Dow climbed 369, advancers over decliners about 4-1 & NAZ gained 190. The MLP index went up 3+ to the 141s & the REIT index crawled up 1 to the 317s. Junk bonds funds climbed higher & Treasuries rose in price. Oil rose another 1+ to the 33s & gold added 6 to 1752 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The FOMC released minutes from its Apr 29 meeting when it helding steady on interest rates. After slashing its benchmark rate to near zero as the coronavirus pandemic took hold, the FOMC voted to keep the rate at 0%-0.25% & not move it until a recovery is firmly in place. The action came as central bank officials noted the excessive damage the virus was doing to the economy & the potential for damage ahead. “Participants commented that, in addition to weighing heavily on economic activity in the near term, the economic effects of the pandemic created an extraordinary amount of uncertainty and considerable risks to economic activity in the medium term,” the minutes said. One area of particular concern is what should happen in the event that coronavirus infections should surge later in the year. The minutes noted that the “more pessimistic” outlook for a rebound was probably as likely as the baseline forecast for improvement. “In this scenario, a second wave of the coronavirus outbreak, with another round of strict restrictions on social interactions and business operations, was assumed to begin around year-end, inducing a decrease in real GDP, a jump in the unemployment rate, and renewed downward pressure on inflation next year,” the summary said. As far as specific threats, the meeting summary noted vulnerability to the banking sector & the potential for bankruptcies from nonfinancial companies. They also noted the danger of high unemployment levels as workers became separated from the workforce. The burden for the economic downturn, which is likely to be the worst in US history for Q2, “would fall disproportionately on the most vulnerable and financially constrained households in the economy.”
Target (TGT), a Dividend Aristocrat, sales surged as customers stocked up on essentials in order to ride out the COVID-19 outbreak from home, but higher operating costs wiped out any bottom-line gains. The big-box retailer said comparable sales rose 11% from a year ago as customers made fewer, bigger shopping trips & total revenue climbed to $19.4B. Digital sales soared 141%. First-qtr EPS plunged, however, year-over-year to an adjusted 59¢. The forecast was expecting adjusted EPS of 40¢ on revenue of $19.04B. Q1 gross margin fell to 25.1%, from 29.6% in 2019, amid higher digital & supply chain costs & increased investments in employee wages & benefits. “With our stores at the center of our strategy, and a significant investment in the safety of our team and guests, our operations had the agility and flexibility needed to meet the changing needs of our business," CEO Brian Cornell said. "With the dedication of our team, the benefit of a sustainable business model and a strong balance sheet, we are confident Target will emerge from this crisis an even stronger retailer." The company gained market share in all 5 of its core merchandise categories, which include essentials, food & beverage & beauty products. The company returned $941M to shareholders during Q1 -- $609M thru share repurchases & $332M in divs. TGT withdrew its full-year guidance on Mar 25 due to uncertainty caused by COVID-19. The stock lost 3.52.
If you would like to learn more about TGT, click on this link:
club.ino.com/trend/analysis/stock/TGT?a_aid=CD3289&a_bid=6ae5b6f7
Coca-Cola (KO), a Dow stock & Dividend Aristocrat, CEO James Quincey delivered a grim forecast for the global economy’s recovery from the impact of the coronavirus pandemic. “The economic impact of the lockdown is just starting to begin,” Quincey said. In the US, more than 36M Americans have applied for unemployment benefits since the coronavirus upended the economy. The Congressional Budget Office said that it expects US. GDP to plunge 38% on an annualized basis in Q2. The IMF is forecasting that the global economy will shrink by 3% this year. Quincey said that he expects a “U”- or “extended U”-shaped recovery rather than one shaped like a “V,” where the economy quickly snaps back to pre-crisis activity. While he said it was too early for KO to gauge how consumer spending habits are changing as lockdowns lift, the company expects that consumers will be more strapped for cash. “We’re gonna have to recognize that coming after this virus crisis will be the economic impact and hangover of the lockdown, and there will be a much greater focus from the consumer on affordability or getting the prices lower,” he said. KO is still seeing negative global volumes in May, although they have improved slightly after plunging 25% in Apr. Roughly ½ of the company's revenue comes from away-from-home channels, like restaurants, movie theaters & stadiums. In China, which began easing stay-at-home orders in Apr, demand in May has not yet recovered to pre-crisis levels. The stock went up 1.36.
