Dow finished inched up 5 (400 above the lows), decliners over advancers 3-2 & NAZ lost 12. The MLP index dropped 3+ to the 353s & the REIT index slid lower to 331. Junk bond funds were little changed & Treasuries rose in price. Oil climbed to the 68s & gold went up 8 to 1314 (more on both below).
AMJ (Alerian MLP index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.5455749728479499)
Kellogg (K), known for Frosted Flakes & Froot Loops cereals, says millennials are hot for its frozen foods, helping boost sales. Sales of Eggo waffles & MorningStar Farms veggie burgers, both in the frozen foods aisle, jumped more than 10% during the first 3 months of the year. "The millennial generation really thinks about frozen differently than other generations," said CEO Steve Cahillane. "It's kind of the new fresh and the new convenient." Artificial colors & flavors were recently removed from Eggo, which helped increase sales, Cahillane said. And the packaging of Eggo & MorningStar were also updated. "We expect frozen foods to continue to grow," Cahillane added. Kellogg, which has struggled with falling sales as more people avoid processed food, has been working to change consumer perceptions of its food. In Oct, it bought protein bar maker RXBar, which promotes its bars as being made with just egg whites, fruits & nuts. In Q1, total revenue rose nearly 5% from a year ago to $3.4B, beating expectations. Besides frozen foods, RXBar & Pringles also sold well. EPS was $1.27, up from 75¢ a year ago. Adjusted EPS came to $1.19, 12¢ above what was expected. The stock gained 1.50.
If you would like to learn more about K, click on this link:
club.ino.com/trend/analysis/stock/K?a_aid=CD3289&a_bid=6ae5b6f7
US productivity grew at an annual rate of 0.7% in Q1, a weak reading but a slight improvement from the previous qtr. The increase followed an even weaker 0.3% gain Q4 of last year, the Labor Dept reported. Labor costs rose at a 2.7% rate in Q1, the fastest gain in a year. Productivity, the amount of output per hour of work, is a key factor determining how fast the economy can grow & how much living standards can increase. Gains in productivity allow companies to pay their workers more without having to boost the cost of their products, a move that can increase inflation. Productivity gains have been lackluster for most of this recovery, increasing just 1.3% for all of 2017. Economists are uncertain why productivity has been so tepid. For the past 7 decades from 1947-2017, productivity has turned in average annual gains of 2.1%. But between 2007-2017, growth has slowed to about ½ that pace with average annual gains of just 1.2%. In 2016, productivity had failed to grow at all, marking the poorest performance in 35 years. Without improvements, the Trump administration will have difficulty achieving its goal of doubling the rate of economic growth to 3% or better. An economy's potential for growth is determined by growth in the labor force, which is determined largely by birth rates & immigration, as well as the growth in productivity. The 2.7% rise in labor costs in Q1 followed a 2.1% increase in Q4 & was the best showing since a 4.8% surge in the Q1-2017. The 0.7% gain in productivity in Q1 reflected the fact that GDP, the total output of goods & services, grew at an annual rate of 2.3% in Q1, slightly slower than the 2.9% in Q4.
Oil prices rose, boosted by OPEC production cuts & the potential for new US sanctions against Iran, but gains were limited by growing US crude inventories. Crude futures reversed early losses, tracking a rebound in the US equity market. Oil futures have recently moved in tandem with equity markets. West Texas Intermediate (WTI) crude futures ended up 50¢ at $68.43 per barrel. Brent crude oil futures rose 52¢ to $73.88. The May 12 deadline for Pres Trump to decide whether to continue waiving US sanctions against Iran was also buffeting downward pressure on prices. Iran's foreign minister said US demands to change its 2015 nuclear agreement with world powers were unacceptable as a deadline set by Pres Trump for Europeans to "fix" the deal loomed. Trump has all but decided to withdraw from the 2015 Iran nuclear accord by May 12, sources said, though exactly how he will do so remains unclear. Iran re-emerged as a major oil exporter in Jan 2016 when intl sanctions against Tehran were suspended in return for curbs on Iran's nuclear program. Also supporting prices, North Sea oilfields connected to the Brent oil pipeline have stopped production due to a shutdown at the UK's Sullom Voe oil terminal, the Brent pipeline operator said, reducing output of the crude. Global oil supply has tightened with production cuts led by OPEC & its allies. The latest survey showed OPEC pumped around 32M barrels per day (bpd) in Apr, slightly below its target of 32.5M bpd, due largely to plunging output in Venezuela. The May 12 deadline for Pres Trump to decide whether to continue waiving US sanctions against Iran was also buffeting downward pressure on prices. Russia said its own compliance with a global deal with OPEC & other producers to curb output stood at 95.2% in Apr, with its output unchanged at 10.97M bpd. However, rising US oil supply tempered oil futures gains. Oil firms have ramped up Jan-May production faster than at any other time in at least ½ a decade. On Wed, US gov data showed a 6.2M barrel jump in crude inventories last week. US production also hit a new weekly record of 10.62M bpd, ahead of top OPEC producer Saudi Arabia & just below #1 producer Russia. Inventories at the Cushing, Oklahoma storage hub climbed by about 152K barrels in the latest week.
