Thursday, May 5, 2016

Higher markets as oil prices rise

Dow rose 52, advancers over decliners 3-2 & NAZ added 8.  The MLP index recovered 7+ to the 295s on rising oil prices (see below) & the REIT index was little changed in the 343s.  Junk bond funds went up & Treasuries pulled back.  Oil jumped up related to a big fire in Canadian oil fields & gold was higher.

AMJ (Alerian MLP Index tracking fund)

CLM16.NYM...Light Sweet Crude Oil Futures,J...45.27 Up ...1.49 (3.4%)

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

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Applications for US unemployment benefits increased to a 5-week high, a sign that progress in the strongest part of the economy may be moderating.  Jobless claims rose 17K to 274K, according to  the Labor Dept.  The forecast was 260K, the largest since Jan 2015.  Further increases in new applications would probably be needed to mark a shift in sentiment among hiring managers about the economy’s prospects after the weakest qtr for growth in 2 years.  Filings dropped to 248K in mid-Apr, the lowest since 1973.  The 4-week average of jobless claims, a less-volatile measure than the weekly figure, rose to 258K from 256K in the prior week.  Filings have been below 300K for 61 weeks, the longest stretch since 1973 & a level consistent with a healthy labor market.
The number continuing to receive jobless benefits fell 8K to 2.12M, the lowest level since 2000.  The unemployment rate among people eligible for benefits dropped to 1.5% from 1.6%.

Jobless Claims in U.S. Increase to Highest Level in Five Weeks

A wildfire threatening Canada's oil sands region & escalating tensions in Libya sparked concern among investors over a near-term supply shortage, driving oil prices up.  Some pipelines in the region being shut as a precaution, output at several facilities has been disrupted.  The volume of the decline was unclear.  In addition, Libya's already crippled oil production is at risk of further disruption from a stand-off between eastern & western political factions, which prevented a Glencore cargo from loading.  US production continues to fall, with the latest official figures showing a decline by over 8% since mid-2015 to 8.825M bpd.

Oil Rallies as Canada Fire, Libya Violence Unleash Supply Fears

Kellogg reported sales fell short of estimates.  Q1 EPS was 49¢, down from 64¢ last year.  Adjusted EPS was 97¢, beating estimate of 94¢.  Sales for the qtr totaled $3.4B, down from $3.6B year-over-year & below the forecast for $3.5B.  The sales decline was primarily due to the effect of currency translation in mid-2015 related to the Venezuela business.  The stock dropped 1.94.   If you would like to learn more about Kellogg, click on this link:

Kellogg Reports Quarterly Sales Decline Largely Due To Venezuela Business

Kellogg (K)

Canada is a major supplier of oil, with almost 4M barrels a day output.  While the fire can prove significant, any disruptions will not last long.  Meanwhile Dow is lumbering along not far from setting a new record.

Dow Jones Industrials


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