Wednesday, May 25, 2016

Markets rise as oil approaches $50

Dow jumped up 166, advancers over decliners almost 3-1 & NAZ rose 34.  The MLP index rose 4+ to the 305s & the REIT index is still in the 338s.  Junk bond funds are higher & Treasuries are not doing much of anything.  Oil is now in the 49s & gold fell again on Fed interest rate bets.

AMJ (Alerian MLP Index tracking fund)

Crude Oil   49.24   0.62 (1.28%)

Gold     1,219.20   -10.00 (-0.81%)

US home prices rose 5.7% in Q1 from a year earlier as buyers competed for a limited supply of listings.  Prices climbed 1.3% on a seasonally adjusted basis from the previous 3 months, the 19th consecutive quarterly gain, according to the Federal Housing Finance Agency.  Home prices have risen as job growth brings out more buyers in a market starved for choices.  There were 1.98M houses for sale at the end of Mar, down 1.5% from the same month last year, according to the National Association of Realtors.  While the US has a whole had robust gains, prices fell from the previous qtr.  “Home price appreciation was somewhat less widespread than in recent quarters,” the FHFA said.  While price drops were modest, “such declines are notable given the pervasive and extraordinary appreciation we have been observing for many years.”  Prices in Mar rose 0.7 percent on a seasonally adjusted basis from Feb.  The national median price of an existing single-family home was $217K in Q1, up 6.3% from a year earlier, National Association of Realtors data show.

U.S. Home Prices Climbed 5.7% in First Quarter From Prior Year

Oil extended its advance to near $50 a barrel as weekly US industry data showed crude stockpiles declined, easing a glut.  Futures rose for a 2nd day of gains.  US oil inventories, near the highest in 80 years, dropped by 5.14M barrels last week, the American Petroleum Institute said.  That would be the biggest decline since Dec.

Oil has surged more than 85% from a 12-year low earlier this year on signs the global glut will ease amid declining supply in Nigeria & non-OPEC countries including the US.  While some of the world's biggest producers continue to pump crude at near-record levels, OPEC is unlikely to set an output target when it meets next week as it sticks with Saudi Arabia's strategy of squeezing rivals.  Crude stockpiles at Cushing, Oklahoma, the biggest U.S. oil-storage hub, declined 189K barrels last week.  Nationwide inventories probably dropped by 2M barrels thru May 20, according to an estimate.

Tiffany stock dropped after it missed fiscal Q1 sales expectations & provided a downbeat profit outlook, citing lower spending by tourists.  For the qtr, EPS fell to 69¢ from 81¢ last year.  The forecast was 68¢ & revenue declined to $891M from $962M, below the $917M estimate.  Same-store sales declined 9%, compared with an expected 4.8% drop.  For the full fiscal year, TIF expects EPS to decline in the mid-single-digit percentage range, while analyst forecast is for $3.76 implies a 1.8% decline.  "As expected, this was a difficult quarter in terms of both sales and earnings growth. We faced numerous challenges, including continued pressure from foreign tourist spending in Europe, the U.S. and Asia, particularly in Hong Kong," said CEO Frederic Cumenal. The stock fell 1.01.  If you would like to learn more about TIF, click on this link:

Tiffany's Stock Rocked By Sales Miss, Downbeat Outlook

Tiffany (TIF)

Stocks are having another good day as oil hits another 2016 high.  But more pain lies ahead for energy companies as many have major problems even at these prices levels.  Additionally, Dow is still looking up at 18K while it is stuck in a sideways trading range.

Dow Jones Industrials


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