Friday, May 19, 2017

Higher markets on earnings and added investments in the US

Dow soared 141, advancers over decliners nearly 3-1 & NAZ rose 28.  The MLP index shot up 4+ to the 309s & the REIT index gained 2+ to the 344s.  Junk bond funds remained mixed & Treasuries were a little lower.  Oil headed higher again & gold was flattish (more on both below).

AMJ (Alerian MLP Index tracking fund)

Live 24 hours gold chart [Kitco Inc.]

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US stocks rallied as a set of strong corp earnings lifted investor spirits in a week dominated by uncertainty surrounding Trump's presidency.  However, the major indices were on track for their worst weekly declines since mid-Apr following reports that Trump had tried to interfere in a federal investigation.  Investors were concerned that the uncertainty in DC could hinder Trump's promise of fiscal stimulus, a bet on which stock averages have rallied to record highs.  Of the 452 S&P 500 companies that have released results so far, about 75% have topped earnings expectations.  In a typical qtr, about 64% beat estimates.

Strong Earnings Lift Investor Spirits After Trump Slump

While Trump takes off on his first foreign trip, a week-long tour of the Middle East & Europe, he will meet first with the greatest regional ally of the US in the fight against terror, Saudi Arabia, which has shown increasing confidence in the US economy under Trump.  Saudi investment in US bonds reached a one-year high of $114.4B at the end of Mar, up significantly from a low in Sep of $89.4B.  As a top oil producer, Saudi Arabia has been financially pressed thanks to falling oil prices, the global supply glut&  a nearly $80B budget deficit.  While OPEC attempts to stabilize prices, which plummeted in 2014 & have more recently fallen under $56 per barrel, Saudi Arabia has trimmed its positions in foreign assets in order to account for the oil-related financial losses.  The Kingdom held $737B worth of foreign assets in Aug 2014 & by Mar the country had trimmed those positions to just $501B, making its reinvestment in the US throughout recent months, noteworthy.  The country has also released a plan, called Vision 2030, that aims to make its economy more diversified & less energy dependent.   Recent investments in not just bonds, but other areas of the American economy like technology, indicate Saudi Arabia has confidence in the future of economic growth under the current US leadership.  Pres Trump is expected to detail a brand new $100B arms deal with Saudi Arabia today.  The deal reportedly includes an advanced anti-ballistic missile system & combat ships.  Saudi Arabia is the US' largest trading partner in the Middle East.  The trip to the Middle East & Europe will last 9 days, including stops in Israel, Rome & Italy, with the purpose of strengthening alliances & reasserting US global leadership.

Saudi Arabia Bets on Trump Economy

Gold futures edged higher to end the week with a gain of roughly 2.1%.  The $ & equities were trading lower than a week ago, helping to boost investment demand for the precious metal.  Jun gold rose 80¢ (under 0.1%) to settle at $1253 an ounce.

Gold Prices Climb More Than 2% For The Week

Baker Hughes reported that the number of active US rigs drilling for oil climbed by 8 to 720 rigs this week.  The latest data marked an 18th weekly rise in a row.  The total active US rig count, which includes oil & natural-gas rigs, jumped 16 to 901.  Jun West Texas Intermediate crude was up 88¢ (1.8%) to $50.23 a barrel.

Baker Hughes Reports 18th Straight Weekly Rise In The U.S. Oil-rig Count

Ford is pumping $350M into a plant outside of Detroit where a new transmission for fuel-efficient vehicles will be built.  The automaker said that the investment in the Livonia Transmission Plant is expected to create or keep 800 jobs.  Some jobs are expected to be added this year, but most will be filled over the next 2 years.  Upgrades to the Livonia facility are part of more than $2.25B  in investments in the state announced this year by Ford.  The stock  went up 12¢.  If you would like to learn more about Ford, click on this link:

Ford to invest $350 million in Michigan plant

Ford (F)

The chart below shows this has been a tough week for the stock market, due to one ugly day on Wed.  But stocks have rebounded & it looks like bulls want to take them higher.  Trump's trip has the makings of bringing some calm to chaotic DC, giving news people a new focus.  Market averages manage to hang in there, despite all the negative stories coming from DC.  If the trip goes well, the bulls should be able to take the averages to new heights.  Best wishes for a successful trip!!

Dow Jones Industrials


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