Your Thursday Market Blip 1/21/16

Your Thursday Market Blip 1/21/16

Stocks today rebounded somewhat from yesterday’s selloff which, by the way, had the earmarks of a potential bottom since several reversals happened. I have meetings out of the office so this blip is written before the close. As of noon my time the Dow is up 154 at 15,921. Energy stocks were the big movers thanks toa rebound in oil prices.
Natural gas pipeline biggie Kinder Morgan reported earnings and the numbers were better than expected sending shares higher as analysts cheered the recent “defensive moves” made by management to cut the dividend and pare back capex. Kinder Morgan is under pressure from falling oil and gas prices but its main natural gas business is up as power plants drop coal and switch to gas. Kinder owns about 84,000 miles of pipe plus pumping stations, storage tanks and ships. The bottom line numbers beat estimates as adjusted net income came in with a 40% gain while revenue was off 8% thanks in part to a weak Canadian dollar affecting operations in the great white north. Cash flow continues to be “steady as she goes” and the company will utilize this to either fund capex or retire debt.
While natural gas demand is up, coal demand is off as evidenced by the falling share prices of railroads who had benefited for years from shipping coal and oil. Recently however those segments have either flattened or are now in decline. It will be interesting to see what adjustments are made by rail operators to pick up the slack.
WTI crude prices rebounded from a 12 year low trading near at $29.58 a barrel up over 4%. The US Energy Information Agency reported that oil in storage grew by 4 million barrels and now sits near an 80 year high of 486.5 million barrels. Gasoline inventories also continue to rise sharply adding 4.6 million barrels and topping forecasts. SUV drivers cheered the news.