Stocks fell today as the Dow closed off 40 to 16,413 on light trading volume.
US economic news is generally good. Industrial production was up 0.9% in January reversing a 3 month slide and beating estimates calling for a 0.4% gain. Strong utility demand and a gain in motor vehicle production boosted the results. Manufacturing production was up 0.5% coming in above economists’ estimates calling for a 0.2% rise. The LEI index (Leading Economic Indicator) index was down slightly for the second month in a row but is still forecasting moderate economic growth for the good old US of A.
Retail biggie Wal-Mart reported 4th quarter results this morning and the numbers were iffy, or in this case “wally”. Total revenue was down 1.4% and net income was off about 8% as competition from Amazon, higher labor costs and a strong dollar affected both top and bottom lines. Shares were lower by 4% on the news. On the other end of the spectrum, upscale retailer Nordstrom’s will report earnings later today.
WTI crude traded lower by 1% to $30.34 per barrel. US Oil and gasoline stockpiles continue to rise and euphoria over yesterday’s positive announcements by Iran regarding oil “production cap freezes” gave way to the realization that at least for now it is all talk and that markets continue to be heavily oversupplied. Share of natural gas giant Kinder Morgan were higher on news that Warren Buffet and David Tepper have been buying the beaten down stock and establishing initial positions in what is considered the largest gas pipeline company in America. This makes sense from Buffet’s standpoint because he already owns BN Railroad which is currently experiencing a decline in coal shipments as power plants shift to nat gas.
Gold gained 2.1% or $26 an ounce to close at $1,237 an ounce. Rob “RoHa” Haworth at US Bank noted that gold iss increasing being seen as a safe haven in an era of negative interest rates being offered in such places like Japan, Sweden and Denmark. Warren Buffet once famously said that gold was no good because first you had to pay a guy to dig it up and then you had to pay another guy to guard it for you. He considered bonds a better play because at least they paid interest but in today’s environment, negative interest bonds are worse than gold in that you have to pay interest instead of making interest. Speaking of interest…what is the difference between a gubment bond and a drummer in a band? One earns income and matures.