Your Monday Market Blip 12/7/15

Your Monday Market Blip 12/7/15

The Dow pulled back to open the trading week as the tug of war between the prospect of rising interest rates and falling oil prices continues to spook traders. At the close the Dow was down 117 points at 17,730. Trading volume was lower than last Friday which was an encouraging sign.
In the energy markets, natural gas pipeline giant Kinder Morgan is getting hit thanks to speculation that it will need to cut its dividend in order to maintain its investment grade bond rating after buying a smaller natural gas pipeline business last week. While the company says it has enough cash flow to keep the dividend and still access capital markets for expansion projects needed to meet demand, “Mister Market” thinks the low price of nat gas and rising stress levels in energy companies could limit access to capital markets and therefore a cut the divvy is needed. In other words you cannot have both the dividend and cheap capital at the same time. Kinder Morgan said it will announce its intentions soon. Meanwhile Bank of America put a buy rating on the stock saying that even if the company lowers its dividend the value of its business at current prices is compelling. Let’s hope it’s not “repelling”.
Keurig Green Mountain Coffee Roasters announced it was being taken private in a $14 billion deal by a group of investors today sending shares up close to 80%. The deal was a blow to hedge fund guru David Einhorn AKA “Silky Seymour” as he was short the stock and may have lost all his gains so far. Now that is one expensive cup of coffee!
Oil continues to trade lower as the geopolitical tussle between Russia, Saudi Arabia and Iran continues to play out. All three nations are locked in a production battle in which maintaining market share and cash flow is resulting in a flood of oil hitting the markets and overwhelming end users with a glut not seen in modern times. WTI crude oil today fell a whopping 5.7% to trade under $38 per barrel which is a price not seen since 2009.