Thursday, November 17, 2016

Markets climb higher on hopes for a growing economy

Dow went up 35, advancers slightly ahead of decliners & NAZ gained 39.  The MLP index added 1+ to the 299s (continuing its sideways trading for many months) & the REIT index fell 3 to the 321s.  Junk bond funds edged higher & Treasuries saw more selling, taking the yield on the 10 year Treasury up to 2.28%.  Oil fell to the 45s as the big OPEC meeting approaches & gold dropped to the low 1200s.

AMJ (Alerian MLP Index tracking fund)

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Live 24 hours gold chart [Kitco Inc.]

Banks are still too-big-to-fail according to Minneapolis Federal Reserve Bank pres Neel Kashkari.  He said there's a high probability of another financial crisis & bailout.  “I’ve heard from senators and congressmen and women on both sides of the aisle who are concerned that the biggest banks are too-big-to-fail. We analyzed the history of financial crises: we’ve now got a 67% chance today of another financial crisis in the next century and another bailout,” he said.  He rolled out a blueprint for ending too-big-to-fail & said his plan would decrease the chances of another financial crisis to as low as 9%.  The plan includes boosting capital requirements of lenders with more than $250B in assets to 23.5%, impose a 1.2% or 2.2% tax on the debt of “shadow banks” larger than $50B, create a less oppressive regulatory environment for small banks & require the incoming Treasury Secretary to certify that a bank does not pose a systemic risk.  “There’s ways of analyzing how large [banks] are, how interconnected they are, how many spillovers there would be if they were to fail. Today there is no time limit. Banks can enjoy their implicit status of being too-big-to-fail potentially indefinitely; we are going to put a deadline and say either you are truly not too-big-to-fail or we’re going to ratchet up your capital requirements so you virtually can’t fail,” he added.

Fed's Kashkari Says U.S. Faces Another Financial Meltdown

Wal-Mart, a Dow stock & Dividend Aristcorat, reported lower-than-expected quarterly sales at established US stores, hurt by declining food prices & unseasonably warm weather.  Investors shrugged off earnings that slightly exceeded estimates.  WMT also raised the low end of its fiscal-year profit forecast, similar to rivals that expressed optimism ahead of the holiday shopping season.  "Food deflation continues to be challenging," CFO Brett Biggs said.  Deflation has been strong for products like eggs, an important category for a food retailer, he added.  Sales at US stores open at least a year rose 1.2%, excluding fuel price fluctuations, in Q3.  That's weaker than expectations of a 1.3% rise.  EPS was 98¢, versus$1.03 a year earlier.  Analysts expected 96¢.  Net sales rose 0.5% to $117.2B.  Online sales increased 20.6%, accelerating from the previous qtr.  That business added 50 basis points to Q3 comparable sales, its biggest contribution to date.  WMT has invested heavily in e-commerce, acquiring startup in Aug for $3B.  "The U.S. (e-commerce) results were stronger than those in our key international markets, driven by our marketplace offering ... as well as a contribution from," CEO Doug McMillon said.  The stock slumped 2.20.  If you would like to learn more about WMT, click on this link:

Wal-Mart's comparable sales hurt by falling food prices

Wal-Mart (WMT)
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McDonald's, another Dow stock & Dividend Aristocrat, plans to offer table service across in US stores to make the ordering process less stressful, but did not say when the overhaul will be complete.  About 500 of its more than 14K domestic stores have been testing table service & ordering kiosks for people who do not want to wait for the cashier.  People in those stores order at the counter or kiosks, then sit & wait for an employee to bring them their food.  Early next year, it will expand the offering in Boston, Chicago, San Francisco, Seattle & Washington, DC.  The push comes as the company tries to stage a comeback after losing customers in recent years, with execs conceding they failed to keep up with changing tastes.  The stock went up 24¢.  If you would like to learn more about MCD, click on this link:

McDonald's says table service coming to US stores

McDonald's (MCD)

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Buyers returned to the stock market in the PM.  Not sure why.  The Fed rate hike next month is haunting the market & higher mortgage rates are already being felt.  Yield sensitive stocks have been crawling back, but they are still out of favor.  The Dow had a good rise last week.  However there is not enough enthusiasm to take it over 19K (shown below) & the bulls do not want to take it higher.  Market breadth remains weak, a negative sign.

Dow Jones Industrials

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