Your Thursday Market Blip 1/28/16

Your Thursday Market Blip 1/28/16

The Dow continues to trade in a tight range rising 125 points today to 16,069. Trading volume was mixed. Good earnings reports coupled with rising oul prices set the tone for today’s action.
Facebook reported stellar earnings as revenue gained 52% and net income was up 46%. Analysts were tickled with the report and sent shares higher. Meanwhile Ford Motor reported a huge increase of 107% in profits on a 19% revenue gain but shares fell when AutoNation, the country’s largest car dealer, said it would be cutting orders for new vehicles. Car experts are hinting that record sales from last year could mark a peak in the cycle and that forward numbers will be flat to down. Ford made no mention of this and said forward guidance was solid. The company also upped its dividend and paid the UAW workers a bonus of $9,300 based on company performance. Sales of the new F150 are hotter than a leather seat on a hot summer day.
Oil prices continue to rebound as Saudi Arabia appears to have suggested a 5% output cut for each of the big oil producing nations. Russia, which is the largest non OPEC producer indicated it was amenable to the idea meaning that it would cut output by roughly 500,000 barrels per day. We will see how this plays out. WTI oil today hit $33.45 a barrel up about a point.
After a 3 year decline, gold is looking to put in a bottom. Many are asking “why?!!” because gurus aver that if we are facing a deflationary cycle, gold would be the last place to put money. The potential answer to this question could come from the emerging markets which are now facing a debt crisis caused by weak local currencies and a slowing Chinese economy. Big investors are moving money out of local currencies into US dollars but another option for them might be simply to buy gold which might also minimize local currency risk. While I do not know if this is actually going on, recent studies show demand for gold in China is rising as fears of a further drop in the value of the yuan are fanning the flames of capital flight. Gold today fell one dollar to $1,114 an ounce.