If you would like to learn more about KO, click on this link:
club.ino.com/trend/analysis/stock/KO?a_aid=CD3289&a_bid=6ae5b6f7
Coca-Cola CEO says economic impact of coronavirus lockdowns is ‘just starting to begin’
Gold prices settled higher for a 2nd session, as economic stimulus measures boosted demand for the precious metal against the backdrop of economies attempting to reopen from the COVID-19 pandemic. Futures prices for the metal then extended the gains from the settlement after minutes from the FOMC's Apr meeting showed that Fed officials discussed being more explicit about the future path of interest rates. The Fed’s benchmark interest rate stands at 0-0.25%, but negative interest rates would be a boon for precious metals. Gold for Jun rose $6 (0.4%) to settle at $1752 an ounce. Prices were at $1754 in electronic trading shortly after the FOMC minutes, which were released following the futures price settlement. During testimony to the Senate Banking Committee yesterday, Powell said “we need to be prepared to act further and I would say we are, if the need is there.”
Gold posts second straight gain, extends climb after FOMC minutes
Oil futures climbed to finish at their highest in about 10 weeks on the back of a 2nd-straight weekly decline in domestic crude supplies & a drop in stocks at the Cushing, OK, storage hub. Jul West Texas Intermediate oi, which is the most-actively traded & the front-month contract, rose $1.53 (4.8%) to settle at $33.49 a barrel. That was the highest finish since Mar 10, based on the front-month contracts. Meanwhile, global benchmark Brent crude for Jul picked up $1.10 (3.2%) at $35.75 a barrel, the highest finish since Mar 11. The Energy Information Administration (EIA) reported that US crude inventories fell by 5M barrels for the week ended May 15, marking a 2nd weekly decline in a row. That compared with a forecast for an increase of 2.4ML barrels. The American Petroleum Institute yesterday reported a decline of 4.8M barrels. The EIA data showed crude stocks at the Cushing storage hub fell by about 5.5M barrels for the week, easing concerns over tightening storage space. An agreement between OPEC & their allies to cut 9.7M barrels a day in oil thru the end of Jun have helped to stem a flood of crude against a backdrop of demand that had been declining, hurt by lockdowns to stop the spread of COVID-19. Production in the US has also declined, with the EIA reporting that total oil output fell by 100K barrels a day to 11.5M barrels a day last week. In a separate report issued Mon, the EIA forecast further a decline in domestic shale-oil production.
Oil has come roaring back in 2 months from sub zero levels to 33 today. That rally off record lows must be encouraging for stock investors. Meanwhile, safe haven gold has risen to 7 years highs. Reopening in states (to various degrees) & work on vaccines for the virus are supporting demand for stocks. But there is a huge amount of damage that has been done to the labor force, consumers & businesses. With the Dow at the upper end of its 2 month trading range, the bulls have their work cut out to continue this rally.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The FOMC released minutes from its Apr 29 meeting when it helding steady on interest rates. After slashing its benchmark rate to near zero as the coronavirus pandemic took hold, the FOMC voted to keep the rate at 0%-0.25% & not move it until a recovery is firmly in place. The action came as central bank officials noted the excessive damage the virus was doing to the economy & the potential for damage ahead. “Participants commented that, in addition to weighing heavily on economic activity in the near term, the economic effects of the pandemic created an extraordinary amount of uncertainty and considerable risks to economic activity in the medium term,” the minutes said. One area of particular concern is what should happen in the event that coronavirus infections should surge later in the year. The minutes noted that the “more pessimistic” outlook for a rebound was probably as likely as the baseline forecast for improvement. “In this scenario, a second wave of the coronavirus outbreak, with another round of strict restrictions on social interactions and business operations, was assumed to begin around year-end, inducing a decrease in real GDP, a jump in the unemployment rate, and renewed downward pressure on inflation next year,” the summary said. As far as specific threats, the meeting summary noted vulnerability to the banking sector & the potential for bankruptcies from nonfinancial companies. They also noted the danger of high unemployment levels as workers became separated from the workforce. The burden for the economic downturn, which is likely to be the worst in US history for Q2, “would fall disproportionately on the most vulnerable and financially constrained households in the economy.”
Fed minutes show fears of ‘extraordinary amount of uncertainty and considerable risks’ because of coronavirus
Target (TGT), a Dividend Aristocrat, sales surged as customers stocked up on essentials in order to ride out the COVID-19 outbreak from home, but higher operating costs wiped out any bottom-line gains. The big-box retailer said comparable sales rose 11% from a year ago as customers made fewer, bigger shopping trips & total revenue climbed to $19.4B. Digital sales soared 141%. First-qtr EPS plunged, however, year-over-year to an adjusted 59¢. The forecast was expecting adjusted EPS of 40¢ on revenue of $19.04B. Q1 gross margin fell to 25.1%, from 29.6% in 2019, amid higher digital & supply chain costs & increased investments in employee wages & benefits. “With our stores at the center of our strategy, and a significant investment in the safety of our team and guests, our operations had the agility and flexibility needed to meet the changing needs of our business," CEO Brian Cornell said. "With the dedication of our team, the benefit of a sustainable business model and a strong balance sheet, we are confident Target will emerge from this crisis an even stronger retailer." The company gained market share in all 5 of its core merchandise categories, which include essentials, food & beverage & beauty products. The company returned $941M to shareholders during Q1 -- $609M thru share repurchases & $332M in divs. TGT withdrew its full-year guidance on Mar 25 due to uncertainty caused by COVID-19. The stock lost 3.52.
