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Archive for April, 2015

Weekly Market Update – April 24, 2015

The Dow rose 21 points Friday on the strength of better-than-expected earnings reports.  For the week the Dow was up 1.4% and for the year the index is up 1.5%.

With no major economic data reported Friday corporate earnings took center stage.  Microsoft and Amazon both reported solid Q1 earnings and led Friday’s rally, both advancing over 10%.  Starbucks also surged after reporting late Thursday.  The enthusiasm generated from the releases propelled the NASDAQ and S&P 500 to record highs. 

Oil fell .8% to $57.28 Friday, ending the week up 2.0%.  Despite the number of oil rigs in operation in the US falling to its lowest level since 2010, oversupply concerns sent oil lower on news that Russia and Saudi Arabia were increasing production.

The yield on the 10-year Treasury fell 3 bps Friday to 1.92%, up 7 bps for the week and now down 25 bps for the year.  Through Thursday, April 23, our trust preferred portfolios were up approximately 4.5%, on average, versus 1.71% for the Barclays Aggregate Bond Index. 

Many accounts have Magnum Hunter preferreds which were under pressure today as the company is in the midst of raising capital.  Earlier in the year, the company announced it was seeking a joint venture partner to develop some of its Ohio and West Virginia natural gas acreage.  The joint venture appears to be delayed from the original March/April timeline discussed on the last earnings call.  After speaking with management today, we believe the joint venture is 45-60 days out.  The company is looking to get an upfront payment in the $30-$100 million range, with the partner paying for future drilling costs between $300-$400 million.
 
We believe the company will issue additional equity in the near future to raise additional cash, which we view as a positive step to securing the dividend payments. We expect the preferred shares to remain volatile until a joint venture agreement is reach in the next 6-8 weeks.

Next week’s economic calendar highlights include consumer confidence reports on Tuesday and Friday and weekly jobless claims and an April manufacturing report on Thursday.  Expect consumer confidence to remain steady, weekly jobless claims to settle in the 280,000 – 290,000 range (from 295,000 this week) and the manufacturing report to show an uptick in activity from March. 

Weekly Market Update – April 17, 2015

The Dow fell 280 points Friday on concerns about Greece and China.  For the week the Dow was down 1.3% and for the year the index is up .1%.

Impending trade regulations in China that would limit margin trading and expand short-selling and worries that Greece is nearing default after negotiations to bring about another round of financial aid stalled sent markets lower Friday.  European finance ministers are set to meet in Greece again next Friday to continue the discussion on the implementation of economic and political reforms necessary to secure further funding.  In the US, economic data released on Friday showed a rise in consumer confidence and a slight increase in the CPI (consumer price index), in-line with expectations. 

Oil fell .9% to $56.18, ending the week up 8.8%, its largest jump since February of 2011.  The escalating conflict in Yemen and data on Wednesday showing the smallest inventory build since the start of the year helped boost prices.

The yield on the 10-year Treasury fell 3 bps Friday to 1.85%, down 10 bps for the week and now down 32 bps for the year.  Through Thursday, April 16, our trust preferred portfolios were up over 4.5%, on average, versus 2.00% for the Barclays Aggregate Bond Index. 

Next week’s economic calendar highlights include March housing data on Wednesday and Thursday and weekly jobless claims also on Thursday.  Expect the March housing data to show a slight improvement from February and weekly jobless claims to settle in the 280,000 – 290,000 range (from 294,000 this week).  First quarter corporate earnings will continue as well.

Weekly Market Update – April 10, 2015

The Dow rose 99 points Friday to close above 18,000 for the first time in April.  For the week the Dow was up 1.7% and for the year the index is up 1.4%.

Friday was a relatively quiet day, with attention focused on next week’s Q1 corporate earnings announcements.  Earnings in Q1 are forecast to be 4.7% lower, year-over-year, negatively affected by the strong dollar.   

Oil rose 1.7% to $51.64 per barrel after Friday’s drilling rig report showed that the number of US drilling rigs in operation dropped for the 18th-consecutive week.

The yield on the 10-year Treasury fell 1 bps Friday to 1.95%, up 5 bps for the week and now down 22 bps for the year.  Through Thursday, April 9, our trust preferred portfolios were up over 3.5%, on average, versus 1.63% for the Barclays Aggregate Bond Index. 

Next week’s economic calendar highlights include March retail sales on Tuesday, March inflation data on Tuesday and Friday, weekly jobless claims and March housing data on Thursday and a consumer confidence report also on Friday.  Expect retail sales to show an improvement from February, the inflation data to show a slight uptick in prices, weekly jobless claims to settle in the 280,000 – 290,000 range (from 285,000 this week), housing data to show increased activity from February and consumer confidence to remain at a relatively high level.  First quarter corporate earnings will continue as well.

Weekly Market Update – April 2, 2015

The Dow rose 65 points Thursday on positive geopolitical news and the expectation of another solid jobs report Friday.  For the week the Dow was up .3% and for the year the index is now down .3%.

News broke Thursday that a framework for a nuclear deal with Iran had been established, sending markets higher.  The deal would not put an end to Iran’s enrichment capabilities, but would limit its enrichment capacity in exchange for the lifting of economic sanctions that have crippled the country’s economy.  The parties involved in the talks have until the end of June to finalize the agreement.  Oil rose over a dollar after the announcement but still finished the day down 1.9% at $49.14 per barrel.  

Meanwhile, in the US, Friday’s March jobs report is expected to show the addition of approximately 260,000 jobs and an unchanging unemployment rate (currently at 5.5%).  The data is not expected to markedly change the Fed’s plans to raise interest rates later this year.

The yield on the 10-year Treasury rose 4 bps Friday to 1.90%, down 5 bps for the week and now down 27 bps for the year.  In the first quarter of the year ending Tuesday, March 31, our trust preferred portfolios were up approximately 3.5%, on average, versus 1.61 % for the Barclays Aggregate Bond Index. 

Next week’s economic calendar is a quiet one, the only data release of note being weekly jobless claims on Thursday.  Expect jobless claims to settle in the 280,000 – 290,000 range (from 268,000 this week – a good number).  First quarter corporate earnings will begin in earnest as well.

Markets and our office will be closed tomorrow, Friday, April 3, in observance of Good Friday.

 

Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464