Oil up on OPEC output cuts, worries about Iran sanctions
Buyers returned after the opening & brought the Dow up, near break-even by midday. The rest of the day the Dow was flattish. The lack of cheery news ruled trading & market breadth was negative. The chart below shows the Dow is on its 200 day moving average. If it falls below that line (where it was 6 months ago), the bulls may go into hiding.
Dow Jones Industrials
AMJ (Alerian MLP index tracking fund)
China is looking to increase its soybean output this year as the country & the US face the prospect of a trade war. Beijing
has threatened to impose a 25% tariff on American soybean imports in
retaliation for US trade measures. But China needs soybeans.
The country is the world top importer & consumer of soybeans, which
are mostly used as livestock feed. As reported, authorities in
the northeastern Heilongjiang & Jilin provinces in China met last
weekend to discuss actions to boost planting of soybeans. Increased
plantings would mean that the country would be less reliant on imports
from the US, which is its 2nd-ranked supplier. China is expected to import 96M tons of soybeans in the 2017-18
year & domestic production is seen at 14.6M tons. The big concern is that the tariffs would drive up global soybean prices. Soren
Schroder, the CEO of food production company Bunge, said
soybean sales from the US to China have essentially ground to a halt
since Beijing threatened tariffs on imports.
China seeks soybean boost for trade war advantage
Kellogg (K), known for Frosted Flakes & Froot Loops cereals, says millennials are hot for its frozen foods, helping boost sales. Sales of Eggo waffles & MorningStar Farms veggie burgers, both in the frozen foods aisle, jumped more than 10% during the first 3 months of the year. "The millennial generation really thinks about frozen differently than other generations," said CEO Steve Cahillane. "It's kind of the new fresh and the new convenient." Artificial colors & flavors were recently removed from Eggo, which helped increase sales, Cahillane said. And the packaging of Eggo & MorningStar were also updated. "We expect frozen foods to continue to grow," Cahillane added. Kellogg, which has struggled with falling sales as more people avoid processed food, has been working to change consumer perceptions of its food. In Oct, it bought protein bar maker RXBar, which promotes its bars as being made with just egg whites, fruits & nuts. In Q1, total revenue rose nearly 5% from a year ago to $3.4B, beating expectations. Besides frozen foods, RXBar & Pringles also sold well. EPS was $1.27, up from 75¢ a year ago. Adjusted EPS came to $1.19, 12¢ above what was expected. The stock gained 1.50.
club.ino.com/trend/analysis/stock/K?a_aid=CD3289&a_bid=6ae5b6f7
Kellogg says its frozen foods are hot with millennials
For gold investors, the rising market volatility
is no match for the currently growing economy, with gold holdings
slumping to a decade low, according to the World Gold Council (WGC). The
yellow metal is widely regarded as a safe haven investment, something
that is purchased to guard against geopolitical & economic
uncertainty. While the economy is performing well, in Q1
market volatility increased. But, according to the WGC data, that didn't
encourage investors to seek safety by purchasing gold. The
WGC reported that global gold demand fell to its lowest Q1
level since 2008, falling to 973 metric tons in Q1, a 7% drop compared to the 1047 metric tons last year. “A relatively stable gold price and
rising interest rates contrasted with sharp equity-market volatility &
periods of heightened geopolitical risk to create mixed signals for
gold investors” in the first 3 months of this year, the WGC report
said.
