Friday, February 17, 2017

Mixed markets on French election fears

Dow inched up 4 (off the lows), decliners over advancers nearly 3-2 & NAZ gained 23.  The MLP index was off 1+ to the 333s & the REIT index was fractionally higher to the 345s.  Junk bond funds slid lower & Treasuries had a modest gained.  Oil was slightly lower & & gold also declined (more on both below).

AMJ (Alerian MLP Index tracking fund)

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Live 24 hours gold chart [Kitco Inc.]

Shale wildcatters pushed ahead on the biggest surge in US oil drilling since 2012 as the explorers take advantage of prices above $50 for more than 2 months.  Rigs targeting crude in the US rose by 6 to 597 this week, the highest total since Oct 2015, according to Baker Hughes.  Drillers have added 72 rigs since 2017 began, the best start in 5 years.  The expansion is spreading in Texas & Oklahoma, with the Granite Wash play leading the increase this time around.  Producers are cashing in on a more stable oil market, with prices swinging between $50 and $55 a barrel as OPEC & 11 other nations cut back production to help reduce global supplies.  Saudi Arabia told OPEC it reduced its oil output by the most in 8 years.  Oil producers have brought 281 rigs back to work since drilling bottomed out in May, the biggest gain since producers added 361 rigs over the 9 months through Jun 2012.  US crude inventories rose to 518M barrels last week, the highest in weekly data going back to 1982.  Drilling is booming in a few shale plays, led by the Permian Basin in West Texas & New Mexico & the Scoop & Stack formations in Oklahoma, as they offer good returns at a $50 oil price.  The Permian remains the most attractive play for investors this year.  The Midland & Delaware basins within the Permian helped the oilfield reach a new high of $26B in merger & acquisition activity last year.  This week other parts of Texas & Oklahoma began to shine, with the Granite Wash Basin's adding 5 rigs & the Barnett Basin adding 2.

Shale Drilling Is o a Roll as OPEC Cuts Keep Oil Above $50

Pres Trump visited Boeing's (a Dow stock) Charleston, SC campus for the reveal of its new 787-10 Dreamliner, the largest in the 787 family.  While addressing a group of BA workers, the pres reiterated his commitment to American workers & to creating more jobs.  “Our goal is to rely less on imports and more on products made in the U.S.A.” he said.  His visit came 2 days after workers at the SC plant voted to reject union representation.  The plant, which opened in Nov 2011, is the final assembly site & delivery facility for the 787 Dreamliner.  The campus sprawls 743 acres & employs 7565 workers.  As of Jan 2017, BA employed more than 120K Americans across 9 states.  The company has invested more than $2B cumulatively in its SC plant, which is the exclusive building site for the 787-10 aircraft.  It also spends $355M each year & uses hundreds of the state's local suppliers & vendors.  The new jetliner can hold 330 passengers; & has 40 more seats more than the 787-9.  Its maximum cruising speed is Mach 0.85, consistent with the 2 previous models.  The maximum range of the 787-10 is 6400 nautical miles & the jetliner is 15% more fuel efficient than its competitors.  The factory is also the aircraft provider's first 100% renewable energy site, with up to 20% of its energy supplied by solar panels. The first delivery of the aircraft is scheduled to take place in 2018 to Singapore Airlines.  Currently there are 149 orders for the newest 787 model.  The stock rose 1.89
.  If you would like ro learn more about BA, click on this link:

Trump Visits Boeing SC: Here’s a Look at the Brand New Dreamliner

Boeing (BA)

Gold prices fell, but tallied a 3rd straight weekly gain with political uncertainty fueling demand for the precious metal.  Apr gold declined $2.50 (0.2%) to settle at $1239 an ounce.  Futures prices, which settled Thurs at a more than 3-month high, gained roughly 0.3% for the week.

Gold Prices Fall The Day, But Post a Third Straight Weekly Gain

The People's Bank of China said that it would crack down on financial crimes like money laundering, tax evasion & terrorist financing.  Over the past month, the central bank has stepped up monitoring of several prominent bitcoin exchanges to try & prevent Chinese citizens from using digital currencies to circumvent the country's stringent capital controls.  The central bank also warned that it sees asset bubbles forming in certain markets & that it will increasingly monitor the country's financial markets for abnormal moves.

PBOC Steps Up Efforts To Increase Financial Stability

The French presidential election outcome was felt in today's stock market.  According to recent polls, Le Pen, France's far-right, anti-EU candidate, is the favorite to win the first round of voting, scheduled for Apr.  However, it is not clear whether she will win the run-off vote in May.  While the stock market has had one of its greatest rallies in recent months, dark clouds are out there (i.e. French election).  But today's decline may have had more to do with the market being vastly overbought.  The bulls will say they can accept today's modest retreat after the Dow inched up 1 for a new record..

Dow Jones Industrials


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