If you would like to learn more about TGT, click on this link:
club.ino.com/trend/analysis/stock/TGT?a_aid=CD3289&a_bid=6ae5b6f7
Target's profit sinks 64% as costs soar amid pandemic
Coca-Cola (KO), a Dow stock & Dividend Aristocrat, CEO James Quincey delivered a grim forecast for the global economy’s recovery from the impact of the coronavirus pandemic. “The economic impact of the lockdown is just starting to begin,” Quincey said. In the US, more than 36M Americans have applied for unemployment benefits since the coronavirus upended the economy. The Congressional Budget Office said that it expects US. GDP to plunge 38% on an annualized basis in Q2. The IMF is forecasting that the global economy will shrink by 3% this year. Quincey said that he expects a “U”- or “extended U”-shaped recovery rather than one shaped like a “V,” where the economy quickly snaps back to pre-crisis activity. While he said it was too early for KO to gauge how consumer spending habits are changing as lockdowns lift, the company expects that consumers will be more strapped for cash. “We’re gonna have to recognize that coming after this virus crisis will be the economic impact and hangover of the lockdown, and there will be a much greater focus from the consumer on affordability or getting the prices lower,” he said. KO is still seeing negative global volumes in May, although they have improved slightly after plunging 25% in Apr. Roughly ½ of the company's revenue comes from away-from-home channels, like restaurants, movie theaters & stadiums. In China, which began easing stay-at-home orders in Apr, demand in May has not yet recovered to pre-crisis levels. The stock went up 1.36.
If you would like to learn more about KO, click on this link:
club.ino.com/trend/analysis/stock/KO?a_aid=CD3289&a_bid=6ae5b6f7
Coca-Cola CEO says economic impact of coronavirus lockdowns is ‘just starting to begin’
Gold prices settled higher for a 2nd session, as economic stimulus measures boosted demand for the precious metal against the backdrop of economies attempting to reopen from the COVID-19 pandemic. Futures prices for the metal then extended the gains from the settlement after minutes from the FOMC's Apr meeting showed that Fed officials discussed being more explicit about the future path of interest rates. The Fed’s benchmark interest rate stands at 0-0.25%, but negative interest rates would be a boon for precious metals. Gold for Jun rose $6 (0.4%) to settle at $1752 an ounce. Prices were at $1754 in electronic trading shortly after the FOMC minutes, which were released following the futures price settlement. During testimony to the Senate Banking Committee yesterday, Powell said “we need to be prepared to act further and I would say we are, if the need is there.”
Gold posts second straight gain, extends climb after FOMC minutes
Oil futures climbed to finish at their highest in about 10 weeks on the back of a 2nd-straight weekly decline in domestic crude supplies & a drop in stocks at the Cushing, OK, storage hub. Jul West Texas Intermediate oi, which is the most-actively traded & the front-month contract, rose $1.53 (4.8%) to settle at $33.49 a barrel. That was the highest finish since Mar 10, based on the front-month contracts. Meanwhile, global benchmark Brent crude for Jul picked up $1.10 (3.2%) at $35.75 a barrel, the highest finish since Mar 11. The Energy Information Administration (EIA) reported that US crude inventories fell by 5M barrels for the week ended May 15, marking a 2nd weekly decline in a row. That compared with a forecast for an increase of 2.4ML barrels. The American Petroleum Institute yesterday reported a decline of 4.8M barrels. The EIA data showed crude stocks at the Cushing storage hub fell by about 5.5M barrels for the week, easing concerns over tightening storage space. An agreement between OPEC & their allies to cut 9.7M barrels a day in oil thru the end of Jun have helped to stem a flood of crude against a backdrop of demand that had been declining, hurt by lockdowns to stop the spread of COVID-19. Production in the US has also declined, with the EIA reporting that total oil output fell by 100K barrels a day to 11.5M barrels a day last week. In a separate report issued Mon, the EIA forecast further a decline in domestic shale-oil production.
Oil prices finish at 10-week high as domestic crude supplies, Cushing stocks drop
Oil has come roaring back in 2 months from sub zero levels to 33 today. That rally off record lows must be encouraging for stock investors. Meanwhile, safe haven gold has risen to 7 years highs. Reopening in states (to various degrees) & work on vaccines for the virus are supporting demand for stocks. But there is a huge amount of damage that has been done to the labor force, consumers & businesses. With the Dow at the upper end of its 2 month trading range, the bulls have their work cut out to continue this rally.
Dow Jones Industrials
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