Wednesday, December 7, 2016

Markets steady while oil continues drifting lower

Dow added 21, advancers over decliners better than 2-1 & NAZ lost 8.  The MLP index was even in the 297s & the REIT index rose 3 to the 332s.  Junk bond funds did little & Treasuries finally found a few buyers.  Oil declined again (more below) & gold rebounded.

AMJ (Alerian MLP Index tracking fund)

Crude Oil Feb 17

Gold Dec 16

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Oil fell on speculation that OPEC production cuts will bolster US shale production & amid signs that the organization won't insist all its partners deliberately reduce output.   Futures dropped 1% after declining 1.7% on yesterday, the first drop in 5 days.  The Energy Information Administration increased its US oil output forecast for this year & next, & domestic explorers last week raised the number of rigs in action to the most since Jan.  OPEC will accept natural output declines as part of the 600K-barrel-a day reduction agreed with non-members, rather than insist they intentionally cut.  West Texas Intermediate for Jan delivery was at $50.40 a barrel, down 53¢ after falling as much as 1.4% earlier.

German industrial production rose less than analysts forecast in Oct, signaling that Europe's largest economy took a slow start toQ4.  Production, adjusted for seasonal swings, gained 0.3% from the previous month, when it declined a revised 1.6%, data from the Economy Ministry showed.  The reading, which is typically volatile, compares with a median estimate for a 0.8% increase.  Output was up 1.2% from a year earlier.  After a slowdown in Q3, the Bundesbank predicted a considerable economic expansion in Q4.  With business confidence in Germany at the highest level in more than 2 years & slightly improving global growth outlook, the Economy Ministry said a “certain revival” of momentum in industrial production can be expected.  Output was bolstered by a 1.7% increase in construction in Oct.  Manufacturing gained 0.1%, with output of investment goods up 0.5%.  Energy & basic-goods production fell.  This data comes on the back of a report yesterday showing factory orders bounced the most in more than 2 years in Oct.  The surge was driven by demand for investment goods & saw both domestic & overseas orders increasing.

German Industrial Production Rose Less Than Forecast in October

Starbucks set an annual revenue growth target of 10% & profit growth target of 15-20% for the next 5 years, & the coffee chain said it planned to open 12K stores globally by 2021.  The company also said it would open an outlet of its high-end coffee chain, Reserve Roastery & Tasting Room, in Europe, bringing the number to 5 globally.  Details of the launch will be announced early next year.  SBUX said last week that CEO Howard Schultz would step down to focus on the company's high-end coffee shops.  The company also said it would have Reserve coffee "bars" selling premium coffee in up to 20% of its 37K stores by 2021, more than it had previously targeted.  The stock was up 45¢.  If you would like to learn more about SBUX, click on this link:

Starbucks Sets 5-Year Growth Targets, to Open 12,000 Stores 


Starbucks (SBUX)

Little is going on in what is another sleepy day.  The Fed rate hike next week is looming over the markets, but optimism about Trump helping business continues to be the main driver for the stock market.  Dow's rise today is good enough for another record high.

Dow Jones Industrials

stock chart  

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