Monday, May 2, 2016

Higher markets as dollar remains weak

Dow jumped up 69, advancers over decliners 4-3 & NAZ rebounded 11 after a weak Apr.  The MLP index was fractionally lower in the 293s & the REIT index is still in the 337s where it has been or near for weeks.  Junk bond funds were mixed at recent high levels & Treasuries pulled back.  Oil slid back from 2016 highs & gold is flirting with 1300 (more on both below).

AMJ (Alerian MLP Index tracking fund)

CLM16.NYM...Light Sweet Crude Oil Futures,J...45.96 Up ...0.04 (0.1%)

GC.CMX..........Gold Apr 16............................1,249.50 Up ...0.30 (0.0%)

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Gold advanced above 1300 for the first time since Jan 2015 on speculation central banks in the US to Europe will maintain low interest rates, spurring demand for the metal.  Gold futures for Jun climbed to 130, the highest level since Jan 22, 2015.  The precious metal has climbed 23% this year.  Investors have flooded back to gold this year as risks to the global economy prompted the Federal Reserve to signal it will take a slower approach to further interest-rate increases.  That has weakened the $ & added to the appeal of owning non-yielding assets like gold.  Fed policy makers last week left benchmark interest rates unchanged which gold's appeal as the metal generally gives investors returns only thru price gains.  Futures trading on the Comex was about even with the 100-day average for this time.

Gold Rallies Above $1,300 as Investors Like Low Interest Rates

Oil prices edged back from 2016 highs as rising production in the Middle East outweighed a decline in US output & a sliding $.  Crude production by OPEC rose in Apr to 32.64M barrels per day (bpd), close to the highest level in recent history.  Iraq's Apr exports from southern fields increased, as did seaborne exports from Russia, the biggest exporter outside OPEC.  On Fri, Jun Brent closed the month at $48.13, for a 21.5% gain over the month that marked the largest monthly advance since May 2009.  The US oil rig count fell for the 6th week last week, which showed the price of oil had not risen enough to lure shale producers back.  The price slide, which came amid low liquidity due to the May Day holiday, contrasted with broader investor confidence in an oil price rebound.  Speculator bets on rising Brent crude prices reached a fresh record last week, while money managers raised bullish bets on US crude futures to a fresh 10-month highs in the week to Apr 26.  The International Energy Agency (IEA) said oil prices may have bottomed out if no major global economic issues emerge.  "In a normal economic environment, we will see the price direction is rather upwards than downwards," IEA said.

U.S. Crude Prices Retreat From 2016 Highs

Sysco, a Dividend Aristocrat, had fiscal Q3 EPS or 38¢, up from 30¢ for the same period last year.  Adjusted EPS was 46¢, beating the 42¢ estimate.  Sales for the qtr totaled $12B, up from $11.7B last year & above the $11.9B forecast.  "Overall food cost deflation was 0.4% (0.8% in U.S. broadline), as measured by the estimated change in Sysco's product costs, with deflation in the meat, seafood and poultry categories partially offset by modest inflation in other categories," the food distributor said.  The stock rose 1.36.  If you would like to learn more about SYY, click on this link:

Sysco Corp. Earnings Beat Estimates With Help From Lower Food Costs

Sysco (SYY)

Last month, commodities had a strong rally based on a weakening of the $.  Oil is around 46 & gold wants to close above 1300.  The weak $ attracts buyers & the stock market likes to see that.  But earnings continue to be unimpressive, traditionally the key driver for stock prices.  Dow is still up almost 2K, a staggering advance, from the Feb low & difficult ot understand given a weak economy & earnings that only meet lowered expectations.

Dow Jones Industrials


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