Markets rise when oil tops $50 (again)

Dow climbed 69, advancers over decliners 3-2 & NAZ gained 16.  The MLP index lost a fraction to the 318s & the REIT index crawled higher to the 343s.  Junk bond funds inched higher & Treasuries slid lower.  Oil rose over 50 & gold was weak (more on both below).

Dow Jones Industrials

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Crude rose to a 3-week high after Kuwaiti comments bolstered optimism that OPEC & its partners will extended output curbs.  Futures climbed almost 2%.  Kuwait & other countries support prolonging production cuts that are scheduled to expire in Jun.  Prices rose yesterday after US gov data showed that gasoline inventories dropped more than expected, while refineries boosted the amount of crude they processed by the most in almost 3 years.  While US crude supplies rose to a record last week, they increased by less than they were expected to, signaling that more oil is being pulled out of storage.  That optimism & the disruption in Libyan output helped drive prices up 3.7% over the past 2 sessions, their longest stretch of gains in more than a month.  They slid last week to the lowest since Nov as American supply gains countered output cuts by other producers.  West Texas Intermediate for May advanced 77¢ (1.6%) to $50.28 & the contract touched $50.46, the highest since Mar 9.  US gasoline inventories dropped 3.75M barrels last week & they were projected to fall 2M barrels.  Refineries processed 16.2M barrels a day of crude last week, up 425K barrels from the prior week, according to the EIA (the biggest weekly increase since Jun 2014).  Nationwide crude stockpiles rose by 867K barrels to all-time high of 534M.  Analysts projected a 2M barrel gain.  Oil output climbed further to above 9.1M barrels a day.

• Oil Tops $50 as Kuwait Says OPEC in Talks for Meeting Consensus

Gold prices settled lower, as strength in the $ & some gains in equities drew investor interest away from the precious metal.  Jun gold fell $8.80 (0.7%) to settle at $1248, the lowest finish for the Jun contract since Mar 20.

Gold Prices Finish Lower As Dollar Strengthens

VF Corp, a Dividend Aristocrat, the distributor of brands including North Face, Timberland & Wrangler, outlined plans for the 5-year period thru 2021, & said it expects to return $8B to shareholders in the period.  The company said it will overhaul its portfolio, shift to a consumer & retail-centric model, boost direct-to-consumer & digital operations & shift investment to Asia, especially China.  The company expects revenue to grow at a 5-year compounded annual growth rate (CAGR) of 4-6% & EPS to grow at a 5-year CAGR of 10-12% with margins reaching 51.5% by 2021.  The company expects to generate more than $9B of cash & the board has approved a new $5B share buyback.  VFC will change its fiscal year end to Mar 31 from the Sat closest to Dec 31 of each year, which it expects will give it better visibility into revenue growth & expense planning.  The stock fell 2.12.  If you would like to learn more about VFC, click on this link:
club.ino.com/trend/analysis/stock/VFC?a_aid=CD3289&a_bid=6ae5b6f7

VF Corp. Sets 5-year Goals, Unveils $5 Billion Share Buyback

V.F. Corporation (VFC)

China's main indices capped the 4th day in the red as lingering concerns over liquidity were further heightened by curbs on property investment.  The blue-chip CSI300 index fell 0.9% to 3436 while the Shanghai Composite lost 1 to 3210.  Smaller caps led the decline, with the tech-heavy start-up board sliding 1.8% to a 5-week low.  China's central bank skipped open market operations for a 5th day & was set to drain 40B yuan today.  The property market was another area of concern for investors, as an increasing number of cities joined a broad move by authorities to slap curbs on home purchases.  The National Academy of Economic Strategy, a gov think tank, urged authorities to guard against risks in the property & financial sectors by properly managing monetary & land supply "floodgates," adding to worries about more restrictions on property developers.  Moody's Investors Service warned that the financial risks facing China from a potential property downturn had grown as record lending had made banks more risk-prone while the gov was less able to combat those risks.  An index tracking real estate developers fell 1.1%.  The steep correction in newly-listed stocks, now in its 3rd session, has seen dozens of them tumbling by the maximum allowed 10%.

