Thursday, December 8, 2016

Markets rise to records on strength in retail holiday sales

Dow jumped up 65, advancers over decliners 3-2 & NAZ gained 23.  The MLP index added 2+ to the 301s & the REIT index was up 1+ to the 338s.  Junk bond funds were mixed & Treasuries traded lower once again.  Oil rose 1 & gold slid back (more on both below)

AMJ (Alerian MLP Index tracking fund)

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Live 24 hours gold chart [Kitco Inc.]

On the day Donald Trump lashed out at Boeing, a Dow stock, mechanics & engineers at the planemaker’s South Carolina factory were focused on another challenge: making the first 787-10 Dreamliner.  BA is counting on the newest & longest Dreamliner to help turn its marquee carbon-fiber jet into a cash machine.  So far, the -10 is meeting deadlines & hitting performance targets, a rarity in an industry where delays are the norm.  The question is whether a glutted market will crimp profit and sales, & whether Trump will further dent orders by raising trade tensions with China, a crucial market.  Its newest widebody is central to a plan to erase $27.5B in deferred 787 costs that were accumulated over a decade of losses. The first of 3 planned flight-test planes was loaded onto the final assembly line in North Charleston over the past week, achieving a production milestone ahead of plan.  BA has just started to break even on the jets after a decade & will need to record an average profit of $34.4M per plane over the next 800 Dreamliners to avoid having to report an accounting loss for the program.  Execs insist they can get there by combining savings from suppliers with higher pricing on the -9 and -10, the Dreamliners with the greatest profit potential.  The stock rose 1.25. If you would like to learn more about BA, click on this link:

Boeing’s Newest 787 Prepares to Take Off

Boeing (BA)

American consumers show no signs of putting away their wallets as the holiday shopping season approaches the halfway point.  Total online sales from Nov 1-Dec 5 reached $52.16B, up 7.8% from last year, according to Adobe Digital Insights (ADBE).  All but one out of those 35 days have resulted in more than $1B in revenue, with Mon, Dec 5 particularly strong, up 8.7% from the same day last year to $1.94B.  ADBE anticipates an additional $39.4B in sales by Dec 31.  While spending figures may be clear, the average American's wish list is not. 81% of the country is finding it harder to come up with the perfect holiday gifts, a survey by eBay (EBAY) found.  That’s due partly to a lack of new products & innovation from companies this year.

Shoppers Battle Low Inventory, Shipping Costs

Oil settled with a gain following 2 consecutive sessions of declines, which pulled prices below $50 a barrel for the first time in a week.  Traders looked ahead to a meeting this weekend of OPEC & other crude producers, with expectations that that the nations will shore up a deal to curb output.  Jan West Texas Intermediate crude rose $1.07 (2.2%) to settle at $50.48 a barrel.  It lost 2.3% to finish at $49.77 yesterday for its lowest settlement since Nov 30.

Oil Futures Bounce Back From a Dip Under $50 a Barrel

Gold settled lower, giving back much of the prior session's gain, as the $ strengthened against the € following the ECB's decision to pare back its bond-buying program.  Feb gold fell $5.10 (0.4%) to settle at $1172 an ounce after climbing 0.6% on Wed.

Gold Futures Settle Lower On The Back Of a Dollar Rally

The Trump rally continues with Dow up an astonishing 1.3K since the his victory was called.  For the time being, it looks like the sky is the limit although he is only only hiring his assistants & punching out a few tweets.  Expectations are running high.  Reality will settle in eventually & that could be a painful time.  

Dow Jones Industrials


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