Tuesday, May 21, 2019

Markets jump on renewed hopes for a trade deal

Dow shot up 197 (closing near session highs), advancers over decliners about 4-1 & NAZ climbed 83.  The MLP index went up 3+ to the 255s & the REIT index gained 3+ to the 381s.  Junk bond funds rose & Treasuries were sold today.  Oil was off pennies in the 63s & gold fell 3 ro 1274.

AMJ (Alerian MLP Index tracking fund)

Pres of the Boston Federal Reserve Eric Rosengren believes the central bank needs to keep interest rates on hold given the prolonged uncertainty surrounding US-China trade negotiations & muted inflation rates.  “The two elements of the Fed’s mandate are sending opposing signals for monetary policy, with low unemployment perhaps suggesting a bit tighter policy, and low inflation the opposite,”  Rosengren said during a speech.  While he noted that lower inflation might indicate the Fed needs to set a “somewhat accommodative, or looser, policy stance,” he also suggested that policymakers can afford to wait to see whether inflation moves closer to 2%.  At their Apr meeting, Fed policymakers signaled there would be no interest rate hikes for the remainder of 2019 in light of global economic & financial developments, as well as muted inflation.  The Fed's preferred measure of inflation registered just 1.5% in Mar, well below its 2% target, a main reason that policymakers chose to halt further interest rate rises.  Rosengren also said that the inflation rate is likely to move closer to 2% with the latest imposition of tariffs, although he warned that prolonged & widespread tariffs would ultimately cause the economy to slow.  “The uncertainty surrounding U.S.-China trade negotiations poses a potential downside risk to this forecast,” he said.  “If the trade uncertainty is prolonged, financial markets could retrench further, and households and firms could curtail spending.”  Tariffs could ultimately provoke a “violent” reaction from the markets & cause overall economic growth to slow, he noted, but he expects the world's 2 largest economies to eventually reach a deal, meaning any residual effect on the economy or markets will likely be transitory.  Rosengren is a voting member of the 10-person FOMC this year.

Interest rates should remain on hold amid trade uncertainty: Boston Fed president

An agreement on raising the US debt ceiling and a 2-year spending deal is possible by later today, Senate Majority Leader Mitch McConnell said.  "Our hope is to make a deal before the day is over," the Kentucky Rep said at a news conference.  In early May the Treasury Dept said that extraordinary measures to keep the US below the debt ceiling would run out "sometime in the second half of the year."

McConnell says debt limit, two-year spending deal possible by day's end

In a major concession, British Prime Minister Theresa May offered UK lawmakers the chance to vote on whether to hold a new referendum on the country's membership in the EU, but only if they back her thrice-rejected Brexit agreement.  May made the offer as part of a desperate attempt to persuade Parliament to back a divorce deal that will allow the UK make an orderly, if delayed, departure from the EU.  She plans to ask the House of Commons to vote in early Jun on a withdrawal agreement bill, in what May called a "last chance" to seal a Brexit deal.  Soon after that vote, she will give a timetable for her departure as Conservative leader & prime minister.  May said the bill would include "a requirement to vote on whether to hold a second referendum" that would give Britons a chance to approve or reject the terms of Brexit.  A referendum is a key demand of opposition lawmakers who have until now rejected May's deal.  "I do not believe that this is a route we should take," said May, who has long opposed a new public vote on Brexit.  "But I recognize the genuine and sincere strength of feeling across the House on this important issue."  The Brexit referendum, however, will only happen if Parliament backs the EU withdrawal bill & it becomes law, something that still seems unlikely, despite May's last-minute changes.  Jeremy Corbyn, leader of the main opposition Labour Party, said May's new bill was merely "a repackaging of the same old bad deal, rejected three times by Parliament."  Ian Blackford, a lawmaker with the pro-EU Scottish National Party, said it was "too little, too late from a prime minister who is headed for the exit door."

Seeking Brexit support, May offers vote on new referendum

Kohl's (KSS) shares plunged more than 10% after the company posted disappointing Q1 & cut its full-year forecast.  Adjusted EPS was 61¢ on revenue of $3.82B, missing the 67¢ & $3.93B that was anticipated.  Comparable sales fell 3.4% year-over-year, missing the expected 0.1% drop by a wide margin.  "The year has started off slower than we'd like, with our first quarter sales coming in below our expectation," CEO Michelle Gass said.  "We are actively addressing the opportunities that impacted our first quarter sales and we have strong initiatives that will enhance our sales performance in the second half."  Looking ahead, KSS sees full-year adjusted EPS of $5.15-5.45, well below the $6.04 estimate.  It previously saw full-year adjusted EPS of $5.80-6.15 share.  The stock tumbled 7.77 (12%).
If you would like to lern more about KSS, click on this link:

Kohl's earnings: Stock price plunges after slashing

Easing restrictions on Huawei brought stock buyers out today.  However, trade negotiations with China remain in limbo.  Meanwhile earnings from retailers are coming & the best reports may have already been reported.  With the latest recovery in the stock market, the Dow is within 1K of its record.  Not bad!

Dow Jones Industrials

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