Gold demand slumps to a 10-year low
US productivity grew at an annual rate of 0.7% in Q1, a weak reading but a slight improvement from the previous qtr. The increase followed an even weaker 0.3% gain Q4 of last year, the Labor Dept reported. Labor costs rose at a 2.7% rate in Q1, the fastest gain in a year. Productivity, the amount of output per hour of work, is a key factor determining how fast the economy can grow & how much living standards can increase. Gains in productivity allow companies to pay their workers more without having to boost the cost of their products, a move that can increase inflation. Productivity gains have been lackluster for most of this recovery, increasing just 1.3% for all of 2017. Economists are uncertain why productivity has been so tepid. For the past 7 decades from 1947-2017, productivity has turned in average annual gains of 2.1%. But between 2007-2017, growth has slowed to about ½ that pace with average annual gains of just 1.2%. In 2016, productivity had failed to grow at all, marking the poorest performance in 35 years. Without improvements, the Trump administration will have difficulty achieving its goal of doubling the rate of economic growth to 3% or better. An economy's potential for growth is determined by growth in the labor force, which is determined largely by birth rates & immigration, as well as the growth in productivity. The 2.7% rise in labor costs in Q1 followed a 2.1% increase in Q4 & was the best showing since a 4.8% surge in the Q1-2017. The 0.7% gain in productivity in Q1 reflected the fact that GDP, the total output of goods & services, grew at an annual rate of 2.3% in Q1, slightly slower than the 2.9% in Q4.
US productivity grows at tepid 0.7 percent rate in Q1
Oil prices rose, boosted by OPEC production cuts & the potential for new US sanctions against Iran, but gains were limited by growing US crude inventories. Crude futures reversed early losses, tracking a rebound in the US equity market. Oil futures have recently moved in tandem with equity markets. West Texas Intermediate (WTI) crude futures ended up 50¢ at $68.43 per barrel. Brent crude oil futures rose 52¢ to $73.88. The May 12 deadline for Pres Trump to decide whether to continue waiving US sanctions against Iran was also buffeting downward pressure on prices. Iran's foreign minister said US demands to change its 2015 nuclear agreement with world powers were unacceptable as a deadline set by Pres Trump for Europeans to "fix" the deal loomed. Trump has all but decided to withdraw from the 2015 Iran nuclear accord by May 12, sources said, though exactly how he will do so remains unclear. Iran re-emerged as a major oil exporter in Jan 2016 when intl sanctions against Tehran were suspended in return for curbs on Iran's nuclear program. Also supporting prices, North Sea oilfields connected to the Brent oil pipeline have stopped production due to a shutdown at the UK's Sullom Voe oil terminal, the Brent pipeline operator said, reducing output of the crude. Global oil supply has tightened with production cuts led by OPEC & its allies. The latest survey showed OPEC pumped around 32M barrels per day (bpd) in Apr, slightly below its target of 32.5M bpd, due largely to plunging output in Venezuela. The May 12 deadline for Pres Trump to decide whether to continue waiving US sanctions against Iran was also buffeting downward pressure on prices. Russia said its own compliance with a global deal with OPEC & other producers to curb output stood at 95.2% in Apr, with its output unchanged at 10.97M bpd. However, rising US oil supply tempered oil futures gains. Oil firms have ramped up Jan-May production faster than at any other time in at least ½ a decade. On Wed, US gov data showed a 6.2M barrel jump in crude inventories last week. US production also hit a new weekly record of 10.62M bpd, ahead of top OPEC producer Saudi Arabia & just below #1 producer Russia. Inventories at the Cushing, Oklahoma storage hub climbed by about 152K barrels in the latest week.
Oil up on OPEC output cuts, worries about Iran sanctions
Buyers returned after the opening & brought the Dow up, near break-even by midday. The rest of the day the Dow was flattish. The lack of cheery news ruled trading & market breadth was negative. The chart below shows the Dow is on its 200 day moving average. If it falls below that line (where it was 6 months ago), the bulls may go into hiding.
Dow Jones Industrials
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