Dow soared 443 (closing at the highs), advancers over decliners better than 3-1 & NAZ went up a more modest 45. The MLP index was up pennies in the 251 & the REIT index added 1+ to the 368s. Junk bond funds hardly budged in price & Treasuries were merely a tad lower. Oil gained 1+ to the 55s (more below) & gold rose a big 10 to 1324.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Trump weighs extending China tariff deadline by 60 days
China's Consumer Price Index missed expectations in January coming in at 1.7% higher than a year ago, the National Bureau of Statistics said. The forecast called for CPI to come in at 1.9% higher year-over-year. Dec CPI, a gauge of prices for goods & services, had risen 1.9% on-year. CPI eased due to a decline in food prices, the statistics bureau official said. Meanwhile, producer inflation rose just 0.1% from a year ago, compared to a 0.2% rise expected. China's Dec Producer Price Index, which measures price increases before they reach the consumer, had risen 0.9% on-year. Jan marked the 7th straight month of slowing factory gate inflation. The data comes amid a new round of US-China talks in Beijing this week as the 2 economies renewed efforts to reach a deal to defuse trade tensions.
China's inflation slows in January, potentially pushing officials to step in, says economist
PepsiCo (PEP), a Dividend Aristocrat, has found something many of its peers have lacked, growth. But growth will come at a cost. Investments in marketing & advertising have helped the owner of brands like Mountain Dew & Frito-Lay post sales growth of 3.7% in 2018. That includes 2% growth in its North American beverage business, which until recently had been in decline. But the company's efforts to boost its top line are expected to hurt its profits: PEP is forecasting that EPS will be $5.50 during 2019, down from its 2018 EPS of $5.66. That's lower than estimates of $5.86 in 2019. Still, by 2020, the company expects EPS to return to growth. "As other consumer product companies were taking a very extreme approach to cost-cutting, we had always said we were going to take a more balanced approach," CFO Hugh Johnston said. "We felt like the balanced approached of reducing cost, investing some money back to growth ... was in fact the right approach." The company reported fiscal Q4 of $4.83, up from a loss of 50¢, a year earlier. Excluding merger & integration charges, net tax benefits & other items, EPS was $1.49, meeting expectations. Net sales of $19.5B, matched expectations & were unchanged from a year earlier. PEP eyes further marketing & advertising spending & it also plans to balance those investments with a cost-savings program that aims to slash at least $1 billion every year through 2023. The program is an extension of a prior savings plan that was expected to end after 2019. The stock rose 3.32.
If you would like to learn more about PEP, click on this link:
club.ino.com/trend/analysis/stock/PEP?a_aid=CD3289&a_bid=6ae5b6f7
PepsiCo expects earnings to decline in 2019 as it invests to boost its sales growth
Industrial production sank 0.6% in Jan, the first drop in 8 months, the Federal Reserve reported. The decline was below expectations for a flat reading. Adding to a sense of weakness in the report, industrial production in Dec was cut to a 0.1% gain from the initial estimate of a 0.3% gain. Despite the decline, production remains 3.8% higher in Jan than it was a year earlier. Capacity utilization declined 0.6 percentage point to 78.2% in Jan, the lowest level since last Jul. In Jan, all categories except mining & utility production declined. Manufacturing alone dropped 0.9%, led by slump in the volatile motor-vehicle sector. Autos fell 8.8% in Jan. Excluding autos, factory output fell 0.2%. Mining output edged up 0.1% & the output of utilities increased 0.4%. Economists didn't think the firm Dec industrial output report would be repeated in Jan, but not many were calling for the across-the-board weakness seen in the data. This might be the tipping point for factory sector, but the separate ISM manufacturing index for Jan was stronger than Dec. The manufacturing sector faces headwinds from slowing global growth, trade tensions & the strong $. The Empire State Index that is more forward-looking, was moderately positive.
Oil futures climbed to settle at their highest since Nov, with US benchmark prices up 5.4% for the week. Recent monthly data showed that crude output from OPEC continues to decline & Saudi Arabia reportedly pledged to cut even more production. US-China trade talk progress also helped to ease worries about energy demand. Mar West Texas Intermediate oil rose $1.18 (2.2%) to settle at $55.59.
This was the 8th straight week of the stock market rally. The Dow rose 780 this week. Will wonders never stop? Times have been bumpy, to say the least, but traders are bidding stock prices higher. As stated previously, any market that goes straight up without a correction is scary for the old timers. China trade talks lumber on & economic data, while fairly good, is stumbling lately. While the Dow needs less than 1K to reach a new record, demand for gold & Treasuries, safe haven investments, remains strong. The disconnect will not last!