China Shares Down For 4th Day as Liquidity Concerns Linger

Optimism about the economy continues to be strong.  That thought was aided by the revised GDP data today.  Trump is doing his part.  Next Thurs & Fri he will host Chinese President Xi Jinping at the Mar-a-Lago estate.  But chaotic goings in DC bring a dark cloud over the stock market which investors have been overlooking for months.  Dow just needs another 80 to put in the black for Mar.  It would also be up a massive 2400 since the Nov election.

Dow Jones Industrials

 

Higher markets after revised GDP data for Q4

Dow went up 82, advancers over decliners about 3-2 & NAZ gained 14.  The MLP index retreated 1+ to the 318s & the REIT index lost 1+ to the 341s.  Junk bond funds climbed higher & Treasuries were sold.  Oil was higher, near 50, & gold pulled back to 1250.

AMJ (Alerian MLP Index tracking fund)

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The US economy grew in Q4 at a faster pace than previously reported on higher consumer spending, Commerce Dept data showed.  GDP rose at a 2.1% annualized pace (forecast was for 2%), revised from 1.9%.  Consumer spending, the biggest part of the economy, rose at a 3.5% rate, revised up from 3%; added 2.4 percentage points to growth, revised from 2.05 points.  Corp profits jumped 9.3% from a year earlier, the most since 2012, & rose 0.5% from the previous 3 months.  Trade subtracted 1.82 percentage points from growth, the most since 2004, compared with the prior estimate of a 1.7-point drag, on weaker exports & higher imports.  The data reinforce the underlying story of the US economy: the 7 year expansion continues to be led by consumers, who are cushioned by a firm labor market & rising confidence.  At the same time, rising corp profits could provide continued momentum for hiring & support further capital investment.  Q1 growth is forecast at 1.9%, while the Trump administration has said its policies will eventually result in a 3% pace or greater.  Upward revision to consumption reflects spending on net foreign travel & recreation services, as well as gasoline & other energy goods.  Pre-tax corp profits were down 0.1% for all of 2016, after a 3% drop in 2015.  Inventories added 1.01 percentage point to growth, revised from 0.94 point.  Stripping out inventories & trade, final sales to domestic purchasers increased at a 2.8% rate, revised from a 2.6% pace.

U.S. Fourth-Quarter Growth Revised Upward to 2.1% on Consumption

Filings for US unemployment benefits declined last week by less than forecast, while remaining at levels consistent with a solid labor market, a Labor Department report showed.  Jobless claims decreased 3K to 258K (forecast was 247K) in the latest week.  The number continuing to receive jobless benefits increased 65K to 2.05M.  While claims are near the highest level this year, weekly filings have been below 300K since early 2015, a level consistent with a healthy labor market.  US employers remain reluctant to let go of staff amid steady economic growth & increased difficulty finding workers with relevant skills & experience.  The 4 week average of initial claims, a less-volatile measure than the weekly figure, increased to 254K, the highest since Dec, from 246K in the prior week.  The unemployment rate among people eligible for benefits rose to 1.5% from 1.4%.

Jobless Claims in U.S. Declined Less Than Forecast Last Week

Inflation in Europe's largest economy decelerated more than forecast in Mar.  Consumer-price growth in Germany slowed to 1.5% from 2.2% the previous month, the Federal Statistical Office said, marking the first weakening since Aug 2016.  The forecast called for inflation of 1.9%.  The decline partly reflects the timing of the Easter holiday, which was in Mar in 2016, & may be a precursor to softer euro-area numbers.  Consumer-price growth in Spain also weakened more than expected in Mar, with a slowdown to 2.1% from 3% last month.  A drop in the overall euro area rate, forecast to come in at a lower pace of 1.8%, probably won't surprise the ECB, which predicted it would peak in Q1.  Even so, that's a reminder that price trends are being largely driven by volatile components such as energy& food.  While a pickup in inflation in the past year has kickstarted a discussion about the central bank's monetary policy stance, pres Mario Draghi has said he’s waiting for assurances that the improvement is broad based & sustainable.  The ECB said this week that it's too soon to start discussing when to withdraw stimulus.

German Inflation Decelerates in Dip Predicted by ECB

Stocks are recovering, hoping to eke out a gain for the month of Mar.  The Dow needs less than an advance of 100 to be in the black.  The GDP data was a plus today, although that reflects history.  Current events (more jobs & business & expansion), while volatile, keep encouraging investors.

Dow Jones Industrials