Friday, May 19, 2017

Markets continue in recovery mode

Dow shot up 118, advancers over decliners better than 3-1 & NAZ advanced 43.  The MLP index rose 3+ to the 308s & the REIT was fractionally higher in the 342s.  Junk bond funds were mixed & Treasuries retreated.  Oil is now over 50 (more below) & gold is flat.

AMJ (Alerian MLP Index tracking fund)


Crude Oil50.19


Gold1,252.80 EDT0.000.0%

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Federal Reserve Bank of St. Louis Pres James Bullard said recent economic data has been weak & the FOMC's projected path for raising interest rates may be too steep.  Since Mar, “longer-term yields have declined, inflation expectations have weakened, and market expectations of the policy rate path have declined,” Bullard said.  “This may suggest that the FOMC’s contemplated policy rate path is overly aggressive relative to actual incoming data on U.S. macroeconomic performance,’’ he added.  Fed officials left interest rates unchanged at their meeting this month, indicating that a disappointing Q1 wouldn't stop them from raising rates twice more in 2017 following a hike in Mar.  Policy makers described as “transitory” a slowdown in Q1 growth, while emphasizing that inflation was running close to their 2% goal & the labor market continued to strengthen.  Bullard said inflation & inflation expectations have surprised to the downside in recent months & while the unemployment rate has fallen to 4.4%, the lowest since 2007, that may not bring a change in trend.  Growth in payrolls has slowed in the past year even as the jobless rate has dropped, he said.  “Low unemployment readings are probably not an indicator of meaningfully higher inflation over the forecast horizon,” he continued.  “Even if the U.S. unemployment rate declines substantially further, the effects on inflation are likely to be small.’’  Bullard, who does not vote on the FOMC this year, said that while Q2 growth estimates suggest a pickup from Q1, taken together they don't suggest any change from the 2%  growth path since the expansion began.

Fed's Bullard Sees Weak Data Contradicting FOMC's Rate-Hike Path

Oil prices were heading for a 2nd week of gains on growing expectations that big crude exporters will extend output cuts to curb a persistent glut in inventories.  US benchmark crude oil was up 67¢ at $50.02.  Since the start of Mar, the Brent price has swung from more than $56 a barrel to les than $47 as opinion swayed over whether cuts by OPEC & other producers will offset rising US output.  Saudi Arabia & non-OPEC Russia have said they see a need for an extension to output reductions.  The initial agreement between OPEC & other producers was for cuts of 1.8M barrels per day (bpd) to run thru the H1-2017.  OPEC & other producers are due to discuss an extension during an OPEC meeting on Thurs.  Russia's largest oil producer Rosneft said on yesterday it was ready to stick to crude output agreements with OPEC.  But there are signs that Saudi Arabia, OPEC's largest producer, is keeping markets well supplied. Its crude exports rose by 275K bpd in Mar from Feb & its stockpiles also increased, official data showed.

Oil Heads for 2nd Week of Gains as Output Cut Extension Expected

Campbell Soup quarterly sales fell as it cited pressures facing the broader packaged food industry.  The maker of canned soups, Pepperidge Farm cookies & V8 juices lowered its sales outlook for the fiscal year & the stock fell.   CEO Denise Morrison noted that products in the center aisles of grocery stores, which are seen as being less fresh, have been particularly challenged.  To adjust to changing tastes, the company has been working to transform its portfolio to include products that seem fresher or healthier.  But the company has struggled on that front as well; its "Campbell Fresh" division, which includes Bolthouse Farms refrigerated drinks, saw sales fall 6% in the qtr.  The division that includes its US soup & sauces division saw sales decline 2%.  For fiscal Q3, EPS was 58¢.  Excluding one-time items, EPS was 59¢, under the 64¢ forecast.  Total revenue of $1.85B, felling short of the $1.87B forecast.  CPB now expects sales to be flat to down 1%.  It previously forecast sales to be flat to up 1%.  CPB expects full-year EPS of $3.04-3.09.  The stock lost 1.06.  If you would like the learn more about CPB, click on this link:

Campbell Soup cites industry challenges as sales slip

Campbell Soup (CPB)

The bulls took a short vacation & are back in full force.  Maybe they are encouraged because Trump is off on a foreign trip.  However, unrest remains in DC as those guys are taking another look at health care reform & a new tax plan.  After all the commotion this about Comey's firing, the popular stock averages continue to be within inches of setting new records.  Hard to believe!!

Dow Jones Industrials


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