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Pres Trump is considering extending the Mar 1 deadline for the imposition of higher tariffs on China by 60 days as the world's 2 largest economies continue trade negotiations. Today, Trump said he
might extend the Mar 1 deadline, after which the US would more
than double its tariffs on Chinese goods, while keeping current
tariffs in place. “There is a possibility that
I will extend the date,” Trump said. “But if I do that, if I see that
we’re close to a deal or the deal is going in the right direction, I
would do that at the same tariffs that we’re charging now, I would not
increase the tariffs.” Earlier in the week, Trump suggested he might let the deadline “slide for a little
while” if talks go well, though he noted that he was not “inclined” to
do so. Late Wed, however, it was reported that Trump was thinking about tacking on an additional 60 days to the deadline in order to let negotiations continue. A
US delegation, including Treasury Secretary Steve Mnuchin & Trade
Representative Robert Lighthizer, arrived in Beijing this week for the
latest round of closed-door trade talks. Both sides have remained
tight-lipped about any potential progress. Trump previously said that
whether he extends the trade deadline will depend on the outcome of the
meetings, like whether they’re close to reaching a deal or not. In Dec, Trump agreed to a 90-day truce that
will end on Mar 1. The
trade war began nearly one year ago when Trump, who has long railed
against trade deficits, slapped a tariff on steel & aluminum imports
from China. He's demanded that China close the gap by buying more
American goods, in addition to stopping its purported practice of
stealing technology from US companies.
Trump weighs extending China tariff deadline by 60 days
China's Consumer Price Index missed expectations in January coming in at 1.7% higher than a year ago, the National Bureau of Statistics said. The forecast called for CPI to come in at 1.9% higher year-over-year. Dec CPI, a gauge of prices for goods & services, had risen 1.9% on-year. CPI eased due to a decline in food prices, the statistics bureau official said. Meanwhile, producer inflation rose just 0.1% from a year ago, compared to a 0.2% rise expected. China's Dec Producer Price Index, which measures price increases before they reach the consumer, had risen 0.9% on-year. Jan marked the 7th straight month of slowing factory gate inflation. The data comes amid a new round of US-China talks in Beijing this week as the 2 economies renewed efforts to reach a deal to defuse trade tensions.
China's inflation slows in January, potentially pushing officials to step in, says economist
PepsiCo (PEP), a Dividend Aristocrat, has found something many of its peers have lacked, growth. But growth will come at a cost. Investments in marketing & advertising have helped the owner of brands like Mountain Dew & Frito-Lay post sales growth of 3.7% in 2018. That includes 2% growth in its North American beverage business, which until recently had been in decline. But the company's efforts to boost its top line are expected to hurt its profits: PEP is forecasting that EPS will be $5.50 during 2019, down from its 2018 EPS of $5.66. That's lower than estimates of $5.86 in 2019. Still, by 2020, the company expects EPS to return to growth. "As other consumer product companies were taking a very extreme approach to cost-cutting, we had always said we were going to take a more balanced approach," CFO Hugh Johnston said. "We felt like the balanced approached of reducing cost, investing some money back to growth ... was in fact the right approach." The company reported fiscal Q4 of $4.83, up from a loss of 50¢, a year earlier. Excluding merger & integration charges, net tax benefits & other items, EPS was $1.49, meeting expectations. Net sales of $19.5B, matched expectations & were unchanged from a year earlier. PEP eyes further marketing & advertising spending & it also plans to balance those investments with a cost-savings program that aims to slash at least $1 billion every year through 2023. The program is an extension of a prior savings plan that was expected to end after 2019. The stock rose 3.32.
If you would like to learn more about PEP, click on this link:
club.ino.com/trend/analysis/stock/PEP?a_aid=CD3289&a_bid=6ae5b6f7
PepsiCo expects earnings to decline in 2019 as it invests to boost its sales growth
Industrial production sank 0.6% in Jan, the first drop in 8 months, the Federal Reserve reported. The decline was below expectations for a flat reading. Adding to a sense of weakness in the report, industrial production in Dec was cut to a 0.1% gain from the initial estimate of a 0.3% gain. Despite the decline, production remains 3.8% higher in Jan than it was a year earlier. Capacity utilization declined 0.6 percentage point to 78.2% in Jan, the lowest level since last Jul. In Jan, all categories except mining & utility production declined. Manufacturing alone dropped 0.9%, led by slump in the volatile motor-vehicle sector. Autos fell 8.8% in Jan. Excluding autos, factory output fell 0.2%. Mining output edged up 0.1% & the output of utilities increased 0.4%. Economists didn't think the firm Dec industrial output report would be repeated in Jan, but not many were calling for the across-the-board weakness seen in the data. This might be the tipping point for factory sector, but the separate ISM manufacturing index for Jan was stronger than Dec. The manufacturing sector faces headwinds from slowing global growth, trade tensions & the strong $. The Empire State Index that is more forward-looking, was moderately positive.
U.S. industrial production falls in January for the first time in eight months
Oil futures climbed to settle at their highest since Nov, with US benchmark prices up 5.4% for the week. Recent monthly data showed that crude output from OPEC continues to decline & Saudi Arabia reportedly pledged to cut even more production. US-China trade talk progress also helped to ease worries about energy demand. Mar West Texas Intermediate oil rose $1.18 (2.2%) to settle at $55.59.
Oil futures settle at highest since November, with U.S. prices up over 5% for the week
This was the 8th straight week of the stock market rally. The Dow rose 780 this week. Will wonders never stop? Times have been bumpy, to say the least, but traders are bidding stock prices higher. As stated previously, any market that goes straight up without a correction is scary for the old timers. China trade talks lumber on & economic data, while fairly good, is stumbling lately. While the Dow needs less than 1K to reach a new record, demand for gold & Treasuries, safe haven investments, remains strong. The disconnect will not last!
Dow Jones Industrials
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