of $3.8B, a record for any quarter, aided by an all-time high North American margin of 12.9%.  Solid profits in Europe & growth in China also contributed.  EPS rose to 61¢ from 29¢ a year earlier (when F-150 pickup production was limited).  The shares also rose after CEO Mark Fields said that Ford is working on a long-range electric vehicle that would go 200 miles or more on a charge.  CFO Bob Shanks rejected the view that the US auto market has peaked.  “I don’t buy into that,” he said.  “I know that’s what the market is pricing in; they’re also pricing in a recession. There’s nothing that we see in the leading economic indicators to suggest that anything like that is on the horizon.”

“I don’t know if it’s as good as it gets,” Shanks said. “We expect the first half to be the more favorable half of the year.”  The stock went up 43¢.  If you would like to learn more about Ford, click on this link:

Ford Profit Surges to Record as Sales of SUVs, F-150 Gain

Ford (F)

MasterCard reported a slightly better-than-expected quarterly profit as customers spent more using its cards.  However, net income fell 6% as operating costs jumped 25%.  EPS fell to 86¢ from 89¢ a year earlier.  Analysts expected 85¢.  Gross dollar volumes, the total value of transactions made by customers, rose 13% to $1.1T on a local currency basis.  Cross-border volumes, the value of transactions made by card holders outside the card-issuer's country, jumped 12%.  Total operating costs rose to $1.1B from $879M & net revenue rose 9.7% to $2.45B.  The stock lost 1.20.  If you would like to learn more about MA, click on this link:

MasterCard 1Q Profit Beats Expectations as Purchase Volumes Rise

Mastercard (MA)

United Parcel Service reported a higher quarterly net profit, citing a rise in ecommerce packages in its crucial US domestic business & improved margins on the back of cost cutting.  The company posted EPS of $1.27, up from $1.12 a year earlier.  Analysts had expected EPS of $1.22.  The stock lost 1.55.  If you would like to learn more about UPS, click on this link:

UPS 1Q Profit Rises on Higher Margins, Ecommerce

United Parcel Service (UPS)

The overbought stock market finally ran into selling.  The weak dollar was bullish for commodities & stocks were sold to fuel rising commodity prices.  The stock market remains vastly overbought & more such weakness can be expected.  However, yield sensitive issues, such as REITs & junk bond funds, are trading near highs for 2016.

Dow Jones Industrials


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